The Markets Won’t Save the Fed From Trump
Investors can’t do what politicians and voters won’t do.
On Monday, Donald Trump announced that he had fired Lisa Cook, a member of the Federal Reserve’s board, accusing her of “deceitful and potentially criminal conduct in a financial manner.” The Trump administration alleges that the economist lied to mortgage lenders when purchasing two properties in 2021, naming both as her primary residence.
The allegations against Cook are unproven, and she has not been charged with a crime; even if the claims are true, it is not clear that they would justify her removal. But the president has spent years harassing and denigrating Fed officials, and appears to be trying to replace Cook in order to sway the course of monetary policy—and not subtly either. If he succeeds, in the short term, he risks letting inflation get out of control, driving up prices for American families. In the long term, he risks raising borrowing costs for individuals, businesses, and the government permanently.
