Trump vs Da Fed 2.0

RE · Jan 25, 2025, 02:12 AM

While putting himself at odds with NATO over Denmark and Greenland will create interesting foreign policy problems, this is nothing compared to doing battle with Da Fed. As we know, the Federal Reserve isn't really a goobermint agency, it's a privately held corporation, owned by the TBTF banks. Jp Morgan, Goldman Sachs, Citibank, BoA along with International Banks like Lloyds, the House of Rothschild, Credit Suisse also have interest. They are supposed to be independent, which means El Trumpo can't ORDER the Chairman to lower interest rates. He can fire him, but then he has to get a new one confirmed and the nominations are made by the member banks.

The other tactic if the Chairman won't kowtow to His Trumpness would be to try to get the Federal Reserve Act revoked and decertify da Fed. That however is highly unlikely and DANGEROUS, in two ways. First is that the financial markets would go bonkers, the 2^nd is the JFK outcome. One of the main theories behind the JFK assassination was that he was planning on getting rid of the fed after the Cuban Missile Crisis.

Even if Da Fed kowtows and drops a few basis points off the federal funds rate, they really don't have complete control because the Bond Vigilantes are reacting to the high debt load everyone has, and that lowers price. Price goes down, yield goes up.

We'll have to see how the financial markets react to these first little parries. Break out the popcorn.

https://www.axios.com/2025/01/24/trump-vs-the-fed-20

RE

RE · May 14, 2026, 11:40 PM

MARKETWATCH.COM • 2026-05-14

The bond market is already hiking rates as Kevin Warsh takes over as Fed’s new chair

“This is the modern bond vigilante,” said Ahn. “They don’t burn down the Fed’s credibility with one yield spike. They starve its optionality by lifting the entire curve above the policy band.” There has long been a perception that new Fed chairs are swiftly tested by turmoil in markets shortly after taking the reins, according to Deutsche Bank’s Jim Reid, who noted the actual data on the topic has been mixed.

The Bond Vigilantes awaken!

Even with the rising rates on USTs though, I don't see much likelihood that Inflation will respond and cool anytime too soon. Input prices for manufacturers aren't going down until Hormuz is at least partially settled and demand destruction in Food and Energy takes a while because the consumption is generally fairly inelastic. However, more flexible areas of the economy like vacation travel and clothing purchases will take an immediate hit that will depress the labor market. So, recession & stagflation likely to take hold in the 3rd or 4th quarter.

Kevin can't do much about this, but he is guaranteed to be Chump's Whipping Boy. Since His Trumpness theoretically can't fire him, it will be interesting to see how he holds up under regular abuse on social media. You couldn't pay me enough for that job.

RE