Tuesday, July 15, 2025

'both the currency and the bond market can collapse' If Trump Fires Powell

If President Trump gets his way and removes Jerome Powell as chairman of the U.S. Federal Reserve, the market reaction would be swift and brutal, Deutsche Bank's George Saravelos argues.

Posted by snoofy at 04:33 PM | 17 COMMENTS | permalink

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It hasn't been an easy start to 2025 for Jerome Powell. Unfortunately for the Fed chair, the second half of the year is likely to be even tougher.

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-- Business Insider (@businessinsider.com) Jul 13, 2025 at 5:31 AM

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The article continues,

Saravelos said a removal of Powell would be far worse than President Nixon's imposition of Arthur Burns on the Fed in the 1970s. Nixon and Burns, like Trump, were fixated on lowering interest rates -- and thus fueled the stagflation of that decade.

Today, "the U.S. is running a much larger twin deficit and negative foreign asset position, capital markets are far more open and disproportionately skewed towards U.S. asset allocation, and the global exchange rate system is free-floating as opposed to fixed. All these ingredients argue for significantly greater global disruption than in the 1970s," Saravelos warned.

The first warning sign would be a sharp fall in the value of the U.S. dollar. The greenback has already fallen 9.75% this year, its worst first-half performance in years.

#1 | Posted by snoofy at 2025-07-14 11:02 PM

Every action Trump has taken since the beginning of his second presidency has both hurt this nation and the strength of the dollar.

That seems to be his only objective.

#2 | Posted by ClownShack at 2025-07-14 11:06 PM

That seems to be his only objective.

That, along with lining his own pockets.

#3 | Posted by REDIAL at 2025-07-14 11:34 PM

He's been doing a great job of that too.

#4 | Posted by ClownShack at 2025-07-14 11:39 PM

Yep.

Forcing out Powell will indicate that the Fed is no longer independent of the US Government, and in this case under the thumb of an incompetent, mentally ill 79-year old who has little inkling of economics, capital markets and the now-faltering position of the US economy. Powell out and some lackey in will confirm to investors that Treasury securities are no longer a safe haven, that interest rates may change on a whim, and that the new Fed chair may well try to ignore the actions and advice of the Federal Open Markets Committee at the Fed. All this adds up to a sudden, permanent spike in interest rates, from Treasury securities to the lowest rated junk bonds, and including interest rates on credit cards. "Hammer time" only begins to describe what could well happen.

El Rey Dotardo II open seeks to surround himself with boot lickers and sycophants who (in Trump's opinion) look good on television. No other qualifications are necessary. If a new Fed chair without the serious experience and intellect necessary for the job is presented, markets will react badly.

In my opinion Jay Powell has done a great job steering the US economy through the past 5+ years. Trump is close to throwing all of that work into the ash heap, and could come close to setting off an immediate recession, with trillions in debt no longer of interest to investors worldwide.

Pushing out Powell will have very bad consequences for the US...

#5 | Posted by catdog at 2025-07-15 05:05 PM

Both the currency and the bond market will collapse if Trump fires Powell?

Then Mr. Powel is a goner.

#6 | Posted by Zed at 2025-07-15 05:14 PM

"The currency and the bond market collapsing is good, actually, because..." - MAGA

#7 | Posted by hamburglar at 2025-07-15 06:16 PM

He's the only guardrail left-currency has already dropped 10% since Jan. 1. If Powell goes, it'll be survival of the fittest time.

#8 | Posted by Yodagirl at 2025-07-15 06:56 PM

He's the only guardrail left-currency has already dropped 10% since Jan. 1. If Powell goes, it'll be survival of the fittest time.

Posted by Yodagirl at 2025-07-15 06:56 PM | Reply

We're so screwed if he loses his job. These are devastating times.

#9 | Posted by LauraMohr at 2025-07-15 07:16 PM

Amen to that Laura.

#10 | Posted by Yodagirl at 2025-07-16 10:04 AM

Oh ---- yeah! That would be awesome! When America's economy tanks artificially, it means my networth goes up significantly because I know how to invest and use my money. Also, artificial recessions have been the biggest boons to America's economy in the past more than any other type of recession/depression.

I know it's sexy to spread doom and gloom purely based on partisan hate and current events and I know that's all this is but, once someone gives up that kind of slave mentality, their eyes open to a whole new world of financial freedom.

#11 | Posted by humtake at 2025-07-16 11:37 AM

Powell is a hack. He said he wasn't going to lower rates fearing massive inflation after the tariffs were announced. So when no such inflation happened why didn't he lower the rates? He lowered the rates in Sept before the election though. That was a questionable move and certainly seemed political.

#12 | Posted by fishpaw at 2025-07-16 02:33 PM

But see, he feels personal animus toward Powell, who doesn't bow down to him like every other puss. Retribution against Powell is more important than boring things like the currency and the bond market.

#13 | Posted by cbob at 2025-07-16 03:57 PM

the market reaction would be swift and brutal

Posted by snoofy

I've stopped guessing what Trumps actions may do to the markets. The uncertainty is just to overwhelming.

I will say though... nothing could bring about violent revolution faster than destroying the retirement funds of millions of armed boomers and Gen X'rs. It's hard for me to imagine anything more dangerous to the government than a huge number of retirement aged folks who have nothing left to lose.

#14 | Posted by Whatsleft at 2025-07-17 01:02 PM


He's the only guardrail left-currency has already dropped 10% since Jan. 1. If Powell goes, it'll be survival of the fittest time.
#8 | POSTED BY YODAGIRL

Here's the issue. I am not saying I know the answer

BUT Powell is keeping interest high, when the US is about to try to refinance 1/3 of all its debt. The difference between 4.5% and 1.5% is STAGGERING.

Using the current interest rate on that debt will destroy the US.

#15 | Posted by oneironaut at 2025-07-17 01:30 PM

@#13 ... But see, he feels personal animus toward Powell, who doesn't bow down to him like every other puss. Retribution against Powell is more important than boring things like the currency and the bond market. ...

Chmn Powell's and the Fed's job, as assigned by Congress, is to monitor and adjust interest rates to protect jobs and keep inflation around 2%.

When Pres Trump talked about the high interest rate on the federal deficit, maybe he should have been more concerned about it instead of increasing the Federal deficit with his bill that gave tax cuts to the wealthy?

But the interest paid on the Federal deficit is not one of the two things Congress told the Fed to monitor and adjust interest rates for.

#16 | Posted by LampLighter at 2025-07-17 03:33 PM

"I am not saying I know the answer"

Duh?

I am saying you don't have a freakin clue.

Trumpy should have thought about the STAGGERING interest costs when he increased the deficit by 3-4 TRILLION dollars.

#17 | Posted by donnerboy at 2025-07-17 03:49 PM

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