Within the context of the United States’ political and economic landscape in early 2025, three closely interconnected events stand out: the potential government shutdown on March 14, the establishment of a congressional committee to scrutinize the Federal Reserve’s (Fed) policies, and the speculative Mar-a-Lago Agreement designed to devalue the dollar. Named after Trump’s private club in Palm Beach, Florida, this agreement centers on international arrangements to weaken the dollar thereby improving the competitiveness of U.S. exporters. Implementing such a plan would necessitate a fundamental transformation of the Fed’s monetary policy framework, heightening the significance of ongoing criticism and investigations into its activities.
The House Financial Services Committee has established a task force to assess the Fed’s activities, with its first meeting scheduled for March 4, 2025. The primary focus is on evaluating the trade-offs between inflation management and employment stabilization. This initiative reflects growing Republican criticism of the Fed’s independence, including calls for its radical reform or even outright dissolution. The impending lapse in temporary federal budget funding on March 14, 2025, raises the specter of a government shutdown. Meanwhile, the Republican Party, which holds a majority in Congress, is grappling with internal divisions over fiscal policy priorities.
Stephen Miran, Trump’s nominee to head the White House Council of Economic Advisers, outlined potential policy options in a recent article to reform the global trading system and address economic imbalances caused by the “persistent overvaluation of the dollar.” This perspective aligns with the assertive posture of Steve Bannon, former chief strategist for Donald Trump, and underscores the deepening rift between the financial elite and the Trump-aligned wing of the Republican Party.
Steve Bannon has emerged as a prominent detractor of the Fed, calling for its dismantling and supporting stringent fiscal policies to refocus the economy toward domestic priorities. He anticipates a government shutdown as a tactical maneuver to exert pressure on Republican leaders, serving as a catalyst for an agenda that intertwines fiscal and monetary reforms with an anti-globalist program. Bannon and Trump-aligned conservatives prioritize economic growth through tax cuts and deregulation, implicitly intensifying criticism of the Fed as an obstacle to these goals. Conversely, the financial establishment defends the Fed’s independence and current monetary policy as essential to maintaining the dollar’s stability and the United States’ global influence. The outcome of these processes will determine the future of U.S. fiscal and monetary policy, placing the country in a delicate and high-stakes balancing act.