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#PersonalFinance, #InvestingForBeginners, #PassiveIncome, #MakeMoneyOnline, #SideHustleIdeas, #FinancialFreedom, #MoneyTips, #WealthBuilding, #OnlineBusiness, #StockMarketTips, #BudgetingTips, #MoneyMindset, #Investing2025, #FinanceUSA, #WealthFlow, Graham Stephan
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00:00What's up guys, it's Graham here. So I'll be honest, never in a million years did I expect
00:04to be sitting here making this video, but we have to talk about firing Jerome Powell.
00:08That's right, for the last few months we have heard non-stop rumors, threats,
00:12and inside knowledge about the potential firing of the head of the Federal Reserve
00:16for failing to cut interest rates. In fact, at the time I'm filming this video,
00:20CNBC was quoted as saying,
00:22the president asked lawmakers how they felt about firing the Fed chair.
00:25They expressed approval for firing him. The president indicated he likely will soon.
00:31So given how quickly all of this is beginning to unravel, we got to talk about the potential
00:35of this actually happening, the implications this could have throughout our entire economy,
00:39and what experts say is most likely going to happen next. Because without exaggeration,
00:44this single event could have consequences in a fallout unlike anything we've ever seen before.
00:49And if you don't understand what's going on, you're in for a world of trouble.
00:53Although before we go into this, and why Congress calls it imminent,
00:56if you appreciate unbiased, breaking news videos like this, where we just cover the facts for what
01:01they are, it would mean the world to me if you hit the like button or subscribe if you haven't
01:05done that already. It's totally free, it takes you a split second to do, and as a thank you for
01:09doing that, I will do my best to read and reply to as many of your comments as I can.
01:14So thanks so much, and also a big thank you to Incogni for sponsoring this video, but more in that later.
01:18All right, so in terms of firing Jerome Powell, and whether or not this is even a threat worth
01:22considering, we first have to talk about the Federal Reserve.
01:25On the most basic level, they're what's known as the central bank, whose entire job is to oversee
01:30our economy, regulate financial institutions, and control the supply of money that goes into
01:35and out of the system. Their priority over anything else is to make sure that the United States has a
01:41strong labor market, maintains maximum levels of stability, and operates in such a way that
01:46prevents prices from skyrocketing out of control. Or I guess more simply put, their entire job is to
01:52balance economic growth, with making sure that the price of eggs doesn't hit $10 a dozen.
01:57So how do they do this? Well, first, they monitor and manage the inflation rate. In this case,
02:02when inflation is low, meaning prices really aren't changing year to year, they could reduce
02:06interest rates, which makes it cheaper to borrow, and this helps boost spending and investment within
02:11the economy. But when inflation starts rising too quickly, or when borrowing starts seeming excessive,
02:16they could raise interest rates, which slows everything back down. Second, the Federal Reserve also
02:21regulates banking activity and ensures that they operate within a strict set of guidelines. And
02:26third, they'll also provide banking services and other policies to ensure that the market operates
02:31smoothly. This means if certain banks are having liquidity issues, the Fed could step in and bail them
02:36out. Essentially, the Federal Reserve is the backbone of our entire economy, and Jerome Powell is in the
02:42driver's seat behind the steering wheel directing our economy towards, hopefully, long-term growth.
02:47However, what makes this so unique is that the Federal Reserve is considered an independent agency,
02:53meaning they're not at the whims of political pressure when making policy decisions. And most
02:57importantly, their decisions do not need any approval from anybody in Congress. So why all of a sudden is
03:04there all this talk about firing Jerome Powell? Well, on the simplest level, it all comes down to
03:08interest rates. As of today, we've seen the fastest tightening cycle in history. But as I'm sure you would
03:14expect, this creates a problem, the national debt. The fact is, over the last five years,
03:19the United States has spent and borrowed an unsustainable amount of money. Trillions and
03:24trillions of dollars have been allocated to just about anything that you could think of. And when
03:29interest rates are down at zero percent, making those payments becomes very easy. But when the rates
03:34rise to our recent record highs, as you could see, all of a sudden it becomes quite expensive to
03:39maintain. And this is where the real problem begins. We're at a point where the national debt is
03:44becoming so expensive that we either have to print more money to pay for it, which devalues our
03:50currency, or lower interest rates to reduce the burden of our national debt, but floods the economy
03:55with more cheap money, which threatens to reignite inflation. Really, either way, the scenario is not
04:00looking good. And it's clear from the data that something has to be done. So let's talk about the
04:05benefits of lowering interest rates. One, wholesale inflation is going down. This is what's known as
04:11the producer price index, or basically what businesses ended up paying that eventually gets
04:15passed on to the consumer. And last month, it was found that there was no increase whatsoever,
04:20suggesting that inflation's not getting worse in spite of tariffs. Two, Trump says that a rate cut
04:25would save the government almost a trillion dollars a year. In this case, interest rates have a direct
04:30impact on what we pay for the national debt. So by lowering interest rates, that would save us a
04:35lot of money. And three, some people argue that for the last year, inflation is pretty much bottomed
04:40out. As you could see, inflation has remained below 3% for the last 12 months. And even though
04:45we've seen a bit of an increase, in the big picture, it's really not that bad. So Trump has argued that
04:51we should preemptively cut interest rates today before it's too late. However, many people disagree with
04:56the sentiment and believe that interest rates should remain high. Like in this case, even though
05:01inflation is somewhat low, it's beginning to pick back up again. For example, inflation rose more
05:06than 0.3% month over month, which if that continues, would put us at an inflation rate back above 3%,
05:12a level we haven't seen since 2023. Two, the labor market is still really strong. Typically, the Federal
05:18Reserve lowers interest rates in response to higher unemployment. But that is currently near a record low.
05:24And three, we have tariff concerns. Jerome Powell said it himself, they would have lowered interest
05:29rates this year, but tariff uncertainty is putting them on edge. And number four, political pressure
05:33doesn't seem to work on Jerome Powell. Like here's the thing that most people don't realize,
05:38Jerome Powell is not the only one unilaterally deciding whether or not to raise or lower interest
05:43rates. Instead, it's a committee of 12 people who come to a decision together. Now sure, I don't doubt
05:48that he has some influence on the group of people, but it's not like he could just go and say,
05:52Hey guys, I know I said this morning that we weren't going to lower interest rates,
05:55but something just changed and now we're going to lower them all of a sudden.
05:59Anyway, in terms of what's likely to happen next and the impact this could have on our entire
06:02economy, even if Jerome Powell voluntarily resigns, here's the part that you came for.
06:07Because honestly, it's unlike anything I've ever expected before and you need to know how to
06:12prepare. Although before we go into that, just like it's important to hear about what's going on
06:15in the market, it's equally as important to understand how to protect your data from falling into the
06:20wrong hands. For example, I don't know about you, but for me, I've been getting a ton of scam emails
06:25and text messages about owing money or being charged with fake receipts to get me to reach
06:29out for a refund. And the crazy thing is the only way scammers know who to target is because your
06:34personal information is floating around on the internet thanks to data brokers who collect
06:38and sell your information without you even knowing. Thankfully though, it doesn't have to be this
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07:57much, and now let's get back to the video. All right, so in terms of firing Jerome Powell and whether
08:02or not Trump has the authority to actually go through with it, here's where things get very interesting,
08:07because believe it or not, there are circumstances where the president can fire the Federal Reserve.
08:13See, by law, the president has the right to remove Federal Reserve board members for cause,
08:17which is generally interpreted as inefficiency, neglect of duty, or malfeasance. However,
08:23when you really get down to it, it is unclear whether or not this is the case for the chair of
08:27the Federal Reserve instead of just the board members. And in this case, that is Jerome Powell.
08:32For example, a Harvard law professor agreed that it really just comes down to how the text is
08:36interpreted. In this law, the for cause provision was specifically written for board members,
08:41and it could be argued that it may or may not apply to Jerome Powell, the chair. Now from Powell's
08:46perspective, he's openly said that Trump is not permitted to fire him under law. And more recently,
08:51the Supreme Court said that the relationship between the president and the Federal Reserve is
08:56different from that of other independent agencies, signaling that Jerome Powell is legally protected
09:01from being removed by President Donald Trump. All of this means that legally, Donald Trump cannot fire
09:06Jerome Powell purely out of a policy dispute. It would lead to a historic legal battle. However,
09:12that doesn't mean that he can't pressure him into voluntarily resigning.
09:16So here's where things get really interesting. In theory, Trump could make Jerome Powell's life so
09:21difficult that he voluntarily resigns and gives up his position in favor of someone else who Trump
09:27appoints. And believe it or not, this has happened before. In 1951, President Truman disagreed with the Fed chair at the
09:34time, Thomas McCabe, for keeping interest rates low to finance the Korean War. And as the saying goes,
09:39McCabe was informed that his services were no longer satisfactory. And he quit. In this case,
09:44President Truman didn't even need to fire him. A resignation is all it takes, and there you go,
09:50the job is done. And this sets the tone for even more political pressure in the future.
09:54For example, in 1972, President Nixon pressured the Fed chair to keep interest rates low prior to the
10:00election, which was later cited as having contributed to higher inflation. And don't forget, in 2018,
10:06Trump pressured Jerome Powell to lower interest rates, calling him clueless. But those lower rates
10:11never came to fruition. Today, however, it's becoming clear that a different strategy is at play.
10:16Instead of firing Jerome Powell over policy disagreements, Trump's beginning to accuse him of
10:22mismanaging the U.S. Central Bank's $2.5 billion renovation project. Or as Trump says,
10:27when you spent $2.5 billion on really a renovation, I think it's really disgraceful.
10:32Later going on to say that he's never saw a Fed chair as someone who needed a palace.
10:36That's why, unless there's serious legal precedent, Trump cannot fire the head of the Federal Reserve
10:42over policy disagreements. But he can make his life so difficult that he eventually resigns.
10:49At which point, if that happens, you better brace yourself for a market sell-off.
10:54Look, I'm going to be honest. It's largely believed that if the Federal Reserve gives the appearance of
10:58losing their independence, it would undermine America's financial markets, it would cause
11:03Treasury rates to spike back up, and the stock market would see an unprecedented sell-off due to
11:08all the uncertainty. Why? Well, if the Federal Reserve is seen as becoming politicized, investors
11:14would demand a higher risk premium on U.S. Treasuries. After all, the United States Federal Reserve
11:19would no longer be seen as an independent agency, and lowering interest rates would undermine the
11:24financial stability of the markets long-term. Not to mention, if there's too much easy money
11:28within the markets, some people believe that would lead to a devaluation of our currency,
11:33causing other countries to begin selling it off. On top of that, if inflation expectations rise from
11:38printing more money, chances are spending will rise right alongside with it, causing prices to
11:43potentially increase. And monetary policy will begin to decrease substantially if we see a pattern
11:48of lowering interest rates just for the sake of paying less on the national debt. Now, in the very,
11:53very short term, there is a chance that the stock market could begin to rally on the promise of
11:58lower interest rates. But long term, any price increase we see will likely be drowned out by the
12:02negative consequences that we've already discussed. So in terms of what I think is going to happen,
12:06and the probability of Jerome Powell actually resigning or being fired, here's my honest take on things.
12:12Personally, I think it's obvious that Trump is the type of person to test the waters by
12:16making a wild statement, seeing how the market reacts, and then making a decision from there.
12:22To me, it's just so apparent that he's putting a lot of pressure on Jerome Powell to lower interest
12:26rates, he's seeing how the markets rise or fall with the statements, and he's going to do what's
12:30in the short-term best interest of our economy, because he probably sees that as a reflection of
12:35his time in office. For example, the market suddenly began to fall on rumors that Trump was close to
12:40firing Jerome Powell, but as soon as he said he wasn't going to fire him, the markets went back
12:44up. This is super clear that he's seeing what the public reaction would be, and the markets have
12:49spoken. They think that firing Jerome Powell would be a bad idea. However, I don't doubt that there is
12:55the opportunity for Trump to put significant pressure on Jerome Powell to the point where
12:59he either complies and lowers interest rates, or he voluntarily resigns, especially if Jerome Powell
13:06isn't ready for a legal battle over the $2.5 billion remodel. To me, I'd put the chance of him
13:10actually firing Jerome Powell at less than 1%, since, I mean, let's be real, anything can happen.
13:17Then from there, I'd give it maybe a 19% chance of him pressuring Jerome Powell enough so that he
13:23eventually complies and lowers interest rates, even though he doesn't want to. And then I'd give it
13:28about an 80% chance that nothing really happens out of the ordinary. Like, keep in mind, Jerome Powell's
13:34current term is only scheduled to run through May of 2026, so making such a big wave with less than
13:40a year to go doesn't make that much sense from an optics standpoint. I just think we'll continue to
13:45see more pressure, and it's whether or not Jerome Powell caves in. In 2018, he didn't. But yeah, if
13:51Trump is able to make his life a living hell, then we'll have to wait and see what happens. But then
13:56again, I'm just a random dude making videos in a half-converted garage, and I have no idea what on
14:01earth I'm talking about. So if you agree or disagree with me, let me know down below in
14:06the comments section, and I will do my best to read and reply to as many of you as I can.
14:10And as a huge thank you for everyone who's made it to this point in the video, here's a picture of
14:15my kitten Gigi. So thank you so much again for watching, and until next time.
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