Analysis of: Criminal investigation into Fed chair Powell has ‘reinforced’ concerns over independence, Goldman Sachs warns – business live
The Guardian | January 12, 2026
The Trump administration's criminal investigation into Federal Reserve Chair Jerome Powell represents a significant moment in the ongoing struggle over monetary policy control in the United States. While framed as a dispute over building renovations and congressional testimony, the underlying conflict concerns which faction of capital will direct the creation and distribution of money—a power that fundamentally shapes class relations and wealth accumulation. The Federal Reserve has historically served as a mechanism through which financial capital exercises discipline over the broader economy, maintaining 'independence' from elected government while remaining deeply intertwined with banking interests. Trump's pressure campaign, backed by figures like Kevin Hassett and Kevin Warsh (both representing different segments of capital), seeks to redirect monetary policy toward cheaper credit that would benefit indebted corporations, real estate interests, and speculative finance. The investigation into Powell, occurring just months before his term expires, functions as both punishment for resistance and warning to potential successors. Market reactions—the falling dollar, rising gold prices, and dropping stock futures—reveal the anxiety among investors about what happens when the pretense of central bank neutrality is openly shattered. Goldman Sachs warning about 'reinforced concerns over independence' reflects finance capital's recognition that explicit political control over money creation introduces unpredictability into their calculations. Yet this conflict obscures a deeper continuity: whether controlled by appointed technocrats or political appointees, monetary policy remains a tool for managing capitalism's contradictions in ways that protect capital accumulation while disciplining labor through inflation targeting and employment levels.
Class Dynamics
Actors: Financial capital (Goldman Sachs, JPMorgan, investment sector), Industrial capital (oil majors like Exxon), Real estate capital (British Land, property developers), Political executive (Trump administration), Technocratic state apparatus (Federal Reserve), Working class (mentioned abstractly as 'employment' concern)
Beneficiaries: Speculative finance seeking cheaper credit, Indebted corporations, Real estate developers, Gold holders hedging against dollar instability, Political allies positioned to control Fed appointments
Harmed Parties: Workers facing potential inflation from politicized rate cuts, Fixed-income holders and savers, Those excluded from asset ownership during cheap money periods, Hospitality and retail workers facing business pressures
The conflict reveals an intra-capitalist struggle between financial capital (preferring technocratic Fed management for predictability) and political-industrial capital aligned with Trump (seeking direct control for immediate policy benefits). Both factions require working-class discipline—whether through unemployment threats or inflation management—but differ on methods. The Fed's 'independence' has always been independence from democratic accountability while remaining responsive to banking interests; Trump's intervention threatens to replace banker-technocrat control with executive-political control, alarming the former faction.
Material Conditions
Economic Factors: Interest rate levels affecting borrowing costs across economy, Dollar value and its role as global reserve currency, Inflation management and its class-differentiated impacts, Bond market pricing and government debt servicing costs, Real estate valuations tied to credit availability, Rare earth mineral supply chains and China competition
The article reveals how monetary policy shapes production relations: cheaper credit benefits capital-intensive industries and asset owners while potentially eroding worker purchasing power through inflation. British Land's bet on office returns reflects capital's interest in maintaining workplace discipline. The rare earth discussion shows how great power competition over strategic materials drives industrial policy. Exxon's Venezuela standoff demonstrates how state power serves capital's access to resources while individual corporations may resist specific political demands.
Resources at Stake: Control over money creation and interest rate setting, Dollar hegemony and reserve currency status, Venezuelan oil reserves, Rare earth minerals critical for technology and defense, London commercial real estate, US Treasury bonds ($4.2-4.86% yields mentioned)
Historical Context
Precedents: Nixon's pressure on Fed Chair Arthur Burns (1970s), Reagan administration conflicts with Paul Volcker, Historical periods of explicitly political central banking pre-1951 Fed-Treasury Accord, Weimar Republic and other hyperinflation episodes from politicized money creation, West's abandonment of rare earth mining to China in 1980s
The struggle over central bank independence reflects a recurring tension in capitalist governance: the need for a state apparatus that serves capital's long-term interests while insulating monetary policy from democratic pressures and short-term political calculations. The Fed's creation in 1913 established banker-influenced technocratic control; its 'independence' has always meant independence from popular accountability rather than from financial interests. Trump's intervention represents a shift toward more direct executive control over monetary policy, echoing earlier periods before the post-WWII institutionalization of central bank autonomy. This occurs during a broader crisis of neoliberal governance legitimacy.
Contradictions
Primary: Capital requires stable, predictable monetary management for long-term planning, yet individual capitalists and their political representatives constantly pressure for favorable short-term policies (lower rates, cheaper credit)—creating tension between systemic stability and immediate profit maximization.
Secondary: Fed 'independence' from politics depends on political appointment and can be undermined politically, revealing independence as contingent rather than structural, Markets fear politicized Fed while simultaneously demanding Fed intervention during crises, Trump's deregulatory capitalism requires institutional stability that his governance style undermines, Finance capital benefits from both Fed independence (predictability) and political pressure (lower rates), Dollar hegemony requires international confidence that political interference erodes
The immediate contradiction may resolve through Powell's departure and appointment of a more compliant chair, temporarily satisfying political pressure while potentially destabilizing dollar confidence. Long-term, this represents an intensification of contradictions within American capitalism's institutional framework. Either renewed institutionalization of Fed autonomy (if capital's stability concerns prevail) or a shift toward more explicitly politicized monetary management (benefiting whoever controls the executive) may emerge. Neither outcome addresses the fundamental contradiction that monetary policy under capitalism serves capital accumulation regardless of its institutional form.
Global Interconnections
This domestic political conflict connects to global dynamics of dollar hegemony and great power competition. The simultaneous discussion of rare earth supply chains reveals how monetary policy sovereignty intersects with resource competition against China. As the dollar's reserve currency status depends partly on perceived institutional stability, Trump's Fed pressure contributes to dedollarization pressures already emerging from sanctions regimes and geopolitical realignment. Rising gold prices and bond yield movements reflect global capital's hedging against US institutional uncertainty. The British Land story, seemingly disconnected, illustrates how capital globally responds to post-pandemic restructuring—the return-to-office push serving not just productivity claims but commercial real estate valuations and workplace discipline. International investors watching Fed independence erosion must calculate whether US assets remain safe havens or whether institutional decay makes alternatives more attractive, potentially accelerating multipolar currency arrangements that would diminish American capital's global advantages.
Conclusion
The Powell investigation exposes how struggles over monetary policy, typically obscured by technical language about inflation targets and employment mandates, are fundamentally about class power and wealth distribution. For working people, the relevant question is not whether technocrats or politicians control the Fed, but whether monetary policy will serve broad prosperity or narrow accumulation. Neither faction in this elite conflict represents worker interests—both seek to manage capitalism's contradictions in ways that preserve capital's prerogatives. However, the visible cracking of institutional facades may create openings for public education about money's political nature and demands for genuinely democratic economic governance. The immediate outcome will likely favor capital's short-term interests through rate cuts, with workers bearing inflation costs while asset owners benefit from cheaper credit—a reminder that central bank independence has never meant independence from class interests, only from democratic accountability.
Editorial Note: This analysis applies a dialectical materialist framework to news events. It represents one interpretive perspective and should not be considered objective reporting.
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