Zeus: If Donald Trump ran the Fed
The last thing we need is to subject global monetary policy to this chaos
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(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc. His climate columns have appeared in USA Today, The Independent, and New Thinking magazine. His debut novel, Unregulated Militia, is available now on Amazon, at Barnes & Nobles and all major outlets).
NEW YORK (Callaway Climate Insights) — Back in the early 1990s, when I was a young financial markets reporter at Bloomberg in London, I once set up an interview with the top central banker in South Africa. Chris Stals was his name.
Times were simpler then, but I was still shocked when he answered his own phone, and then casually told me in the course of a briefing on the local economy that he would likely be cutting interest rates soon.
“Is this real?, I asked a colleague afterward and was told that yes, that’s how things worked in South Africa at the time. So I wrote the story.
David Callaway explains why this column is called Zeus in The coming battle with the climate gods: How mortal innovators and investors will save the planet.
I was reminded of this earlier today when President Donald Trump jokingly floated the idea that he should run the Federal Reserve because Gov. Jerome Powell won’t cut interest rates on his demand.
Powell and the Fed indeed held rates steady today, arguing that it is too soon to judge the impact of Trump’s ever-shifting economic policies and changing whims. Most experts believe the Fed will cut later this year.
Trump can’t make himself Fed chairman but he likely will soon appoint a “shadow” Fed leader (speculation is Treasury Secretary Scott Bessent) to take over the job when Powell’s term expires next spring.
But imagine the chaos in global markets if the “will he, won’t he” daily questions about what the president might do were applied to setting monetary policy. Imagine the potential for corruption among Trump’s cronies if he set policy based on the headlines of the moment, or just to shake things up.
Like he did when asked about whether the U.S. will bomb Iran. “I may do it. I may not.”
The ongoing chaos with tariffs and petty feuds with other leaders would be extended to bond and currency prices, if they aren’t already. Stocks, especially rate-sensitive climate stocks, would swing wildly day-to-day as the president shifted his stance to suit his goals.
Journalists — like me all those years ago — would be routinely given massive, market-swing scoops in the middle of rambling, stream of consciousness diatribes. Investors would be teased with statements about changing rates only to have the rug — and their trades — pulled from under them on Truth Social hours later.
Luckily, it can’t happen. But the potential for the president to co-opt central bank leadership is certainly there, especially as Powell heads for the exit.
Fed watching is already tense enough for global investors. Changing it to a never-ending lookout for a Trump trade will herald an era of volatility that even the famous “Greenspan put” wouldn’t be able to stop.
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I think we're all pretty clear that the USA is no longer the strongest, wealthiest nation in the world. Trump's non-performance at the G-6 (as it effectively now is) has conclusively erased that status. We can now refer to him as the C-in-C (Clown in Chief.) Two weeks, people, another two weeks...