Trump's Political Intervention in the Federal Reserve Could Become Reality, Boosting Inflation

BlockBeats News, January 10th, market analyst Wilcox stated that Trump's intervention in the Fed may lead to higher inflation. Trump has selected Stephen Miran as the Chairman of the Economic Advisory Committee and Daniel Katz as the Director of the Treasury Office. The two have jointly developed a comprehensive plan to reform the Federal Reserve system, granting the President and Congress greater political control over the Fed.

One key factor that currently protects the Fed from political interference is that the President can only "for cause" remove Fed governors and does not have the power to dismiss the Chairman. However, Katz and Miran will empower the President to dismiss both governors and the Chairman. Additionally, they will reduce the term of Fed governors from 14 years to 8 years, aligning each term to start from the date of confirmation, allowing many or all terms to expire simultaneously. Furthermore, while Congress currently authorizes the Fed to set its own budget and fund its operations from its securities earnings, Katz and Miran propose to incorporate it into the appropriations process, with Congress approving the Fed's budget once every five years. A large body of academic literature and U.S. historical experience suggest that increasing political control often leads to more severe inflation. (Jinshi)