Donald Trump’s push to reshape the Federal Reserve—targeting Chairman Jerome Powell over $1.8M renovation allegations and demanding Fed board member Lisa Cook’s removal—risks undermining its independence, despite Supreme Court skepticism about firing her due to the Fed’s private-public structure. Historical precedents like Nixon pressuring Arthur Burns or Clinton influencing Greenspan show this isn’t new, but Trump’s overt tactics have alarmed even some Republicans. Critics blame the Fed’s post-1971 gold-detachment policies for dollar devaluation, economic instability, and inequality, while opponents warn direct political control could trigger financial chaos, advocating instead for audits or abolition over rate-setting debates. [Automatically generated summary]
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Trump's latest regime change target.
What does the Federal Reserve have in common with Venezuela and Greenland?
It has been targeted by President Trump for regime change.
The Justice Department recently launched a criminal investigation into whether Federal Reserve Chairman Jerome Powell lied to Congress about the cost of renovating the Federal Reserve's offices.
Many believe this investigation was launched in order to support President Trump's effort to replace Powell, who he nominated to be Fed chairman in 2017, with a Fed chairman who will accommodate President Trump's demands for lower interest rates.
Almost all observers believe that President Trump's desire to stack the Federal Reserve Board with loyalists who will tailor monetary policy to his liking motivated the investigation of the Federal Reserve System and board member Lisa Cook.
President Trump is using allegations that Cook lied on a mortgage application as a justification to fire her.
At a Supreme Court hearing on Lisa Cook's case, the majority of justices, including some who have been supportive of President Trump's attempt to exercise greater authority over federal agencies, seem to oppose his firing of Cook.
One reason for this would be viewing the Fed as different from federal agencies like the Federal Trade Commission because private banks play a role in the Fed's governance.
This indicates the Fed is a public-private hybrid.
The criminal investigation into Chairman Powell and the attempt to fire Lisa Cook have caused investors, stockholders, and others to fear Trump is endangering the economy by compromising the Fed's independence.
This supposed threat to Fed autonomy has also caused some Republicans who are usually defenders of President Trump to criticize him.
There is a long history of presidential attempts to influence monetary policy.
President Richard Nixon, for example, pressured the Fed chairman Arthur Burns to lower rates.
Nixon and Burns were even recorded joking about Fed independence.
Fed Chairman William Martin may not have liked Ike, but he caved to President Eisenhower's demands that the Fed increase the money supply.
President Bill Clinton persuaded Fed Chairman Alan Greenspan to support Clinton's economic plans.
The most extreme case of presidential pressure, at least until the Justice Department launched its criminal probe into Powell, was when President Lyndon Johnson shoved the Fed chairman against a wall because the Fed raised interest rates, causing trouble for Johnson's great society at home and the Vietnam War abroad.
President Trump is thus not different from his predecessors.
He is just more transparent.
Opponents of Federal Reserve independence have a point.
Allowing a secreted central bank to control interest rates and the money supply is the reason the purchasing power of the dollar has vastly declined since 1971, when President Nixon severed the last link between the dollar and gold.
Fed-produced fiat currency is also the cause of rising economic instability and inequality.
The beneficiaries of this system are the politicians and the corporatist interests living off the welfare warfare state.
On the other hand, President Trump's critics are correct that giving politicians power to set interest rates would be a recipe for disaster.
Instead of arguing over who should control the money supply and set rates, President Trump and Congress should work to audit the Fed and end the Fed.