The Federal Reserve and its chair, Jerome Powell, are facing growing criticism as the U.S. grapples with economic uncertainty and inflation. The latest twist? Former President Donald Trump has renewed calls for lower interest rates, while Tesla billionaire Elon Musk is throwing his weight behind longtime Fed critic Ron Paul. Meanwhile, Bitcoin, often hailed as a hedge against central banking policies, has taken a sharp hit amidst shifting market expectations.

The Bitcoin and Gold Boom Amid Fed Uncertainty

Since the Federal Reserve initiated an interest rate-cutting cycle last September, Bitcoin prices have surged, mirroring gold’s record-breaking ascent. The instability in global markets and geopolitical uncertainty have prompted central banks worldwide to hoard gold, further fueling speculation about Bitcoin’s future. Coinbase CEO Brian Armstrong even predicts Bitcoin will surpass gold’s $18 trillion market cap.

However, Bitcoin’s rally hit a speed bump as fresh economic data and Powell’s recent statements threw cold water on expectations for additional rate cuts. The U.S. Consumer Price Index (CPI) for January came in hotter than expected at 3.3%, exceeding the 3.1% forecast. The data sent Bitcoin tumbling nearly 3% before a slight recovery, as markets adjusted their outlook on the Fed’s policy moves for 2025.

Trump’s Push for Lower Rates—and Musk’s Radical Proposal

Trump, never one to shy away from bold economic policy suggestions, took to Truth Social to demand lower interest rates, tying them to his proposed tariffs.

“Interest rates should be lowered, something which would go hand in hand with upcoming tariffs,” Trump posted. “Let’s rock and roll, America!”

Musk, meanwhile, has stirred up the conversation by endorsing the idea of Ron Paul as the next Fed chair. The former Texas congressman and author of End the Fed has been a fierce critic of the central banking system for decades, advocating for its complete abolition.

Musk responded positively to conservative commentator Charlie Kirk’s post suggesting Paul for the role, calling it a “great idea.” When Senator Mike Lee echoed the sentiment, Musk doubled down, saying, “That would be amazing.”

A Push to Audit—and End—the Fed?

The discussion took another turn when Musk also backed a proposal for Paul and Doge (Trump’s Department of Government Efficiency) to conduct a full audit of the Federal Reserve. Paul, known for his libertarian stance, made it clear that any audit would serve as a stepping stone toward dismantling the institution.

“I want to audit as a process [that will result in] people demanding it—‘we need to end this,’” Paul said on his Ron Paul Liberty Report channel. He cited the recent Doge-led investigation into USAID, which ultimately led to Trump shutting down the agency, as an example of how audits could drive major policy changes.

Paul has long championed Bitcoin as a countermeasure against excessive government spending and inflationary policies. At the 2021 Bitcoin Conference in Miami, he predicted that reckless government spending would only strengthen Bitcoin’s appeal. “It’s going to work well for Bitcoin,” he stated, urging people to take the cryptocurrency seriously as an alternative to the Federal Reserve System.

The Road Ahead: Bitcoin, Inflation, and Political Clashes

Powell’s reluctance to cut rates has put him on a collision course with Trump, who initially appointed him in 2017 but has since turned into a vocal critic. The Fed chair recently reiterated that rate cuts remain on hold to avoid reigniting inflation, a stance that investment analysts argue could even lead to whispers of rate hikes instead of reductions.

“With inflation stuck above the 2% target, continued strong economic growth, and a robust labor market, the need for further rate cuts looks to be diminishing by the day,” said Isaac Stell, investment manager at Wealth Club. “Markets are now pricing in just one rate cut for 2025.”

As the 2024 election cycle heats up, the battle over monetary policy is set to intensify. With Trump pushing for lower rates, Musk amplifying calls for Fed reform, and Bitcoin caught in the crossfire of economic uncertainty, the future of the financial system is anything but predictable. One thing is certain: the debate over the Fed’s role is far from over.