For most of 2025 President Donald Trump has been signaling his dissatisfaction with Federal Reserve Chairman Jerome Powell, and now there's speculation that the President has found Powell's replacement.
As the head of the most powerful monetary organization in America -- and perhaps the world -- a Federal Reserve chair wields a lot of political influence.
President George H. W. Bush once publicly mused that he lost the 1992 election because the federal reserve didn't act fast enough to get America out of a recession that made voters miserable, for example. A consultant for his opponent then came up with the slogan, "It's the economy, stupid!"
Clearly, President Trump would like to nominate to the Fed someone who will do what the President wants him or her to do, as would any US Chief Executive.
Now President Trump appears to have decided on White House adviser Kevin Hassett as Powell's replacement, but it's not certain, as "Money Man" Pat Shinn explains.
"The Federal Reserve was started in 1913 after the 1907 [economic] panic, and it is clearly designed to be an independent body.
"So the goal of the Fed is to have what I call a 'Goldilocks economy'. That's an economy that's not too hot, not too cold.
"The Federal Reserve wants 'full employment.' Now, that's not the same as zero unemployment...that's basically anyone who wants a job can get a job, so it may not be the job they really want but they can get a job.'
"The President nominates Federal Reserve board members and those are confirmed by the Senate -- and the US Supreme Court has weighed in and they didn't say it specifically earlier this year but they pretty much confirmed that the Fed is a separate, independent entity so the Fed has confirmed -- read between the lines -- the President cannot fire independent board members," Shinn adds.
The problem is that the President and the Fed want two different things.
"The President wants plentiful jobs, very low interest rates, and a rip-roaring economy, which of course are all inflationary," Shinn notes. "And presidents have tried to influence the fed going back to possibly Calvin Coolidge in the 1920s, Harry Truman in the 1940s, and in the 1960s Presidents Kennedy and Johnson, certainly Richard Nixon -- but Trump beats 'em all when he comes out like he did and said he thinks Fed President Powell is a 'moron'." Ironically it was President Trump who nominated Powell for Fed chair back in 2018.
"So it's kind of weird here, Powell's term as Fed chair is up in May 2026 but his term [in the less public role of] Fed governor isn't up till 2028. In most of these cases, when no longer renominated as Fed chair, the person will step down entirely and that's my guess, Powell will step down.
"But President Trump has taken the very unusual step of saying publicly that he will name Fed Chair Powell's replacement sometime before the end of this month.
"And the name that comes to the forefront is Kevin Hassett, and I think he gets the job," Shinn says.
"So Hassett aggressively cuts interest rates and the economy does well -- and you run the risk of it doing too, too well. They aggressively cut rates and fuel a bubble.," the longtime "Money Man" and KTRH stock market news anchor concludes.
The risk can be extreme if the Fed isn't independent because the Chairman has to balance employment, inflation, the influence of interest rates (which affect your bank account, credit card and bond interest rates) and the worldwide effects of Fed decisions, since the US dollar is the default monetary exchange most places in the world.
It's often a very tough balancing act.
Shinn says it's important to remember that the President and Fed are not on opposing sides. It's just that the Fed wants to engineer what Wall Street likes, a smooth, steady economy with low inflation while presidents usually want a fastidious economy in which you want to party like it's 1999.