The Fed’s Failures Set the Stage for the Trump-Powell Turmoil. Here’s One Solution.

Jai Kedia U.S. federal prosecutors are investigating Federal Reserve Chair Jerome Powell over his testimony regarding the renovation costs of the Fed’s headquarters. In an unprecedented video , Powell claimed that the “threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.” , If Powell is correct, it marks the worst politically motivated attack against the central bank in recent memory.

I am an economist, not a lawyer, and cannot speak to the legal merits of the case. Instead, I will provide a range of possible economic outcomes if we are to assume this federal prosecution is engineered to erode the Fed’s independence. The most likely outcom