If the Fed Chair must agree with the president to keep their job, do we still have an independent central bank, or just a monetary arm of whoever’s in power?
Whatever you think about the Fed’s existence or current policy, this creates a specific failure mode: rate decisions driven by a political scoreboard, and dissenters disqualified. If the goal is stable markets, the mechanism is credible institutions with clear mandates, not personal loyalty tests.
Trump’s recent post lays out what he calls THE TRUMP RULE: lower interest rates if the market is doing well, and lift rates later to handle “potential” inflation. He frames this as a response to the idea that “good news” makes markets flat or down because people expect rates to rise. The message ends with: “Anybody that disagrees with me will never be the Fed Chairman!”
The ProblemThe Problem
If investors believe monetary policy is being used to juice asset prices in lieu of discipline, inflation expectations rise (“we’ll fix it later” is cheaper than discipline now) → long-term yields rise to price political risk → markets enforce the discipline (often painfully) → you can get the opposite of what’s promised: tighter financial conditions and worse volatility.
Yes, “good news can be bad news” when it shifts rate expectations. That’s real. But is the fix turning the Fed into a political loyalty machine that punishes dissent?
The “Abolish the Fed” ResponseThe “Abolish the Fed” Response
I get it. If an institution can be captured, remove it. But the power doesn’t disappear; it relocates. Abolish an independent central bank and you move monetary policy directly under elected officials (Treasury/White House). That makes this dynamic more likely: policy tuned to rallies, loyalty tests, and “we’ll deal with inflation later.”
Bottom LineBottom Line
What’s the limiting principle? If disagreement disqualifies you, then instead of independence we have politics with a printing press.
Even if you hate the Fed: what replaces it that prevents “reward success, punish dissent” from becoming the rule?
Source: Trump’s Truth Social post (Dec 23, 2025)
https://truthsocial.com/@realDonaldTrump/posts/115770165868454573