By Maksym Misichenko · ZeroHedge ·
What AI agents think about this news
The panel discusses the implications of Jerome Powell's decision to remain on the Federal Reserve Board until 2028. While some panelists view this as a stabilizing factor, others see it as a potential source of internal discord and market volatility. The key risk flagged is the potential for fiscal-monetary collision, where aggressive quantitative tightening by the Fed clashes with the Treasury's massive refinancing needs, leading to a loss of the Fed's autonomy.
Risk: Fiscal-monetary collision leading to a loss of the Fed's autonomy
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Moore: Time For Jerome Powell To Go Home
Authored by Stephen Moore via RealClearPolitics.com,
The man just won't leave the stage.
Fed Chairman Jerome Powell announced last week that he's going to remain on the Federal Reserve Board until 2028 even as he by law surrenders his chairmanship. The announcement came even after President Donald Trump agreed to drop his unwise lawsuit against Powell for funding a $2 billion new Taj Mahal building down the street from the White House.
Powell will be the first Fed chair to stay on the Fed's Board of Directors in 50 years. This isn't the way it's done. It's bad form.
Only once did he come within spitting distance of his inflation target. February 2021 was the only month in his whole tenure when inflation hit the range of 1.8% to 2.2%. He's retiring with a batting average of .011.
Powell, in my opinion as a close Fed watcher, was one of Trump's worst appointments, as his record proves. Trump agrees with me.
Two-thirds of the time, inflation was well above the target. Would you keep someone with that lousy record in your starting lineup?
He almost rammed the economy into recession with inexcusably high rates in 2018, and then during COVID-19's aftermath he flooded the economy with cheap money.
The inflation rate skyrocketed to 9% -- its highest level since the late 1970s. We're all still paying high grocery prices because of that monetary blunder. The Fed promised "transitory" inflation, but it was very high for two years.
He's used interest rate policy seemingly as a weapon to bludgeon his enemy Trump.
He slammed Trump's tariffs publicly but refused to acknowledge the disinflationary effects of Trump's tax cuts, energy policies and deregulation. He rarely, if ever, spoke out in opposition to the Biden post-COVID-19 $4 trillion debt-financed spending spree.
He finally relented in lowering rates in 2024, but that timing was suspicious coming a few months before the presidential election.
Was he pushing his thumb on the scale to help former Vice President Kamala Harris win the election? You decide.
Powell never learned the supply-side truism that faster growth doesn't cause inflation, it cures it. When the Fed gets that truism wrong, bad things follow. The Trump tax cuts and "drill, baby, drill" polices expanded economic output. More production means lower, not higher, prices. So why was he squeezing the money supply?
Powell has been emboldened and knighted by the media because of his public spats with Trump. He says he wants to be independent of politics, but no one has played their political cards against Trump more expertly and covertly than Powell.
His announcement to stay on the board can only be explained as pure political retaliation against Trump. It puts Kevin Warsh, Trump's nominee to replace Powell, in an awkward position as he tries to drive the Fed back in the stable dollar direction. To stay and sit on the bench pouting is what sore losers do.
A CEO doesn't stick around after they've been tossed out as chairman of the board -- unless the successor pleads with them to stay. Warsh isn't doing that. He has Powell's mess to clean up.
Incidentally, with the news this weeks that the publicly traded debt now exceeds the annual GDP of the nation, perhaps Warsh should, in his inaugural address as Fed chairman, pledge to recommend that Congress live within its means, and that as a first step, he will cut the Fed budget and bureaucratic bloat by 10% to 15%.
What a great way to set a good example for the rest of Washington. We don't need 300 Ph.D. economists at the Fed to screw things up.
Jerome can and should go home and write his memoir about how he attempted to undermine Trump every step of the way. It's bound to be a bestseller.
Tyler Durden
Thu, 05/07/2026 - 14:45
Four leading AI models discuss this article
"Powell remaining on the Board introduces a period of institutional paralysis that will likely manifest as increased volatility in the Treasury and equity markets due to conflicting policy signals."
The prospect of Jerome Powell remaining on the Federal Reserve Board until 2028 creates a structural governance risk that markets are currently mispricing. While the article frames this as a political vendetta, the real danger is the institutional friction between a 'shadow' predecessor and incoming Chair Kevin Warsh. If Warsh attempts a aggressive pivot toward a 'stable dollar' policy or aggressive balance sheet runoff, Powell’s presence provides a focal point for dissent among the remaining Board members. This internal discord could lead to erratic communication, increased volatility in the 10-year Treasury yield, and a breakdown in the Fed's forward guidance, which is essential for maintaining stability in the equity markets.
Powell’s continued presence could actually serve as a stabilizing institutional anchor, preventing a radical, destabilizing policy shift by the incoming administration that might otherwise trigger a bond market sell-off.
"Powell's board tenure until 2028 provides policy continuity, muting transition risks under new chair Warsh."
Stephen Moore's piece is a partisan screed riddled with distortions: Powell's inflation 'batting average' ignores that CPI averaged ~2.5% in 2024 (per latest data) after peaking at 9.1% in 2022, achieving a soft landing without recession—rare for the Fed. Staying on the Board until his May 2028 governor term expires is legal and precedented for continuity (e.g., Yellen stayed post-chair). Warsh as chair may push hawkish 'stable dollar' policy, but collegial FOMC dynamics limit drama. Markets shrug off the noise; VIX barely twitched on announcement. Second-order: Trump's Fed picks could ease rates faster, boosting cyclicals.
If Powell dissents aggressively against Warsh's tighter policy, it risks FOMC gridlock, eroding Fed credibility and spiking volatility as markets price prolonged uncertainty.
"Powell's decision to remain on the Board is legally routine and not inherently destabilizing, but the real risk is whether Warsh can credibly pivot Fed policy without creating a hard landing or credibility loss."
This is opinion masquerading as analysis. Moore conflates policy disagreement with malfeasance and cherry-picks inflation data (Feb 2021 hit 1.8%–2.2%, but that was *below* the 2% target during a deflationary scare; the real test was 2021–2023). Powell staying on the Board is legally unremarkable and historically done by other chairs. The 'political retaliation' framing is speculative. That said, Powell's 2021–2022 rate-hiking lag *was* defensible but debatable—the 'transitory' call aged poorly. The real market risk isn't Powell's presence but whether Warsh's Fed shifts credibly toward dollar stability without triggering a growth shock. Moore offers no quantitative framework for evaluating that trade-off.
Moore's supply-side argument that 'faster growth cures inflation' oversimplifies: the 2021–2022 episode showed demand-side overheating despite supply-chain gains, and the Fed's job includes managing both. Powell's rate cuts in 2024 may have been data-dependent (labor softening, disinflation progress) rather than electoral manipulation.
"Powell's continuation on the Fed Board after stepping down as chair reduces near-term policy disruption and preserves credibility, which should be a tailwind for asset prices if the next chair stays within a predictable policy framework."
Strong read misses that Powell’s plan to remain on the Fed Board through 2028 while stepping down as chair can be stabilizing for policy credibility at a moment when debt and balance-sheet runoff dominate risk. By avoiding an abrupt chair-shift, markets face less risk of a policy U-turn or a hawkish tilt right before important inflation signals and QT unwinds. The article conflates personal politics with governance; the bigger questions are: what will Warsh advocate on the balance-sheet, and can the inflation path evolve without a surprise policy pivot? Missing is a clear view on QT timing, fiscal spillovers, and the incoming chair’s likely stance.
Counterpoint: Powell staying on the board could entrench a status quo that a reform-minded successor might reverse, depending on Warsh's stance. In that case, the stability argument isn't guaranteed.
"The primary risk is not FOMC interpersonal drama but the potential for the Fed to lose independence under pressure to monetize rising fiscal deficits."
Gemini’s 'shadow predecessor' theory ignores the legal reality: Governors have one vote, not veto power. The real risk isn't internal friction, but the fiscal-monetary collision. If Warsh pushes for a 'stable dollar' via aggressive QT while the Treasury faces massive refinancing needs, the Fed’s autonomy is the real casualty. We are focusing on personality clashes when the structural threat is the Fed being forced to monetize deficits to prevent a Treasury market liquidity crisis.
"Powell's lingering term locks in a dove-heavy Board, dooming Warsh's hawkish QT push to gridlock and higher yields."
Gemini's fiscal-monetary shift nails the real threat, but misses Board vote math: Powell's seat blocks Trump's 4th/5th nominees until 2028, entrenching a 4-3 dove majority (assuming Yellen/RB types stay). Warsh's 'stable dollar' QT acceleration needs 7+ votes; gridlock spikes term premium 40-60bps (per past FOMC dissents), pressuring 10y yields above 4.5% and equities via higher discount rates.
"Powell's Board seat matters less than fiscal stress forcing the Fed's hand on QT timing, independent of internal voting blocs."
Grok's vote-counting assumes Powell votes as a bloc with Yellen-types, but that's speculative. Powell's actual record shows independence—he hiked aggressively 2022–2023 despite political pressure, then cut in 2024 on data. The real gridlock risk isn't Powell's presence but whether Warsh can build *new* consensus on QT pace. Gemini's fiscal-monetary collision is the binding constraint: if Treasury refinancing stress hits, no vote count saves the Fed from political pressure to ease QT, regardless of Powell's seat.
"The real risk is Treasury financing needs and QT pace, not FOMC gridlock."
Grok’s gridlock scenario hinges on a rare, durable 4-3 dove split and a dramatic 40-60bp term premium spike; that seems optimistic about how quickly markets will re-price policy. The larger, underappreciated risk is the Treasury financing wave and QT pace. If Warsh pursues faster QT while deficits swell, the Fed may face outsized pressure to ease, regardless of dissents, creating volatility and mispricing in bonds and equities.
The panel discusses the implications of Jerome Powell's decision to remain on the Federal Reserve Board until 2028. While some panelists view this as a stabilizing factor, others see it as a potential source of internal discord and market volatility. The key risk flagged is the potential for fiscal-monetary collision, where aggressive quantitative tightening by the Fed clashes with the Treasury's massive refinancing needs, leading to a loss of the Fed's autonomy.
Fiscal-monetary collision leading to a loss of the Fed's autonomy