Lone Candle
Champion of Truth
A key part of keeping Peru’s currency stable are reforms that made their central bank independent from politicians. Trump is currently weakening this separation in the United States.
https://www.youtube.com/watch?v=vDayhEHc5OE
“Independence has underpinned financial markets’ trust in central banks for half a century and has provided much of the basis for the U.S.-led international economic order.
Across the Atlantic, Cook’s counterparts at the European Central Bank are alarmed that Trump’s moves could not only set a dangerous precedent — but also have a tangible impact on their own policymaking, which is inexorably influenced by the course charted by the Fed.
“Attacking the independence of the Fed, the Trump administration inflicts a serious damage to the American economy,” said Bank of Greece Governor Yannis Stournaras in emailed comments to POLITICO. “The implications will come sooner rather than later.”
When independence is threatened, monetary policy “becomes dysfunctional, it starts doing things that it shouldn’t do,” European Central Bank President Christine Lagarde told Fox News in an interview Sunday before Trump’s move to oust Cook, but after he had already signaled he wanted her out.
“The next step is disruption. It is instability, if not worse. So I think that this should not be debated,” Lagarde added.
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Others expressed a similar wariness, with one Governing Council member, granted anonymity to candidly discuss the sensitive subject, fretting that a breach of the Fed’s independence could have “enormous repercussions on the financial world,” while also stressing the basic principle of due legal process that’s not been afforded to Cook.”
https://www.politico.eu/article/donald-trump-attack-federal-reserve-lisa-cook-alarm-europe-economic-stability/
“The second Trump administration has been consumed by two central themes. The first theme is the unprecedented pace at which this administration has attacked the rule of law and the constitutional system on which it is built. The second theme is the unprecedented weakness of the response from major institutions to the Trump administration’s actions. Wall Street’s passivity amid Trump’s unprecedented attack on the Fed is only the latest example.”
https://www.politico.com/news/magazine/2025/08/26/trump-lisa-cook-federal-reserve-markets-opinion-00525449
If Trump successfully destroys the Fed’s independence, he will have eliminated the country’s ability to manage the economy with limited influence by short-term election cycles.
Israel hits hospital and kills five journalists, then says they will investigate what happened.
Trump is preparing to send the national guard to more cities. The national guard is not designed to enforce crime. Trump focuses on cities run by Democrats even though several high crime cities are run by Republicans. If Trump mostly or only sends troops to “crack down on crime” in Democrat run cities, that indicates that this is political intimidation and U.S. democracy is dead.
https://www.youtube.com/watch?v=KLmiwzOxaaA
“Senate Republicans have already said they plan to move quickly to confirm Trump’s Council of Economic Advisers Chair Stephen Miran to fill one current vacancy. If Cook loses a pending legal challenge and is dismissed — and her replacement is confirmed by the GOP-controlled Senate —Trump-appointed Fed governors would hold four of the seven seats on the central bank’s board.
That majority, in turn, would be enough to control the reappointment of the 12 regional bank presidents throughout the country who also have a say on rates and whose five-year terms are scheduled to expire in February.
And that, in effect, could give Trump control of the Fed’s policy-making Federal Open Market Committee, whose refusal to lower interest rates throughout his second term has put the president on the warpath with Fed Chair Jerome Powell. Any exertion of White House control over the reappointment process for regional bank presidents would represent an extraordinary break in precedent.”
https://www.politico.com/news/2025/08/27/how-cooks-dismissal-would-upend-the-fed-00527582
The Federal Reserve took great and new action during the great recession, but they kept many of those policies afterwards, which can be dangerous and is an expansion of the Fed’s power.
https://www.youtube.com/watch?v=qVFEcg-RIAk
Trump’s tariffs are costly, but if Trump takes over the financial power currently held by the Fed, that’s a much more dangerous threat to the prosperity and democracy of the United States. Especially when you combine this with Trump’s other potentially costly actions like limiting science and scientists, Trump’s constellation of bad economic policies could add up to a considerably weaker U.S. economy.
https://www.youtube.com/watch?v=ne9xsFhc34o
“Legally, the answer is complicated and untested. No Fed chair has ever been removed by a President.
The Federal Reserve Act allows for the dismissal of Board members, including the chair, “for cause.” But that has historically been interpreted as misconduct or incapacity, not policy disagreements. “The court would typically not see disagreements over interest rates settings as ‘for-cause,’” Binder says.”
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“Still, the Trump Administration appears to be laying the groundwork for a potential confrontation. Treasury Secretary Scott Bessent recently told Bloomberg that he expects to begin interviewing possible replacements for Powell in the fall.”
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“At the heart of that debate is a nearly century-old legal precedent: Humphrey’s Executor v. United States, a 1935 Supreme Court ruling that limited the President’s ability to remove leaders of independent agencies without cause. The ruling has long shielded Fed chairs from political dismissal, but could soon be tested by a conservative Supreme Court.”
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“Trump has blamed Powell for failing to act aggressively enough to support economic growth, saying the Fed chair is “playing politics” by keeping interest rates steady. But central bankers—and many economists—argue the opposite: that an independent Fed is essential to managing inflation and stewarding the economy, and that caving to political demands could damage the economy and global trust in U.S. institutions.”
https://www.yahoo.com/news/trump-fire-jerome-powell-213123735.html
“Federal Reserve Chair Jerome Powell said Wednesday that he expects President Donald Trump’s tariffs policy to cause higher inflation and slower economic growth, complicating potential central bank efforts to ease the fallout.”
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“”Markets are struggling with a lot of uncertainty and that means volatility,” Powell said on Wednesday. Still, he added, the volatility reflected the significance of the policy changes, rather than abnormal behavior in the markets.”
https://www.msn.com/en-us/money/markets/fed-chair-powell-sounds-alarm-on-tariffs-sending-stocks-lower/ar-AA1D3nX5?ocid=msedgntp&pc=NMTS&cvid=a623618c76614cedb4ce655c834e89c8&ei=10
“It’s important for the new administration to understand that controlling inflation requires more than Federal Reserve action. It demands fiscal discipline. That means difficult choices that politicians typically avoid. Federal spending must be curtailed, particularly in entitlement programs. Tax revenues must be made stable and predictable. Most importantly, the administration must reject new spending, regardless of the apparent merits. Finally, more tax revenue through more growth—made possible by the improved tax system and deregulation—would help.
Continuing to ignore fiscal-monetary interactions and hoping inflation will mysteriously moderate risks a crisis that could dwarf any challenges we face today. Fiscal responsibility isn’t just about balancing books; it’s about maintaining the stability of the dollar and the prosperity of the American people. History tells us that the longer we wait, the more costly the eventual solution becomes.”
https://reason.com/2025/01/16/the-way-out-of-our-inflation-mess/