Meet FED’s Powell, Le Miserable

Letter to Romans: No. 47 has long been begging the FED chair to either lower interest rates or commit professional harakiri. Powell has always reacted with a yawn. It took President Trump’s DOJ to issue a criminal subpoena to turn a usually stoic Powell into a tearful Jerome Valjean.

Finding his big boy pants, the FED Chair reacted to the threat of being indicted by issuing a misty-eyed message saying that he’d resign over his prostrate body. As if stunned, Mr. Trump swore he knew nothing about the DOJ’s action. A cynical WSJ still urged the President to “fire” those responsible for it. Among other concerns, even “some Trump allies and officials worry that the Justice Department’s criminal investigation into Chair Powell” … over cost overruns in a FED building rehab project, no less … “could imperil Trump’s nominees in the Senate & unnerve financial markets.”

The dramatic stage, then, could not have been better laid by novelist Victor Hugo. Never mind that the only thing that has really happened is an “investigation” into Powell’s role in allegedly overspending in the multi-billion-dollar rehab effort. And, as numerous legal commentators have already noted, any resulting indictment would not only have to swim against legal precedent but common sense. First, if the idea was to put even more pressure on Powell to either lower rates significantly more than in recent months or resign, his term as chair ends in 4 months anyway. And second, while FED chair, he only has one vote on the board and is hardly the only member fearing inflation more than high interest rates. The coup de gras? Even after his term as chair ends in mid-May, he (and his vote) could stay on the board as an ordinary member until early 2028. Surely, DOJ can’t/won’t “criminally investigate” the entire FED board? So, this drama is far from playing out. How many pages was Hugo’s masterpiece, Les Miserable?

Davd Soul