Real estate magnate Grant Cardone has backed former President Donald Trump’s proposal to take executive control of the Federal Reserve, citing concerns about the central bank’s impact on the US economy.
Cardone endorsed the idea in a tweet, saying, “Why not? The President can direct the Fed to do what’s best for the people.” He criticized Fed Chairman Jerome Powell, calling him “an enemy of the American middle class.” He argued that the Fed’s aggressive rate hikes aimed at controlling inflation due to the pandemic have made home buying “impossible” and put hundreds of small banks at risk.
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Cardone’s comments come in the wake of a Wall Street Journal report that said a small group of Trump allies had drafted a document outlining a vision for the central bank that would subject Fed policy to review by the White House and the president could potentially play a role in the development of the central bank. interest rate decisions.
Trump has long been critical of Fed policy, especially under Chairman Powell, whom he appointed in 2017. During his presidency, when the Fed raised rates from very low levels, Trump criticized the central bank for not keeping rates lower. Higher interest rates held back economic growth.
The landscape has changed since then. The Fed raised rates last year to their highest level since the turn of the century and has kept them there to curb inflation, which rose to a four-decade high in 2022 and is still above the central bank’s 2% target is.
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“Jerome Powell has proven to be an enemy of the American middle class,” Cardone said on X. “He continues to rant about using interest rates to control inflation when all he has done is make buying a house impossible and has put 600 small banks on the street. risk.”
Cardone’s support for Trump’s proposal came with a list of economic problems he attributes to current Fed policies, including a depressed housing market, rising credit card debt and rising bankruptcies.
However, the proposal has raised concerns among some economists and lawmakers.
Senator Kevin Cramer (RN.D.) expressed his opposition, according to the WSJ. “Given their job, their independence is crucial to do it in an impartial, non-political way,” the senator said. “There’s a reason there isn’t just one decision maker — that there are safeguards built into a board of governors.”
Experts warn that eroding the Fed’s independence could have far-reaching consequences. According to the report, Krishna Guha, vice chairman of Evercore ISI, noted in a client memo: “The market would react very poorly to any attempt to tame the Fed, and we believe this would cause the government to pull back. “
Founded in 1913, the Fed operates as an independent agency to protect monetary policy from short-term political pressures. Congress has given it a dual mandate to promote maximum employment and stable prices, which Chairman Powell often refers to during his speeches.
According to the report, Trump’s attempt (if elected in November) to influence Fed leadership would face institutional obstacles. Like Supreme Court justices with life terms, Fed governors serve fourteen-year terms to ensure their independence from political pressure, making it challenging to remove them solely over policy disagreements.
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This article The Fed’s Takeover Proposal Gets Backing From Real Estate Mogul Grant Cardone: ‘I Like It’ originally appeared on Benzinga.com
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