Musings of the Day, 7/21/25: One key lesson from Trump 1.0 is that he likes to keep folks guessing about his true intentions while maximizing optionality to maneuver. Case in point: A lot of folks are fretting over Trump’s noise over firing Powell, citing his increasingly aggressive rhetoric. In this case, I think the bluster is intentional with little/no intent to back it up. I see very low probability of this outcome, simply because he would be giving away optionality to maneuver — especially during ongoing Tariff negotiations. By vociferously castigating Powell (but not doing anything about it), Trump has set up the perfect Fall Guy if the economy takes a dump for ANY reason. The transition of Pusillanimous Powell to Parsimonious Powell creates a perfect scapegoat that allows him to be aggressive on Tariffs: Heads: the economy slows down, and Powell’s hand is forced anyway. Tails: Powell stays intransigent, and Trump has a free scapegoat option until 2026.

Gee what a surprise. Zero upside to firing Powell, imho. 👆