TechFlow news, January 10 — According to Jinshi Data, market analyst Wilcox said that Trump's intervention in the Federal Reserve could lead to higher inflation. Trump has selected Stephen Miran as chair of the Council of Economic Advisers and Daniel Katz as Director of the Treasury Department's Office of Management. Together, the two have developed a comprehensive plan to reform the Federal Reserve system, which would grant the president and Congress greater political control over the Fed.
One key factor currently protecting the Federal Reserve from political interference is that the president can only remove Fed governors "for cause," with no authority to dismiss the chair. However, Katz and Miran propose giving the president power to fire both governors and the chair. Second, they aim to reduce the term of Fed governors from 14 years to 8 years, with each term beginning on the date the member is confirmed—potentially causing many or all terms to expire simultaneously. Additionally, while Congress currently authorizes the Fed to set its own budget and fund its operations through earnings from its securities holdings, Katz and Miran suggest placing the Fed’s budget under the appropriations process, requiring congressional approval every five years. A substantial body of academic literature and U.S. historical experience indicates that increased political control tends to result in more severe inflation.
