Jill On Money: Can Trump fire Powell?

April is Financial Literacy Month and to celebrate I am answering a few of your questions Q Can President Donald Trump Fire Federal Reserve Chair Jerome Powell Related Articles Traveling abroad soon What to look out for when exchanging money What does it cost to own a home in Jill On Money Timing the territory STILL does not work Tariffs could cost the average American household per year Here s how to save for it Jill On Money Bond sphere forces Trump to blink The Federal Reserve was created by Congress in to make the American banking system more stable Banking panics had occurred often throughout the th century and establishment of an independent federal central bank was a way to reduce those events in frequency and impact Unlike numerous other agencies the Fed s independence was seen as vital Congress understood that the nation s central bank must be shielded from political pressure so that it could steer the financial market without fear of retribution Given the Fed s unique independence the bar is high for the president to fire Fed bureaucrats FDR tested this concept and lost According to a Supreme Court ruling Fed representatives can only be forced out or fired for cause which bulk have interpreted as specific sort of crime like embezzlement For his part Powell has been steadfast in his assertion that presidents may not legally fire or demote the Fed chair and he would not step down if questioned to do so Q Bonds have made headlines this month Please explain how they work Buying a bond is essentially the process of making a loan to an entity whether that s a cabinet a state a municipality or a company The loan is established for a predetermined period the term at a fixed rate of interest the coupon Borrowers are on the hook for interest payments either at periodic intervals usually every six months or at the end of the agreement when they repay the obligation in full The higher the menace that the borrowing entity will not repay the bond the more interest that the bond buyer will demand If you want to sell a bond before it matures you may find that the price has changed For example let s assume you purchased a -year U S administration bond in early for and the interest rate was Flash forward three years when new -year bonds are paying and you can see how your bond is not worth as much Who would buy your bond when they could earn more than If you wished to sell your existing bond in the field you would have to drop the price to induce someone to buy your existing bonds That s why it is noted that bond prices move in the opposite direction of prevailing interest rates Q How can I explain compounding to my kids Use this example If you deposit in the bank and the bank pays interest of annually at the end of the first year you will have in the account If you keep your money in the account for another year you earn another interest payment on both the original and the your money has earned At the end of two years my money will grow to Time can super charge how much your money can grow but compounding works against you when it comes to debt That s why high interest debt that is assessed on credit card balances can be so pernicious Q Given the big cuts to administration programs I m worried about Social Prevention Should I be The Trump Administration has repeatedly stated that it would not make cuts to Social Prevention or Medicare for that matter The reason seems pretty clear Tens of millions of Americans rely on the venture The Trump Administration understands that a lot of those Social Safety recipients vote so it is unlikely to touch benefits Related Articles Sprouts Farmers Field set to open in Pittsburg next month Homebuyers dilemma As Trump tariffs swing stock sphere hold off Or buy the dip Guatemalan restaurant eyes two San Jose locations in expansion push My Social Measure is my Social Safeguard With Trump Musk and DOGE will it stay that way Business owner in showdown with VTA over land seized for San Jose BART extension Jill Schlesinger CFP is a CBS News business analyst A former options trader and CIO of an venture advisory firm she welcomes comments and questions at askjill jillonmoney com Check her website at www jillonmoney com