Tech billionaire Elon Musk and his so-called "Department of Government Efficiency," having gained access to several different federal departments, suspended thousands of employees, and interfered with critical IT systems before being reprimanded by federal judges, are now training their sights on the Federal Reserve.
Musk has proclaimed that the central bank is "overstaffed" — and Fed Chair Jerome Powell, himself originally appointed to that role by President Donald Trump, has hit back.
This is a worrying prelude to what will likely be a war waged by Musk and the Trump administration against the central banking system, economic analyst Catherine Rampell told CNN's Jake Tapper on Tuesday — with potential disastrous collateral damage for the country.
"What Jerome Powell said was Fed employees are overworked and the agency is not overstaffed," said Tapper. "And then he explained that the Fed is primarily self-funded through the interest it earns. In other words, cost-cutting measures such as laying off employees would ultimately not save taxpayers much money. So he's — he's criticizing DOGE implicitly and explicitly at what they're saying. Where do you see this going? Do you think this is going to escalate?"
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"Absolutely," said Rampell. "I think the Fed is trying its darndest not to let this escalate. And the Fed is potentially on a crash course with the Trump administration for a whole bunch of reasons — not just DOGE, but the fact that they've been holding off potentially on continuing to cut interest rates, which Trump, the king of debt, wants to keep happening."
"There are a bunch of reasons why the Fed is potentially in Trump's crosshairs, and really don't want to be. They want to be politically independent," Rampell continued. "They have historically been politically independent. And that independence is crucial to their ability to continue to do their job, i.e., to get inflation down. And just to remind people, inflation has come down quite a lot in the past few years. It's not where it needs to be, certainly, but the fact that we have made as much progress as we have without tipping into recession, as many economists feared, is largely a credit to the Federal Reserve and its ongoing independence."
"So picking a fight here, whether Elon Musk is doing it or Trump is doing it, will end quite badly for the economy writ large," Rampell concluded.
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