Lord of Finance vs King of Men

My bets on Powell vs Trump showdown

Source: Investopedia

For finance guys, central bankers are like gods. Their decisions, and most importantly their words, determine the fate of their positions. A simple “yes” can move entire markets. There is this whole aura created around their stance. It’s amusing how something so simple can have such a detrimental effect.

It is possible, because since the dawn of central banking, bankers were given political independence. They are nominated by the president, but POTUS has no power over them.

However, over the years there were bankers that aligned with the government and bakers that were openly defiant. In financial terms it’s called either fiscal dominance or monetary dominance. Either can be forced to some extent, but ultimately, at least in America, the government was always weary of pushing too hard.

Up until now. Since January 20th, Trump has been putting pressure on Jerome Powell to lower rates. From calling him names (apparently Trump’s favorite tool) to actually threatening to fire him.

Powell, as a proper lord of finance, is resisting the pressure for the time being. But can he do it till the end?

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