Core Viewpoint - The potential dismissal of Federal Reserve Chairman Jay Powell by Donald Trump could lead to significant economic, financial market, and international order repercussions. Legal challenges and political reactions are expected if Trump successfully appoints a new chairman [1]. Group 1: Federal Reserve Structure and Decision-Making - The Federal Reserve Chairman's power is not solely derived from legal authority but also from long-standing operational traditions within the Fed, particularly in reaching consensus with the Board of Governors (BoG) and the Federal Open Market Committee (FOMC) [1][2]. - Historically, FOMC votes have typically concluded with unanimous support, indicating strong backing for the chairman from committee members. If the new chairman can secure sufficient voting power within the BoG, they will wield significant decision-making authority [2]. Group 2: Powers of the New Chairman - The new chairman will have the authority to set the interest rate on reserves, which is crucial for executing monetary policy. This power allows the chairman to influence both the U.S. and global economic directions [2]. - The new chairman will also appoint the Federal Reserve's General Counsel, whose role is to provide legal guidance for the Fed's actions. A General Counsel willing to push legal boundaries could expand the chairman's operational latitude [4]. - Additionally, the new chairman may influence the appointment of regional Federal Reserve bank presidents, potentially ensuring that FOMC members align with Trump's policies, especially if funding is needed for initiatives like the border wall [4]. Group 3: Challenges and Political Dynamics - A significant challenge for Trump will be mobilizing support from existing BoG members, most of whom were appointed during the Biden or Obama administrations and have long terms. Their opposition could hinder the new chairman's aggressive policy agenda [6]. - If Trump successfully dismisses Powell, he might overhaul the Fed by appointing loyal supporters, which could lead to extreme measures such as large-scale money printing or altering swap lines with specific countries, potentially impacting the international economy [6]. Group 4: Constraints on Presidential Power - The only potential check on Trump's overreach may come from Congress, which could reassert its authority over the Federal Reserve. However, given the current political climate, optimism regarding this possibility is limited [7].