'Worst' Fed chair ever?

[Editor's note: This column is in response to the May 10 column "What to do with the worst Fed chairman ever"]

EJ Antoni argues that Donald Trump should fire Federal Reserve Chairman Jerome Powell "for cause" and that Powell's monetary policies have impoverished Americans while violating legal standards.

Key Claims and Fact Checks

1. Powell caused the worst inflation in 40 years.

Partially True: Inflation indeed hit 40-year highs during Powell's tenure – but attributing it solely to Powell omits pandemic-related supply chain shocks, Russia's invasion of Ukraine, and fiscal policy decisions made by Congress and the executive branch (not the Fed).

The Fed was one of many actors. The government spent heavily, but Powell's low rates were common central bank policy worldwide during COVID.

2. Powell kept rates artificially low, fueling bubbles and inequality.

Somewhat True: The Fed kept rates near zero from March 2020 to early 2022. This did fuel asset price increases (stocks, homes), benefiting wealthier households more. But the intent was to prevent economic collapse during a pandemic.

The Fed raised rates aggressively starting in 2022 – the fastest series of hikes since the 1980s – which led to mortgage rates exceeding 7–8 percent.

3. Powell's actions created a banking crisis (e.g., Silicon Valley Bank).

Partially True: Rapid rate hikes did expose poor risk management at some banks (like SVB), which held long-term bonds that lost value as rates rose. But those banks made risky bets – not all banks suffered similarly.

The Fed's own supervision of these banks may be partly to blame, but Powell didn't directly cause the collapse.

4. Powell violated the law by funding the CFPB.

Contested: The Supreme Court did hear arguments in 2023 about whether the CFPB's funding mechanism – through the Fed rather than Congress – is constitutional. The case is Consumer Financial Services Association of America v. CFPB. On May 16, 2024 (yes, 2024), in a 7–2 decision, the Court upheld the constitutionality of the CFPB's funding mechanism. The majority opinion, authored by Justice Clarence Thomas, concluded that the funding structure complies with the Appropriations Clause of the U.S. Constitution. The Supreme Court's decision affirms that the CFPB's funding structure is constitutional. Therefore, any claims suggesting that Federal Reserve Chair Jerome Powell is "breaking the law" by facilitating this funding are inaccurate. The Court's ruling provides legal clarity on this matter.

5. Powell created a "cost-of-living crisis" and impoverished Americans.

Inflation did harm purchasing power, but recent data shows it's moderating.

Wages have started catching up in many sectors, and employment is strong. The Fed's dual mandate is inflation + full employment – and employment remains resilient.

Tone and Framing Issues

The article is highly partisan and leans ad hominem (directed at the person rather than the position) – labeling Powell as "the worst" Fed chair and blaming him solely for complex, global economic events.

It minimizes the global nature of inflation, ignores Congressional fiscal policy, and doesn't account for the emergency context of COVID-19.

It heavily politicizes the role of the Fed, despite the institution's intent to operate independently from political pressure.

And, it tells a non-truth about the violation of law.

Conclusion

Jerome Powell has made controversial decisions, and valid criticisms exist – especially around delayed rate hikes and Fed oversight. However:

Blaming him alone for inflation or bank failures is overly simplistic

Claims of lawbreaking are premature or exaggerated

The article uses emotionally loaded language instead of balanced analysis

Defense of Jerome Powell's Performance

1. Navigating the COVID-19 Economic Crisis

Jerome Powell's leadership during the unprecedented economic turmoil caused by the COVID-19 pandemic is widely acknowledged. The Federal Reserve implemented swift and expansive monetary policies, including slashing interest rates to near zero and initiating large-scale asset purchases, to stabilize financial markets and support the economy. These actions were instrumental in preventing a deeper recession and facilitating a quicker recovery.

2. Balancing Inflation and Employment

Post-pandemic, the U.S. economy faced significant inflationary pressures. The Fed, under Powell's guidance, undertook a series of interest rate hikes to curb inflation while striving to maintain low unemployment rates. This delicate balancing act reflects the Fed's dual mandate and showcases Powell's commitment to data-driven policy decisions.

3. Maintaining Federal Reserve Independence

Powell has consistently emphasized the importance of the Federal Reserve's independence, especially amid political pressures. Despite criticisms and calls for rate cuts from political figures, Powell has maintained that policy decisions are based on economic data and analysis, not political considerations. This stance reinforces the credibility and integrity of the institution.

Comparative Analysis: Powell vs. Previous Fed Chairs

Evaluating Powell's performance in the context of his predecessors provides additional perspective:

Paul Volcker (1979–1987)

Achievements: Credited with curbing the high inflation of the 1970s through aggressive interest rate hikes.

Criticisms: His policies led to a significant recession and high unemployment in the early 1980s.

Alan Greenspan (1987–2006)

Achievements: Oversaw a period of significant economic growth and low inflation.

Criticisms: Policies during his tenure have been linked to the dot-com and housing bubbles, contributing to the 2008 financial crisis.

Ben Bernanke (2006–2014)

Achievements: Managed the Fed's response to the 2008 financial crisis with innovative tools like quantitative easing.

Criticisms: Faced scrutiny over the Fed's role in the housing bubble and the effectiveness of post-crisis policies.

Janet Yellen (2014–2018)

Achievements: First woman to serve as Fed Chair. Successfully managed the early stages of post-2008 recovery by beginning the process of interest rate normalization. Presided over steady job growth, with unemployment falling from 6.6 percent to 4.1 percent. Maintained low inflation and a stable financial environment during her tenure.

Criticisms: Some economists argued her pace of normalization (raising interest rates and unwinding quantitative easing) was too slow. Wage growth remained sluggish despite improvements in employment. Critics on both sides alternately claimed the Fed was too cautious or too reliant on models under her leadership.

Jerome Powell (2018–Present)

Achievements: Managed the economic fallout from the COVID-19 pandemic with decisive actions, maintained low unemployment, and addressed inflationary challenges with measured rate increases.

Criticisms: Faced challenges in anticipating the persistence of inflation and has been criticized for delayed policy tightening post-pandemic.

Stock Market Performance

Under Powell's tenure, the stock market has shown resilience:

S&P 500: Achieved significant gains, reflecting investor confidence in the Fed's policies.

Market Stability: Despite volatility, the markets have largely stabilized post-pandemic, aided by the Fed's interventions.

Conclusion

While no Fed Chair's tenure is without criticisms, Jerome Powell's leadership during a period marked by unprecedented challenges demonstrates a commitment to the Federal Reserve's dual mandate and institutional independence. His actions have played a pivotal role in steering the U.S. economy through turbulent times.

As Christians engaging with complex public issues – whether economic policy, leadership criticism, or legal rulings – we are called not to withdraw in cynicism or react in outrage, but to discern with wisdom, humility, and grace.

Scripture reminds us that truth matters deeply (Ephesians 4:15), and that our conversations – even when political or economic – should be "seasoned with salt" (Colossians 4:6), reflecting both clarity and compassion. We must resist the temptation to adopt the world's tone of fear, accusation, or distortion, and instead become people who pursue understanding over assumption, and justice over partisanship.

Economic institutions like the Federal Reserve, or watchdogs like the CFPB, may be far from perfect. But our Christian lens invites us to ask not just "Who's to blame?" but rather, "How do these systems serve – or fail to serve – the vulnerable, the honest worker, the widow and the orphan?" (James 1:27).

Jesus often confronted those who misused power – but He also warned against hasty judgment and called His followers to be peacemakers and truth-bearers in a fractured world.

So, whether we're discussing mortgage rates or media headlines, may we do so as ambassadors of Christ – grounded in truth, careful with critique, and always looking for ways to build up, not tear down (1 Thessalonians 5:11).

Tom Marine is a retired journalist and former Cultural Change Management Consultant in the Software Industry. Following retirement, Tom followed in his father's, uncle's and grandfather's footsteps, all ministers, to help in his wife's ministry in Herbst and Marion, Indiana. You can contact him at tom@tommarine.com.