For those of us who follow economic policy in general and the Federal Reserve in particular, the past week has been shocking and terrifying. Donald Trump’s ongoing attempts to bully the Fed into large interest rate cuts have escalated into an attempt to fire Lisa Cook, a member of the Fed’s Board of Governors, over unsubstantiated claims that she committed financial fraud while still a college professor. Indeed, Trump claims that he has already fired her, although he has no legal right to do so.
Whatever happens, Trump’s campaign to take over monetary policy has shifted from a public pressure to personal intimidation of Fed officials: the attack on Cook signals that Trump and his people will try to ruin the life of anyone who stands in his way. There is now a substantial chance that the Fed’s independence, its ability to manage the nation’s monetary policy on an objective, technocratic basis rather than as an instrument of the president’s political interests and personal whims, will soon be gone.
