Musk supports Trump’s push to weaken Fed independence

Tesla and SpaceX CEO Elon Musk has endorsed a controversial idea that could reshape US economic policy: allowing the president to have direct influence over Federal Reserve decisions, according to a detailed report by CNBC.

Musk’s endorsement came on Friday in response to a social media post by Senator Mike Lee (R-Utah), who called for the Federal Reserve to be brought under presidential control, ending its long-standing independence. Lee's tweet included the hashtag #EndtheFed, and Musk responded with a simple “100” emoji, signaling his agreement, explained the CNBC report further.

Pressure is building up to reduce autonomy of the Federal Reserve

The endorsement is significant as it reflects growing pressure from some conservative figures, including Musk and Trump supporters, to reduce the autonomy of the central bank. This pressure could intensify if Donald Trump returns to the White House in 2024, signalling a potential shift in economic policy priorities.

Senator Lee’s proposal aims to give the president direct authority over the Federal Reserve, including control over its monetary policy decisions, such as setting interest rates. Traditionally, the Federal Reserve operates independently from the executive branch to shield its decisions from political pressures. This independence is seen as crucial for making objective, long-term economic choices based on data rather than political considerations.

However, this tradition has been increasingly challenged, especially by Trump. During his first term, Trump frequently criticized Fed Chairman Jerome Powell, publicly disagreeing with his policies and even suggesting that Powell should be replaced.

Powell reiterated that he would not resign

Further, in a recent statement, Powell reiterated that he would not resign if Trump asked him to, signalling a potential return to tension between the White House and the Federal Reserve under another Trump presidency.

The issue of presidential influence over the Fed gained additional traction during the 2024 campaign. Trump has repeatedly suggested that the president should have a greater role in shaping US monetary policy.

In August, he argued that his business success and financial acumen gave him better instincts than the economists at the Federal Reserve. "I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman," Trump said during a press conference at his Mar-a-Lago estate, the CNBC report explained further.

Musk’s endorsement of Lee’s call to #EndtheFed is part of a broader movement that seeks to reshape the economic governance of the United States, and could become a key issue in the coming years.

As debates over Fed independence intensify, the future of US monetary policy remains uncertain, with the potential for significant shifts depending on how things evolve in the global economy