Deck the Halls with Pink Slips

Good Afternoon,

The Holiday Season is supposed to be a season of giving and generosity, but according to reports from Reuters, the President is considering firing Fed Chairman Powell. This has been a negative week for news and this announcement doesn't make it any better. During this week the following things happened:

1. The major stock market indices (Dow Jones Industrial Average and S&P 500) continued their slide, creating the possibility that we will have the worst December since 1931 (The Great Depression)

2. The Federal Reserve raised interest rates another 25 basis points and signaled that they would do two rate raises in 2019

3. The Government ended the week with a partial shut-down because of the inability to pass a new spending budget

While none of these events are positive, they are bumps in the road. On the other hand, the discussion of possibly firing the Fed Chairman should raise some eyebrows. The Federal Reserve is apart of the Government but is supposed to be an independent branch. The last time we had a Federal Reserve Chairman that was not independent of the President was around 1971 under Richard Nixon. During that time Nixon demanded then-Fed Chairman Arthur Burns to flood the economy with money which helped him win the 1972 election, but it took almost a decade to get price inflation under control.

The President did mention the possibility of firing Fed Chairman Powell in September of this year, and with his mentioning this idea again after rates have been raised is a negative signal not only for the markets but the economy as a whole. History might not repeat itself, but it does rhyme. We know what happened to Nixon but very little is ever said about the impact it had on the economy. The damage done by Executive Branch having influence over the Federal Reserve can have disastrous implications. This is not the gift that anyone wants.

#financialliteracy #reuters #trump #federalreserve #dowjones #sp500 #economy #stockmarket #inflation #governmentshutdown #greatdepression #interestrates #financialfloyd #phillyfinance


https://www.reuters.com/article/us-usa-trump-fed/trump-has-discussed-firing-federal-reserve-chairman-powell-bloomberg-idUSKCN1OL050



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