The Struggle Between Trump and the Federal Reserve
Debt, Inflation, and the Power Struggle
1. Why is Trump Pressuring the Federal Reserve?
Debt Bomb Countdown: U.S. debt has reached $38.5 trillion, with daily interest payments of $1 billion; lowering interest rates could alleviate fiscal pressure.
Tariff War Backfires on the Economy: Tariffs on China have raised prices by 30%, consumer confidence has plummeted; Trump hopes to stimulate the economy by lowering rates, but this may exacerbate inflation.
Controlling the Federal Reserve: Trump threatens to replace Powell and even push for legal reforms to try to make the Federal Reserve obey the White House.
2. Why Does the Federal Reserve Insist on Not Lowering Rates?
Inflation Remains the Number One Enemy: Powell warns that lowering rates could repeat the stagflation crisis of the 1970s.
Policy Flip-Flopping Harms Decision-Making: Trump's “orders change daily,” the Federal Reserve chooses to wait and avoid being politically entangled.
Dollar Hegemony Must Not Be Undermined: If rates are lowered hastily, it may weaken global confidence in the dollar, leading to capital flight.
3. The Rationality of Both Parties' Logic
Trump: Short-term economic stimulus to cover up the negative impacts of the trade war, but this may lay the groundwork for greater risks.
Federal Reserve: Better to allow economic slowdown than to let inflation spiral out of control, maintaining long-term credibility of the dollar.
4. Tonight's Focus: How Will Powell “Walk the Tightrope”?
If he hints at lowering rates (dovish) → U.S. stocks surge, but the independence of the Federal Reserve is questioned.
If he insists on combating inflation (hawkish) → The dollar strengthens, but economic pressure intensifies.
Most Likely Outcome: Ambiguous statement, neither fully yielding nor provoking the market.
Conclusion: This struggle is not about right or wrong, but a contest between short-term political achievements and long-term stability, with ordinary people ultimately bearing the costs.
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