President Trump Wants to Fire Fed Chair Jerome Powell, but Why Is That His Goal?

Although President Trump has fired plenty of people across the federal government, he has thus far left Jerome Powell, the chair of the Federal Reserve that he appointed during his first term, untouched. As he continues to flirt with the possibility of firing Powell, though, many are wondering why Trump seems so hellbent on firing a Fed chair that he appointed.

Trump's desire to fire Powell goes all the way back to his first term, and it would be a major move that could unsettle the global economy. Here's what we know about why he wants to do it anyway.

Powell chairs the Federal Reserve, an organization responsible for the nation's monetary policy, and perhaps most crucially, setting interest rates for the country. Powell's goal is to keep the economy humming along by balancing a desire for low inflation with a desire for low unemployment, and traditionally, chairs of the Fed have been largely independent from the influence of the White House, even though they are appointed by the president.

The reason for that independence is that you don't want the monetary policy to be set by a politician who is worried about the next election. The Fed chair should have the freedom to keep interest rates higher than the president wants, if they think that is what is best for the economy as a whole. If the president can set the interest rates directly, then they would never be raised, and we would face an inflationary crisis.

Trump wants to fire Powell precisely because of Powell's independence, and because he thinks that he could juice the economy by installing someone who is more willing to lower interest rates.

According to CBS, Trump said on July 16 that he had spoken with Republican lawmakers about the notion of firing him, and many of them said that it would be a good idea.

"I talked to them about the concept of firing him. I said, 'What do you think?' Almost all of them said I should. But I'm more conservative than they are," he explained.

Crucially, we don't actually know what would happen legally if Trump decided to try to fire Powell. Federal law says that Fed chairs can only be fired "for cause," meaning that Powell would have to do something wrong in order to be fired.

Of course, we don't know whether a court would actually stop Trump if he tried the maneuver, but firing Powell, especially if Trump was planning to replace him with a loyalist, could send major shockwaves through the global economy. Trump's short-term thinking has helped him win the presidency twice, but it might not be the best way to manage the U.S. economy.

Still, his decision to fire Powell is a frightening possibility, and one that could have broad ramifications. Trump's decision to fire Powell might be because he believes the economy could be working better, but you'd better not look at your 401K for a minute after he does it.