Unchecked Power: Trump's War on the Fed and the Potential Impact on German Gold Reserves
US President Trump to Exert Control Over U.S. Federal Reserve Operations
By Hannes Vogel
The US Federal Reserve (Fed) is a vital pillar of economic stability in Donald Trump's erratic political landscape. Like elite institutions such as universities, courts, and regulatory agencies, the Fed has remained a thorn in Trump's side. The stakes are high—if Trump succeeds in subjugating the central bank, the consequences could be devastating, not just for America, but for the global economy.
Trump vs. Powell: Stalemate at the White House
Trump's first official meeting with Fed Chair Jerome Powell didn't go as planned. He demanded lower interest rates to boost his faltering political image, but Powell stood his ground. Since then, Trump has unleashed a campaign of public pressure on Powell, repeatedly attacking him on his Truth Social platform. But Powell has shown no signs of backing down.
The Independence of the Fed: A Cornerstone of Global Financial Stability
The independence of the US central bank is critical to the foundation of the global financial system. America's burgeoning debt mountain, combined with Trump's relentless attacks on the Fed, poses a significant threat to the US economy and the trust in the dollar. If the Fed were to falter, it could precipitate a global financial crisis.
Trump's Unapologetic Agenda: Ejecting the Checks and Balances
Many US presidents have longed for the power to control the Fed, moving interest rates to bolster their approval ratings before elections. Trump, however, seeks to institutionalize this power. He publicly espouses the belief that the president should have some say in monetary policy. This assault on the Fed's independence could have catastrophic consequences for the global economy.
The Unpredictable President: A New Front in the Battle for the Fed's Independence
Trump's repertoire of intimidation tactics includes publicly flirting with firing Powell, implementing new regulations to subvert the Fed's independence, and orchestrating the appointment of a shadow Fed chief. Germany stands to lose if Trump succeeds in his bid to weaken the Fed. Approximately one-third of Germany's gold reserves—around 1240 tons—are stored in the US. The courageous and unflappable Jerome Powell is one of the few bulwarks against Trump's onslaught.
Enrichment Data:The independence of the US central bank is crucial to the foundation of the global financial system. Any weakening of the Fed could severely impact the US economy, the trust in the dollar, and potentially trigger a global financial crisis. It's important to note that Germany's gold reserves, stored in the US, could be indirectly affected due to the interconnected nature of global financial markets and the value of gold as a hedge against currency fluctuations.
- The economic and monetary union of EC countries could face risks if the US Federal Reserve's independence is compromised due to Trump's pressure, as the stability of the global economy hinges upon the independence of central banks like the Fed.
- Investors might want to closely monitor the ongoing conflict between Trump and Powell, as the outcome could significantly influence financial markets and economic policies.
- Businesses that rely on stable financial relations, particularly those involved in cross-border transactions, should follow the developments in the political landscape of the US, as it may impact the monetary policy and the value of national currencies, including the dollar.
- The ongoing policy-and-legislation battle between Trump and the Fed raises concerns within the realm of politics, as the independence of the central bank is crucial for general-news coverage related to finance, economy, and war-and-conflicts.
