Will Trump End the Fed or Put Himself in Charge of It?

"At this point, it sounds like Trump wants to be a one-man FOMC..."

By George Ford Smith, Mises Institute

On February 18, 2025 President Trump issued an executive order titled, “Ensuring Accountability for all Agencies,” in which he says,

…previous administrations have allowed so-called “independent regulatory agencies” to operate with minimal Presidential supervision. These regulatory agencies currently exercise substantial executive authority without sufficient accountability to the President, and through him, to the American people.

This is a good idea. As Americans, ruled by an elite in Washington, we would really like to know who’s doing what to whom, why, and for how long they’ve been doing it. Most importantly, where they’re getting the money to do it. Money—however thieving means the bureaucrats can get it—is their god, without which they wouldn’t exist.

The problems are enormous for such an undertaking, the biggest one being the issue of trust. Who are you going to believe? Even if the appointees in Trump’s administration are trustworthy individuals, by virtue of their appointments they’ve been coaxed into a corrupt social apparatus. It is corrupt because it is funded entirely on stolen wealth, with the theft not merely getting a pass but hailed far and wide as the bedrock of civilization.

Arguments over taxation almost always center on rates and who should pay, never on taxes as such. But what are they exactly? Taxes are “a sum of money demanded by a government . . .” (infoplease.com). At least they’re honest; taxes are demands. But then we find this: Taxes are “a contribution for the support of a government . . .” (ahdictionary.com). A contribution. As the former Third Reich minister of propaganda once remarked, “A lie told once remains a lie but a lie told a thousand times becomes the truth.”

The bigger lie is the one not told—the inflation tax—because it is still largely a mystery to the public.

As it stands, by an implicit moral code of Western Civilization found in the Bible and in the works of Aquinas, Locke, Adam Smith, Paine, Rothbard, and many others, government, by its nature, is and always has been inimical to human well-being.

Thus, in ensuring accountability, Trump’s team is doing the best it can in an environment hostile not only to him personally but to the principles of good faith and trust. In reading the executive order we find that,

…all executive departments and agencies, including so-called independent agencies, shall submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President before publication in the Federal Register.

Superficially, it sounds good but wait—it said “all.” Does he mean it? “This order shall not apply to the Board of Governors of the Federal Reserve System or to the Federal Open Market Committee in its conduct of monetary policy.” We think of the president as the Chief Executive, but a hands-off-the-Fed approach tells us otherwise.

For the moment the Fed might be untouchable. But its creator was the state, and all it takes is courage to do away with it, which is why it’s been wreaking havoc for over a century.

According to a March 6, 2025 article in International Banker, Trump’s allies have devised a plan that would oust current Fed chair Jerome Powell before his term is up in 2026 and,

…give the US president a role in monetary-policy making. The new chair would regularly seek Trump’s views on interest-rate policy and then negotiate with the FOMC to steer policy on the president’s behalf. This would be a radical change from the current practice whereby the US president is not involved in monetary policy and is not even expected to comment on the decisions made by the FOMC.

Given Trump’s personality—variously described as impulsive, charismatic, and resilient—it’s almost a given that a plan such as this would effectively make him the Chairman of the FOMC. Trump wants lower interest rates to go “hand-in-hand” with his tariffs, whether the free market wants them or not.

As of late February, “Interest-rate futures contracts are now pricing in a more than 70% chance that the Fed will reduce its policy rate by a quarter of a percentage point at its June meeting, to a range of 4.00%-4.25%, and cut it again as soon as September.” In his address to Congress on March 4, 2025 Trump was happy about the current trend, saying, “And today, interest rates took a beautiful drop. Big, beautiful drop. It’s about time.”

Apparently, Trump is unaware of the Austrian School position that “easy money” causes booms that inevitably show up in busts, such as the two major disasters (1930s and 2008), and that no learned bureaucracy such as the FOMC or even Trump personally can know what the interest rate should be, which is why it should be left to market forces exclusively.

Meanwhile, two Republican politicians—Utah Sen. Mike Lee and Kentucky Rep. Thomas Massie—are introducing legislation on March 6, 2025 to “dissolve the Board of Governors of the Federal Reserve System and each Federal Reserve bank with a one-year timeframe,” and repeal the Federal Reserve Act of 1913. Said Mike Lee:

The Federal Reserve has not only failed to achieve its mandate, it has become an economic manipulator, directly contributing to the financial instability many Americans face today. We need to protect our economic future, end the monetization of federal debt that fuels unchecked federal spending, and put American money on solid ground. We need to end the Fed.

At this point, it sounds like Trump wants to be a one-man FOMC while significant others who supported him want to do away with the Fed altogether. Is it a fight between tariffs/low interest rates versus free markets? Or is Trump clever enough to get one now and the other later?

In 1962, Mises wrote Planning for Freedom—a collection of 12 essays and addresses demonstrating the futility of government interference with the market. Let’s hope someone sends a copy to Trump.

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