The Fed’s Independence Illusion

They say the Federal Reserve is independent. Immune to politics. The last honest referee in a game full of spin.

But right now, that’s just a story they tell.

Jerome Powell’s term is ending… and the frontrunners to replace him — Kevin Hassett and Kevin Warsh — aren’t just economists.

They’re political insiders.

And when loyalty starts to matter more than policy, the Fed stops being a referee.

When the Referee Joins the Game

Once politics creeps in, every interest rate decision becomes a headline:

• Cut rates before an election? “They’re juicing the economy.”

• Keep them high? “They’re sabotaging growth.”

It’s not just perception — it’s trust. And once that trust cracks, there’s no patch job quick enough to fix it.

The dollar’s value rests on more than GDP or inflation — it rests on belief.

If investors think the Fed is compromised, they demand higher yields to hold U.S. debt.

Borrowing costs rise. The economy slows. And your dollar quietly buys less — not because prices went up, but because the world stopped believing in the referee.

What You Can Do

• Follow the nominations — track who’s in the running for Fed chair, not just the one who gets picked. The shortlist tells you the direction before the headlines do.

• Watch the bond market — sudden spikes in yields can signal fading trust in U.S. policy, long before the dollar’s weakness shows up in the news.

• Hedge your exposure — consider spreading assets beyond dollar-denominated holdings. Even a small shift can buffer you if credibility continues to crack.

The real risk isn’t the next rate cut or hike.

It’s waking up one morning to find the world no longer believes in the people running the dollar.

And once that happens… there’s no quick way back.

—DOTD

P.S. The Hidden Asset Fueling the Next Energy Superpower (What It Means for the Dollar)