I’m coming up on lecturing on Fed independence and time consistency etc. President Trump continues to provide (depressingly) many episodes to discuss. No dearth of “current events” topics this term…
What happened when Trump uttered these words? The probability of Powell fired within the year rose by 3 ppts on both Kalshi and Polymarkets (the last week of data is shown in the three graphs below, all retrieved approx 2:40pm CT):
This shows how mad Trump is. Imagine the market machinations if Powell was replaced by a Trump guy. The bond market would go crazy and the $US plummet!
Would the fed board be able to resist, or would the nee chair have complete control over fed policy?