Billionaire Elon Musk suggested in a series of social media posts this past weekend that the Federal Reserve should undergo closer scrutiny, making the comments just days before Fed Chair Jerome Powell is scheduled to testify on Capitol Hill.
Musk — who is already roiling Washington as head of the Department of Government Efficiency (DOGE) — said in one post on X Sunday that “All aspects of the government must be fully transparent and accountable to the people. No exceptions, including, if not especially, the Federal Reserve.”
It came in reaction to a post from another X user who argued that the Fed has never had a full audit or a full disclosure of monetary policy decisions.
The Fed is required by law to have its financial statements audited annually by an independent, outside public accounting firm. To ensure auditor independence, the Fed requires that the external auditor be independent in all matters relating to the audit.
In addition, the Government Accountability Office, as well as the Federal Reserve Board’s Office of Inspector General, frequently audit many Fed activities.
Musk on Sunday separately responded to a post from another X user stating that Musk was considering tapping 89-year-old former Congressman Ron Paul to head an audit of the Fed. Musk stated: “This will be great.”
Paul, while in Congress, was well known for pushing a full audit of the Fed conducted by the Government Accountability Office, including its deliberations on interest rate policy, that would be reported back to Congress. He authored a 2009 book called “End The Fed.”
Musk this past weekend also reacted to a Fed-related Paul post from current US Senator Mike Lee, who said “raise your hand if you would like to see Ron Paul as chair of the Federal Reserve.” Musk stated: “That would be amazing.”
Musk’s comments come as Powell prepares this week to face the lawmakers who provide the basis of the Fed’s long-standing independence from the executive branch.
He will appear before a Senate committee on Tuesday and a House committee on Wednesday. Both hearings are part of Powell’s semiannual testimony before Congress.
Powell is expected to face a raft of questions that could range from monetary policy and the effect of tariffs to the future of bank capital requirements and the actions of big lenders to “debank” certain customers. Democrats are likely to push him to defend the Fed’s independence from the executive branch.
This past weekend was not the first time Musk has mentioned the Fed since Donald Trump’s election as president. In late December he used another post to call the central bank “absurdly overstaffed.”
Powell was asked about those comments at a January press conference and said, “You know, we run a very careful budget process. We’re fully aware that, you know, we owe the — we owe that to the public, and we believe we do that.”
Chair of the Federal Reserve of the United States Jerome Powell. (Photo by Bonnie Cash/Getty Images) ·Bonnie Cash via Getty Images
He has also in recent months repeatedly defended the Fed’s independence.
“I’m not concerned that there’s some risk that we would lose our statutory independence because I do think that those set of ideas are strongly believed by people,” Powell said during an interview at the New York Times’ DealBook summit in New York in December.
Since Trump assumed office on Jan. 20, Musk and his DOGE team have upended the nation’s capital by gaining access to technologies within several government departments, bringing work at big agencies to a stop, and urging workers to voluntarily leave their jobs.
Late last week, DOGE workers entered the headquarters of the CFPB, which draws its funding from the Fed. Its acting director told all of the agency’s staff Monday to stay away from the office and do no work.
A federal judge this past weekend temporarily blocked Musk’s team from accessing a sensitive payments system at the Treasury Department, citing the risk of “irreparable harm.”
Recently confirmed Treasury Secretary Scott Bessent last week offered assurances about both Musk’s Treasury work and the Fed. He said that he and Musk are “completely aligned” that the Musk team’s access to the Treasury’s payment system is read-only.
As for the Fed, he said President Trump is not asking the Fed to lower short-term interest rates, but rather will attempt to lower long-term borrowing costs by targeting the yield on the 10-year Treasury bond through policies that promote economic growth, productivity, and cutting government spending.
Trump is “not calling for the Fed to lower rates.”
The central bank held rates steady in the range of 4.25%-4.5% at its last policy meeting on Jan. 29 after cutting rates for three consecutive meetings by 100 basis points last fall.
After initially chiding the central bank on inflation following its policy decision, Trump shortly thereafter said, “I think holding the rates at this point was the right thing to do.”
Powell has made it clear the central bank will be moving slowly as it digests the path of inflation and the economic policies of the new administration.
“We’ll patiently watch and understand and kind of not be in a hurry to get to a place of understanding what our policy response should be until we see how it plays out,” he said last month.
Powell’s wait-and-see approach has been echoed by other members of the Fed over the past week.
Fed vice chair Philip Jefferson said, “I do not think we need to be in a hurry to change our stance.” San Francisco Fed president Mary Daly said, “We don’t need to be preemptive.” Richmond Fed president Tom Barkin said last Wednesday that “you want to wait and see.”
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
