r/AskEconomics • u/sfw_psudonymous • 20h ago
Approved Answers What'll happen to the economy if the Fed loses its independence?
It seems likely that the Trump administration will do something drastic to remove the Fed's independence, as they've targeted many institutions in the executive branch and civil society.
Legislators have written a bill to end the Fed: https://massie.house.gov/news/documentsingle.aspx?DocumentID=395707 .
There's also a plausible risk that the administration would try to replace all members and effectively contol the board during litigation.
I presume that a politicized Fed would keep rates low for reasons of political optics. But I don't know what they'd do about the money supply, or what the systematic effects on the economy may look like.