If Trump Gains Control of the Fed, His Power Mongering Will Be Limitless
The Supreme Court should really stop the dismissal of the Federal Reserve governor. If it doesn’t, the rule of law and the economy are in serious danger.
Since his election victory, Donald Trump has been convinced that the separation of powers era in the United States is over — and that there should be no limits to his authority. And so far, the results have proved him right. Among other things, the president has fired countless directors of independent agencies because they weren't loyal enough. While the Supreme Court hasn't yet issued any final ruling in these cases, it has let Trump have his way for now.
However, the Supreme Court recently set a hurdle for the Federal Reserve. The court described the Fed as “a uniquely structured, quasi-private institution” that differs from other government agencies. It is this boundary that Trump is now trying to cross by firing respected Fed Gov. Lisa Cook on a flimsy pretext. The law requires just cause for Trump to do this. Even if he can prove the allegations of mortgage fraud he has leveled at Cook — something that is far from the case — the Trump team’s charges do not amount to the required cause.
Now the authoritarian president and the powerful central bank are gearing up for a stand-off. Cook refuses to step down, while Fed Chief Jerome Powell — himself under fire from Trump — could declare the firing invalid; Cook is considered Trump’s ally with regard to monetary policy. The case will then move to the courts and then shortly to the Supreme Court.
Justices under Fire
This marks a crucial test for the conservative Supreme Court majority. Should the justices side with Trump, they will — blinded by ideology — throw the system of checks and balances to the would-be dictator like raw meat. Trump won’t hesitate to pursue other entities that stand in his way, especially the large Democratic strongholds such as California, New York and Illinois. It would mark the end of a 250-year-old democracy.
The impact on the U.S. economy would be just as severe. The Fed’s independence from political influence serves as a safeguard against inflation and remains a cornerstone of financial market stability. If Trump replaces Cook with a supporter, he could soon gain control over monetary policy and push interest rates down to a level that exacerbates inflation, already driven by his trade tariffs. That would destabilize the global reserve currency, the dollar and the massive U.S. bond market — causing long-term interest rates to rise, something that runs contrary to what Trump intends. The Fed’s credibility and the stability of the U.S. financial system would erode in no time.
Political Influence
Even if Cook manages to defend her position in court, the Fed’s credibility is in jeopardy. In the face of an imperial president seeking absolute power over the state, the Fed's bankers and economists would struggle to hold their ground in the long run. Even the mere perception of political influence would stoke inflation expectations, making it harder for the central bank to rein in rising prices without harming the economy.
Trump’s lust for power can only be curtailed if the American public feels the full brunt of catastrophic Trumponomics — and public opinion turns sharply against him and his party.
Since his election victory, Donald Trump has been convinced that the separation of powers era in the United States is over — and that there should be no limits to his authority. And so far, the results have proved him right. Among other things, the president has fired countless directors of independent agencies because they weren't loyal enough. While the Supreme Court hasn't yet issued any final ruling in these cases, it has let Trump have his way for now.
However, the Supreme Court recently set a hurdle for the Federal Reserve. The court described the Fed as “a uniquely structured, quasi-private institution” that differs from other government agencies. It is this boundary that Trump is now trying to cross by firing respected Fed Gov. Lisa Cook on a flimsy pretext. The law requires just cause for Trump to do this. Even if he can prove the allegations of mortgage fraud he has leveled at Cook — something that is far from the case — the Trump team’s charges do not amount to the required cause.
Now the authoritarian president and the powerful central bank are gearing up for a stand-off. Cook refuses to step down, while Fed Chief Jerome Powell — himself under fire from Trump — could declare the firing invalid; Cook is considered Trump’s ally with regard to monetary policy. The case will then move to the courts and then shortly to the Supreme Court.
Justices under Fire
This marks a crucial test for the conservative Supreme Court majority. Should the justices side with Trump, they will — blinded by ideology — throw the system of checks and balances to the would-be dictator like raw meat. Trump won’t hesitate to pursue other entities that stand in his way, especially the large Democratic strongholds such as California, New York and Illinois. It would mark the end of a 250-year-old democracy.
The impact on the U.S. economy would be just as severe. The Fed’s independence from political influence serves as a safeguard against inflation and remains a cornerstone of financial market stability. If Trump replaces Cook with a supporter, he could soon gain control over monetary policy and push interest rates down to a level that exacerbates inflation, already driven by his trade tariffs. That would destabilize the global reserve currency, the dollar and the massive U.S. bond market — causing long-term interest rates to rise, something that runs contrary to what Trump intends. The Fed’s credibility and the stability of the U.S. financial system would erode in no time.
Political Influence
Even if Cook manages to defend her position in court, the Fed’s credibility is in jeopardy. In the face of an imperial president seeking absolute power over the state, the Fed's bankers and economists would struggle to hold their ground in the long run. Even the mere perception of political influence would stoke inflation expectations, making it harder for the central bank to rein in rising prices without harming the economy.
Trump’s lust for power can only be curtailed if the American public feels the full brunt of catastrophic Trumponomics — and public opinion turns sharply against him and his party.
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