For only the third time in history, a U.S. president visited the Federal Reserve Bank in Washington. Donald Trump’s recent trip was historic, as he took Reserve Chairman Jerome Powell to task for overspending on the renovation of the Fed’s buildings.
He also seized the moment to draw attention to the failures of the Fed and the political bias of its leader, especially after Powell refused Trump’s request to cut interest rates, even after doing so to boost the presidential prospects of Kamala Harris.
Across the country in Minneapolis, when rioters were destroying the city to protest the treatment of George Floyd, basketball star Royce White chose not to join the chaos. Instead, he led a rally at the Federal Reserve to drive home the point that the bank’s control of the money supply has a much greater impact on black and minority communities than racial issues.
The Fed’s stated goal of 2% annual inflation means that every 10 years, the dollar will be worth 20% less. This policy has had a devastating effect on the working-class and lower‑income wage earners struggling to make ends meet in an economy battered by the Fed’s actions. To a president pledged to make America great again, enough was enough.
Former Trump economic adviser Judy Shelton does not mince words on the subject:
“For too long, the Fed has been accumulating power.” She said it “operates with models and mechanisms that simply don’t reflect real‑world economic conditions,” adding that Powell was “setting himself up as some kind of an emperor.”
Shelton argues that the $900 billion in unrealized losses on the Fed’s portfolio and the massive overspending on its renovation project are merely the threads one can pull to unravel deeper systemic issues. She slammed the Fed’s policy of paying banks interest on reserves at a rate it sets, arguing the prescribed rate distorts the free market. “The Fed just keeps perpetuating its own power,” Shelton charged. “It fixes the interest rate—the price of loanable capital—by paying banks not to make loans.”
Created in 1913 by the Federal Reserve Act, the Federal Reserve is the central bank of the United States. Its specified role is to manage the nation’s monetary policy—primarily by controlling interest rates and regulating the money supply—in an effort to maintain stable prices, low unemployment, and financial stability. Its failure in these areas, particularly during the Biden administration, has put them in Trump’s crosshairs.
Calling for sweeping reform—if not outright abolition—Shelton argues the institution “needs an entirely new construct.” She joins critics who are not simply asking for tweaks to interest‑rate decisions but demanding structural reform, new oversight mechanisms, clearer lines of accountability, and even reconsideration of the Fed’s very mission in a constitutionally governed republic.
“The Fed has become an accomplice to fiscal recklessness,” concluded Senator Rand Paul of Kentucky in announcing his “Audit the Fed” bill. “It’s long past time for Congress to stop shirking its duty and hold the Federal Reserve accountable.”