Trump Could Cross An Economic Red Line For Wall Street As Markets Tank

President Donald Trump appears to be flirting with a red line for Wall Street as markets continue to tumble over economic uncertainty mainly derived from his tariffs: forcing the removal of Federal Reserve Chair Jerome Powell, affecting the central bank's independence.

Trump took a new jab at Powell on Monday, saying "'Preemptive Cuts' in Interest Rates are being called for by many."

"With Energy Costs way down, food prices (including Biden's egg disaster!) substantially lower, and most other "things" trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already "lowered" seven times. Powell has always been "To Late," except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?" Trump added.

Trump is actually whether he can dismiss Powell, National Economic Council Director Kevin Hassett said last week. He also suggested, like Trump, that Powell sought to benefit Democrats even though the institution is not political.

The Fed is protected from political prosecution, chiefly as a result of the landmark 1935 Supreme Court case Humphrey's Executor v. United States, in which the court held that the President may not remove an appointee to an independent regulatory agency except for reasons that Congress has provided by law. However, SCOTUS is about to hear a case that could determine the fate of such protection.

Trump has already signed an executive order trying to seize more control over the central bank's responsibilities related to bank regulation. However, the order exempted the Fed's decisions on interest rates, which are voted on at every meeting by the seven members of the central bank's Board of Governors and a rotating set of five presidents from regional reserve banks.

Nevertheless, experts, including Powell, do not expect the court's decision to apply to the Fed, but that the central bank was "monitoring carefully" the situation, he said.

Michael Brown, a market analyst at Pepperstone, wrote in a note reported by Axios that should Powell be fired, "the initial reaction would be a huge injection of volatility into financial markets, and the most dramatic rush to the exit from US assets that it is possible to imagine:" The last one to try to make such a move, Richard Nixon, catalyzed a bout in inflation.

Originally published on Latin Times