Potential Consequences and Final Outcomes for Trump's Economic Policies
In recent days, the economic stability of the United States has come under scrutiny, with President Donald Trump's policies and actions raising concerns about potential economic collapses.
The latest development involves Trump's reported study of the possibility of firing Federal Reserve Chairman Jerome Powell immediately. This move, if executed, could mark a significant shift in the tradition of Fed autonomy, established over 112 years ago. Trump has already announced his intention to dismiss Federal Reserve Governor Lisa Cook, citing alleged irregularities related to mortgage deals. This decision, if carried out, could undermine US economic stability and threaten the independence of the Federal Reserve.
Trump's economic policies, particularly his tariffs, have been a source of concern for many economists. His tariffs, higher than promised during his campaign, with a focus on Mexico and Canada, have been linked to deindustrialization, a macroeconomic slowdown, possibly higher inflation, and continued capital flight. These factors could lead to catastrophic losses for many people in the U.S. and make the U.S. national debt less sustainable due to capital flight and higher U.S. borrowing costs.
Extreme scenarios of hyperinflation and/or sovereign default have become less unlikely due to Trump's policies. If Trump continues pushing in the direction he's been pushing, hyperinflation and/or sovereign default could occur, with devastating consequences for the American economy.
Trump has expressed a desire to remove Powell and has stated that he could force out Powell if necessary. There have been suggestions that Trump might try to exert pressure on the Fed to print money to lower long-term interest rates, which could lead to spiraling inflation.
Powell, in a speech, stated that the Fed must prevent tariffs from causing a persistent rise in inflation. However, Trump's economist has suggested that the Fed under Powell has acted politically to benefit Democrats, a claim that Powell has not responded to publicly.
Policy uncertainty and divisions within Trump's administration have exceeded expectations. The end of central bank independence could lead to economic collapses similar to those in developing countries. Trump's second term has proven to be worse than his first term in office and worse than most expected during his campaign.
It is crucial for the stability of the American economy that the independence of the Federal Reserve is maintained and that economic policies are based on sound economic principles rather than political whims. The potential firing of Powell and the end of central bank independence could have far-reaching and devastating consequences for the American people.
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