President Trump just nominated Stephen Miran, former Treasury official and current senior economic adviser, to fill the Federal Reserve Board seat being vacated by Governor Adriana Kugler.
Kugler’s early resignation created an interim vacancy, with Miran’s appointment expected to run through January, pending Senate confirmation.
The satirical news site, The Babylon Bee, noted, “Jerome Powell says he won’t lower interest rates until he’s sure it won’t help Trump”
Given the current economic conditions, what policy measures should the Federal Reserve implement moving forward. . . and more importantly, what actions should Congress pursue to reinforce the credibility and effectiveness of the central bank?
Powell’s post-pandemic framework made the Fed hesitant and reactive when decisiveness was needed. His calm and caution were mistaken for discipline — but they revealed shortcomings weakness.
When volatility returned in late 2021, his message-first playbook collapsed.
What failed wasn’t just policy, it was delusion — slogans replaced action and central banks believed they could whisper through fire.
He mistook a credibility crisis for a messaging problem and lost control in real time.
Powell’s Most Damaging Moment Wasn’t a Rate Hike — It Was a Word
Labeling inflation as “transitory” in 2021-22 wasn’t just a forecasting error; it was a strategic bet that careful phrasing could substitute for policy. Powell didn’t misread the data — he ignored it.
The Fed’s obsession with language blinded it to disorder, leading to a costly sequence of delay and denial. By the time it acted, inflation had embedded. Powell didn’t calm markets; he soothed and misled them.
After downplaying inflation, the Fed didn’t adjust — it overcorrected. Powell’s pivot unleashed the fastest rate hikes in 40 years, as if speed alone signaled control.
This wasn’t strategy. it was slamming the brakes . . . after missing the off-ramp.
The Collapse of Silicon Valley Bank
SVB – It wasn’t just a banking failure driven by rising interest rates or tech dynamics — it shattered illusion Fed had firm control over systemic risks.
Regulators let ritual replace risk. Even as rates rose at the fastest pace in decades, they clung to outdated models that failed to reflect the realities of a digital, real-time financial system.
Multiple postmortems, including the Fed’s own review, confirmed what many already suspected: institutional complacency and overconfidence had replaced proactive oversight.
Between 2022 and 2024, Fed Chair Jerome Powell’s tone swung from dovish to hawkish, sometimes within the same briefing. Markets began discounting the Fed’s forward guidance, focusing instead on actual policy actions.
Powell stuck to pre-COVID-19 logic, assuming that a stronger labor market and rising wages would automatically lead to higher inflation.
But the workforce had aged, gone remote, and in many sectors, shrunk.
The Fed misread structural changes as cyclical noise and saw economic resilience where it feared overheating.
Its forecasts contradicted themselves — soft landing, no landing, mild recession — leaving markets guessing every quarter.
That was not coherent strategy, but narrative drift presented as policy.
Powell’s Blind Spot? The Rest of the World
Powell’s aggressive rate hikes didn’t just tighten U.S. credit — they triggered a global ripple. Capital fled emerging markets, currencies cratered and debt burdens exploded under the weight of a surging dollar.
Washington, D.C. shrugged, treating the turmoil as a foreign aftershock — someone else’s crisis.
But the storm circled back.
Global supply chains fractured, U.S. exports weakened, and financial volatility rebounded into American markets.
Hiding behind the “domestic mandate” wasn’t merely narrow-minded — it was dangerously naive.
Secretive by Design, Unaccountable by Default
The Federal Reserve is the most powerful — and least accountable — institution in American public life. It’s not just out of step with the moment; it’s out of reach.
From setting the price of money to moving markets with a sentence, the Fed wields massive economic power behind closed doors. If Congress truly wants to rebuild public trust, it can’t settle for minor reforms. It must rewrite the rules.
Five structural reforms to rebuild the Fed:
1. Fire the Referee. Remove bank supervision from the Fed. It can’t hike rates with one hand and supervise banks with the other. That’s not a dual mandate — it’s institutional failure. It missed obvious risks at SVB because it was regulating itself. Congress should hand it to a standalone regulator with no ties to rate policy.
2. Put a Cop Inside the Vault. Give the Fed an “independent” inspector general. It’s the only agency in Washington, D.C. that investigates its own failures.
Mistakes trigger “reviews” by insiders, ineffective reports, and no accountability. Install an independent IG with subpoena power, public findings and authority to fire senior officials for cause.
3. Shut the Back Door. Limit the Fed’s emergency powers. What started as emergency response is now baked into standard operations. The Fed props up markets, buys corporate debt, and moves trillions — without a single vote in Congress. Crisis tools should not become routine instruments. Establish clear boundaries and require oversight.
4. Break the Black Box. Make Fed forecasts transparent and competitive. The Fed hides behind models no one sees, built on assumptions no one challenges. Require three public forecasts for each policy move: best case, base case, and worst case — with probabilities and declared assumptions.
5. Break Up the Club. Diversify the Fed’s leadership. The Fed board is a self-reinforcing circle of D.C. insiders and academics.
Add permanent rotating seats for workers, small business leaders, retired state treasurers and seasoned financial professionals. If Fed policy moves every corner of the economy, then every corner deserves a seat at the table.
Richard Torrenzano is chief executive of The Torrenzano Group which helps organization takes control of how they are perceived™. For nearly a decade, he was a member of the New York Stock Exchange management (policy) and Executive (operations) committees. His second book, “Command the Conversation: Next Level Communications Techniques,” was just released. He is a sought-after expert and leading commentator on AI, cyber and digital attacks; financial markets; brands, crisis, media, and reputation.
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