Publication Date: November 21, 2025
Author: Siegmund Skalar, New York
Source: Finanz und Wirtschaft
Publication Date: November 21, 2025
Summary Reading Time: 3 minutes
Executive Summary
Donald Trump has already selected his favorite for Fed succession – likely his economic advisor Kevin Hassett. This personnel decision signals a fundamental policy shift toward political loyalty instead of traditional central bank independence. Both candidates (Hassett and former Fed Governor Kevin Warsh) favor AI-based justifications for lower interest rates – a theoretically questionable connection that serves Trump's fiscal objectives. For markets and the dollar, this could prove destabilizing in the medium term.
Critical Key Questions
Where does legitimate government coordination end – and where does instrumentalization of monetary policy begin for short-term political goals at the expense of long-term currency stability?
What systemic risks arise when AI productivity hypotheses serve as justification for lower interest rates, even though their economic effects remain completely unproven?
Can international markets and trading partners trust a Fed whose leadership is determined primarily by political allegiance rather than professional competence?
Scenario Analysis: Future Perspectives
Short-term (1 year):
Interest rate cuts become more likely, the dollar could come under pressure. Inflation risks increase if tariff policy and loose monetary policy coincide.
Medium-term (5 years):
Loss of credibility for the Fed as an independent institution. International investors might evaluate US government bonds more critically. AI productivity promises will prove to be overestimated or temporally delayed.
Long-term (10–20 years):
Structural weakening of the dollar's status as world reserve currency. Other central banks might copy political instrumentalization – with destabilizing consequences for the global financial system.
Main Summary
Core Theme & Context
Trump is preparing the most radical restructuring of US monetary policy in decades. The Fed is to transform from a technocratic institution into a loyal tool of government policy – a paradigm shift with global consequences.
Most Important Facts & Figures
- Kevin Hassett as Trump's economic advisor is clear favorite for Fed chair starting May 2026
- Alternative: Kevin Warsh (former Fed Governor), also signals unconditional loyalty
- Markets already expect three interest rate cuts by end of 2026
- $2000 credit from tariff revenues endorsed by Hassett
- October employment report was canceled due to budget dispute – interest rate decision based on outdated data
Stakeholders & Those Affected
- US savers and retirees: Real losses with rising inflation
- International investors: Dollar weakness and loss of confidence
- Emerging markets: Capital outflows with falling US interest rates
- Tech sector: Beneficiary of AI euphoria and cheap credit
Opportunities & Risks
Risks: Politicization of monetary policy undermines trust in US institutions. AI-based interest rate justification is scientifically questionable. Inflationary pressure from tariffs plus expansive monetary policy.
Opportunities: Short-term lower financing costs for companies. Innovation could be promoted through cheap credit – if AI productivity gains actually materialize.
Action Relevance
Companies should prepare for currency volatility and possible inflation surges. Investors must factor the end of Fed independence into their risk assessment. European central banks should demonstratively strengthen their own independence.
Quality Assurance & Fact-Checking
Verification Status: ✅ Facts checked on November 21, 2025
- Fed meeting in December confirmed
- Hassett as economic advisor verified
- [⚠️ To be verified]: Exact market expectations for 2026 interest rate cuts
Supplementary Research
Federal Reserve System – Official website with current interest rate decisions
Wall Street Journal – Kevin Warsh's opinion articles on Fed criticism
Bureau of Labor Statistics – Confirmation of employment report delay
Bibliography
Primary Source:
Powell Succession – With These Possible Fed Chiefs, Turmoil Awaits the US Central Bank
Verification Status: ✅ Facts checked on November 21, 2025