There’s a ton of chatter around the U.S. economy, with the Fed’s independence on the line and recession risks rising again.
The August jobs report barely moved the needle (+22,000; jobless rate 4.3%), a remarkably soft print that feeds into the cooling demand narrative.
At the same time, ISM Manufacturing was mostly in contraction at 48.7, reinforcing that growth is losing steam. What’s worrying is that it comes even without the likely policy shock.
Adding to the mix, billionaire hedge-fund mogul Ken Griffin has a bombshell take with market-moving implications that are virtually impossible to ignore.
For perspective, Griffin founded Citadel, a multi-strategy powerhouse managing roughly $63 billion in assets. Also, with his Forbes net worth near $42 billion, he’s not just another opinion; he’s among Wall Street’s most influential signals.
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Billionaire Ken Griffin drops “don’t politicize the Fed” bombshell on the economy
Billionaire Ken Griffin fired a massive warning shot at keeping politics away from the Fed.
In a Wall Street Journal op-ed co-authored with Chicago Booth’s Anil Kashyap, the Citadel founder warned that undermining central-bank independence by pressuring or replacing Fed officials leads to higher inflation expectations and an increased risk premium on U.S. debt.
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That means higher borrowing costs for households, companies, and Washington.
Griffin and Kashyap also sounded the alarm on political interference in economic-data institutions (like the BLS), highlighting the importance of credibility in market pricing and policy.
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Citadel’s own Instagram feed reinforced the message: “It is in the President’s best interest for the Fed to be seen as independent — and to act independently.”
Griffin’s take flags a deeper chain reaction where political pressure clips away at Fed credibility, leading to more expensive capital, effectively tightening markets and dragging riskier assets even without a recession.
Ken Griffin highlighted these risks of politicizing the Fed:
- Trigger: Attempts to dismiss/pressure Fed governors will jeopardize independence, raising risk premiums.
- Spillovers: Mortgages, IG/HY spreads, and Treasury yields will bear the cost first.
- Data risk: Politicizing BLS/economic stats will severely impact investor trust and policy efficacy.
- Market read: A credibility hit tightens financial conditions, which becomes bearish for high-duration stocks.
Why Fed independence keeps markets stable
When the Fed is working without any political pressures, inflation expectations are efficiently anchored, and borrowing costs become a lot more predictable.
However, if politics intervenes, investors often look for a higher “risk/term premium” to hold U.S. debt, pushing up market interest rates, even if the Fed decides against hiking.
For households, that’s real money. For instance, every 1 percentage point rise in a 30-year mortgage could add roughly $200/month on a $300,000 loan.
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For companies and the government, the pricey capital results in fewer projects, slower hiring, and bigger interest bills.
Tensions between the government and the Fed escalated through summer 2025, with President Donald Trump criticizing Chair Jerome Powell for opting against cutting rates and exploring ways to change Fed leadership.
The legal guardrails currently make firing a Fed chair difficult, with Powell’s term running to May 2026, and with him expected to remain a governor until January 2028.
Recent flashpoints between President Trump and Fed Chair Powell:
- July 16, 2025: President Trump says it’s “highly unlikely” he’ll be firing Powell, despite reports he was considering it.
- Aug. 7, 2025: The president nominates Stephen Miran to a vacant Fed Board seat through Jan 31, 2026, signaling greater activity in reshaping the board.
- Aug. 26-29, 2025: President Trump says Governor Lisa Cook is fired “effective immediately,” while the Fed said that Cook remains seated pending court action.
- Sept. 2, 2025: Cook publicly says the alleged mortgage inconsistencies don’t justify her removal.
- Sept. 6, 2025: Reuters reports the president has three finalists to potentially replace Powell when his term ends next year.
- Sept. 8, 2025: Senate Democrats demand Miran resign from his White House role if seated at the Fed, due to conflict-of-interest concerns.
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