Musk declares war: the Fed may face review, replacing Powell "awesome"

Powell's 'one-on-one' visit to Capitol Hill, Musk warns the Fed may face DOGE audit, and praises the proposal to replace Powell with Ron Paul.

Article Author: Xiao Yanyan

Article source: Golden Ten Data

Billionaire Elon Musk said the Fed could face scrutiny as the Department of Government Efficiency (DOGE) continues to audit federal agencies and spending. Musk has long criticized the Fed's monetary policy decisions and claimed that the Fed's workforce is too bloated.

Musk said in a series of social media posts last weekend that the Fed should face stricter scrutiny. This Tuesday and Wednesday, Fed Chairman Powell will testify before Congress.

As the head of DOGE, Musk has stirred up a storm in Washington. He wrote on X that the Fed cannot override the scrutiny of the government expert group. "All aspects of the government must be fully transparent and accountable to the people. No exceptions, including (if not particularly including) the Fed."

Musk's remarks are a response to an X user who believes that the Fed has never conducted a full audit or full disclosure of monetary policy decisions.

The law requires the financial statements of the Federal Reserve to be audited annually by an independent external accounting firm. To ensure the independence of the auditors, the Federal Reserve requires external auditors to maintain independence on all matters related to the audit. In addition, the Government Accountability Office and the Office of the Inspector General of the Federal Reserve should regularly audit many activities of the Federal Reserve.

Musk also responded separately to another post from user X, which stated that Musk is considering having 89-year-old former Congressman Ron Paul lead the audit of the Federal Reserve. Musk said, 'This would be great.'

During his time in Congress, Ron Paul was known for pushing for a full audit of the Federal Reserve by the Government Accountability Office, including its deliberations on interest rate policy and reporting to Congress. In 2009, he wrote a book called "End The Fed".

Last weekend, Musk also responded to a post by current US Senator Mike Lee about the Fed. He said, 'If you want to see Ron Paul as the chairman of the Federal Reserve, raise your hand.' Musk said, 'That would be great.'

Musk's remarks come as Powell prepares to face torture from lawmakers. He will appear before the Senate on Tuesday and Wednesday before the House of Representatives. The two hearings are part of Powell's semi-annual testimony before Congress.

Powell is expected to face a range of issues, from the impact of monetary policy and tariffs to the future of bank capital requirements, as well as actions by large lending institutions to 'exclude' certain customers. Democrats are likely to push him to defend the independence of the Federal Reserve relative to the executive branch.

Last weekend wasn't the first time Musk mentioned the Federal Reserve since Trump was elected president. In another article at the end of December last year, he referred to the Fed as "ridiculously overstaffed". Last summer, he also said that the Fed was cutting interest rates too slowly. In August last year, he wrote on X that the Fed "needs to cut interest rates" and that "not cutting rates is stupid". The Fed subsequently cut interest rates in September as expected by the market, and further reduced them in November and December.

Powell was asked about these comments at a press conference in January, saying, “You know, our budget process is very careful. We are fully aware that we are accountable to the public, and we believe we have done that.”

In recent months, he has also repeatedly defended the independence of the Federal Reserve. Powell said in an interview at the New York Times DealBook Summit in December last year, "I am not worried that we will risk losing our statutory independence, because I do believe that people hold these views firmly."

Since Trump took office on January 20th, Musk and his DOGE team have disrupted the U.S. Capitol, gaining technology from multiple government departments, causing work stoppages at large institutions, and urging employees to voluntarily resign.

DOGE plans to abolish 329 federal agencies, with the Consumer Financial Protection Bureau (CFPB), an independent regulatory agency under the Federal Reserve, being the first to be targeted, directly weakening the Federal Reserve's financial control. Over the weekend, DOGE staff entered the headquarters of the CFPB, which is funded by the Federal Reserve. The acting director of the bureau told all staff on Monday not to enter the office or do any work.

Last weekend, a federal judge temporarily banned the Musk team from accessing a sensitive payment system at the Department of the Treasury on the grounds of 'irreparable harm'.

Last week, Treasury Secretary Mnuchin gave assurances to Musk at the Treasury and the Fed. He said he was "completely on the same page" with Musk and that Musk's team had read-only access to the Treasury's payment system. As for the Fed, he said that Trump did not ask the Fed to lower short-term interest rates, but sought to lower long-term borrowing costs by targeting 10-year Treasury yields through policies that promote economic growth, increase productivity and reduce government spending.