Over the past few days, headlines have exploded, and stock markets have reacted, as President Trump took to Truth Social to call Federal Reserve Chairman Jerome Powell a "loser" and suggested he should be fired for not cutting rates.

While firing the Fed Chair isn't something a President can easily do, the mere idea—and the public pressure—raises a crucial question:

Is the Fed truly independent and what if they become less so?

Is the Fed truly independent? Or is the independence increasingly an illusion, vulnerable to political influence and short-term agendas?

As Chief Investment Officer (CIO) of Members’ Wealth, I find this debate extremely important to understand—and deeply relevant to how we think about investing today.

Because if you strip away the personalities, the tweets, and the news cycle, a bigger truth emerges:

No institution—be it the Federal Reserve, an investment firm, or even a single investor—is ever fully independent or conflict free or free from error.

Bias, incomplete information, incentives, emotions—they're always part of the picture.

The question isn’t whether influence exists. It’s more, how should we navigate it.

The Fed's Contradictory Origins: A "Free Market" with Centralized Control

The Federal Reserve was created after the Panic of 1907 to stabilize a chaotic, bank-run-prone financial system. It was built to be independent of politics, which is an important parameter in this blended centralized/free market system. Governors are nominated by the President but serve 14-year staggered terms, specifically to insulate them from election cycles. Separately, the Chair (Jerome Powell) is appointed for a 4-year term from among the Governors and must also be confirmed by the Senate.

But there's a contradiction baked into the system:
The Fed sets arguably the most important price in a capitalist economy—the price of money (interest rates)—by governor committee, not necessarily by free market forces.

Most Americans believe in capitalism.
Most (at least most of those that take the time to think about it) also believe in a balance between centralized and decentralized decision-making.
Yet the very Fed system is designed with a centralized control at its heart with the decentralized portion being political independence. All a lot to take in – I realize.

It’s not perfect. It’s human. It’s a balancing act.
And it’s one that investors must understand—not just today because of Trump’s remarks, but every day.

My CIO Parallel: Bias, Influence, and Investment Discipline

At Members’ Wealth, we strive to be rational and data-driven.
But like the Fed, we’re not immune to influence, bias, or temptation.

For example, in my own history, there were times when the Fed’s prolonged low-rate environment tempted me to shorten bond portfolio duration too far but investment process discipline pulled me back.

Sometimes I was right for the wrong reasons.
Sometimes I was wrong for the right reasons.
And sometimes, the outcomes simply reflected the messy, imperfect reality of investing in a dynamic world.

This is why wealth management—done right—isn’t about chasing outcomes or trying to predict political maneuvers.

It’s about attempting to position portfolios to endure, evolve, and thrive across market cycles and policy shifts, not because of them.

What If Fed Independence Erodes?

If the current administration or the next or some future administration succeeds in applying more direct pressure—or changing leadership—it could mean:

• Short-Term: Lower rates, potentially juicing stock prices and boosting risk appetite but could also spread fear of the loss of independence and cause stock price losses.
• Medium-Term: Higher inflation risks, increased asset bubbles, higher stock market and interest rate volatility and deeper long-term instability.
• Long-Term: Loss of Faith in the ideals of American Capitalism. Though one would hope and I believe that despite short term turbulence, capitalism’s relentless drive for innovation and efficiency will find a way forward. And our money will have to follow that relentless drive on American shores or elsewhere.

Markets react fast.
But economics play out slow.
And while politicians may tilt the game board, they can't rewrite the rules of supply, demand, risk, and reward.

Just like in Jurassic Park, in a population of all females, life finds a way—so too does capitalism.

Our Position Today

Personally, and for many of our clients, we are monitoring the situation carefully—not panicking, but being intentional:

• Does a slight reduction in equity exposure make sense if independence diminishes?
• Should we increase allocations to short-duration, higher-yielding corporate bonds to protect from rising rates?
• Certainly, we should at the very least focus on companies less sensitive to interest rate manipulation and/or tariff disruptions

We invest in the enduring power of capitalism, even as we stay aware of the political winds swirling around monetary policy.

Capitalism is what got me excited to make my first investment 30 years ago—and it’s what excites me even more today.

Final Thought

The Fed was never perfectly independent.
Markets are never perfectly priced (at least in my opinion).
Investors are never perfectly rationale.

But through humility, discipline, and a focus on the long-term engines of growth—capitalism, innovation, and human ingenuity—we can still navigate uncertainty with clarity and confidence.

Thanks for trusting us to navigate this journey with you.

Investment strategies, including rebalancing, do not guarantee improved performance and involve risk, including potential loss of principal. Past performance does not guarantee future results.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. 
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

About the Authors

Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

Tim Macarak CFP®

Tim Macarak is President & Head of Wealth Management at Member’s Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure overtime, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Tim and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs and is determined to put service before all else.

Tim is a CERTIFIED FINANCIAL PLANNER® Professional. Outside work, he enjoys spending time with his wife and kids, Skiing, Coaching, and Traveling. To learn more about Tim, connect with him on LinkedIn.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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