Jerome Powell Under Criminal Investigation — Here’s What It Means for Your Money

Criminal Investigation into Jerome Powell [0:00]

• The Department of Justice has initiated a criminal investigation into Jerome Powell, the chairman of the Federal Reserve Bank.
• The investigation reportedly stems from the Federal Reserve Bank's spending on building renovations, specifically concerning the potential abuse of taxpayer dollars.
• Powell contends that the investigation is not about building renovations but a consequence of the Fed setting interest rates based on its economic assessments rather than following presidential preferences.
• This situation could impact mortgage rates, car loan rates, investment returns, and inflation.

"The threat of criminal charges is a consequence of the Fed setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president."

Federal Reserve's Role and Independence [0:58]

• The Federal Reserve Bank is the central bank of the United States, responsible for monetary policy, setting interest rates, and money printing.
• The Fed has two buildings undergoing renovations projected to cost approximately $2.5 billion, which the Justice Department is investigating for potential abuse of taxpayer funds.
• Crucially, the Fed does not receive funding from Congress for these renovations; it is self-financing through interest generated by lending money to the U.S. government.
• Powell argues that the investigation is politically motivated, linked to his refusal to align monetary policy with the preferences of the president, specifically President Trump.
• The Federal Reserve Bank, despite its name, is not a traditional bank and is not part of the federal government.
• The Fed controls interest rates and money printing, thereby influencing the economy, but the government cannot directly dictate its actions.

"This is all about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions or whether instead monetary policy will be directed by political pressure or intimidation."

Presidential Pressure on Interest Rates [2:36]

• Jerome Powell was appointed by President Trump, but Trump is reportedly unhappy with Powell's decisions and has publicly criticized him.
• President Trump desires very low interest rates, aiming for them to be 1% or lower, which he believes would stimulate the economy.
• Trump is exerting pressure on the Federal Reserve Bank to lower interest rates, but he cannot directly command the Fed due to its independence.
• The Fed's decisions on raising or cutting interest rates, which affect mortgages, car loans, savings interest, the stock market, and inflation, are generally based on two factors: inflation and the job market.
• Historically, high inflation prompts the Fed to raise interest rates, while a slow job market prompts rate cuts to stimulate the economy. However, these actions can have counteracting effects on inflation and employment.

"President Trump cannot tell Jerome Powell what to do. President Trump cannot fire Jerome Powell very directly. But there are other ways clearly to put more pressure on the Federal Reserve Bank."

Historical Precedent: The 1970s Inflation Crisis [07:12]

• The video draws a parallel to the early 1970s, when President Richard Nixon advised Federal Reserve Chairman Arthur Burns to keep interest rates low.
• This policy, coupled with Nixon taking the dollar off the gold standard in 1971, allowed for increased money printing and economic stimulus, leading to short-term growth.
• However, this ultimately resulted in a severe inflation crisis by the late 1970s, with inflation rates reaching approximately 15%, significantly higher than the post-pandemic peak of over 9%.
• The consequence of this short-term economic boosting without regard for inflation was a period of stagflation, characterized by high inflation and rising unemployment.
• To combat this, Fed Chairman Paul Volcker aggressively raised interest rates to around 20%, causing a deep recession and immense pain to the economy and markets but stabilizing the dollar and currency in the long term.

"And then it created a big problem which was this inflationary problem. And then to solve that problem caused pain because then to solve this inflation problem because we ran into an era of stagflation."

Current Economic Concerns and Asset Diversification [10:14]

• Investors are currently concerned about the value of the dollar, as evidenced by its poor performance relative to other currencies in 2025 and record highs for gold prices in 2026 due to inflation and geopolitical worries.
• Inflation benefits asset owners while diminishing the value of cash.
• It is advised not to hoard cash but to own assets to hedge against inflation, as the value of money decreases with more dollars being printed and interest rates potentially falling.
• To hedge against the potential decline in dollar value, diversification into assets like U.S. and foreign stocks (growth, dividend), physical real estate (rental properties), physical gold, and cryptocurrency (like Bitcoin, though speculative) is recommended.
• Shifts towards more interest rate cuts and money printing can boost markets and the economy short-term but have long-term negative impacts, including inflation, currency devaluation, and potential future recessions.

"And the thing that you want to understand is that when inflation happens, one person gets rich while everybody else gets poorer. And the person that gets rich is the person that owns the assets."

Federal Reserve Policy Shift: Ending QT [13:43]

• On December 1st, 2025, the Federal Reserve Bank ended quantitative tightening (QT).
• This signifies a policy shift from removing money from the economy to actively printing more money.
• The video notes that on December 2nd, 2025, the Fed printed $13.