FILE PHOTO: U.S. President Donald Trump attends a cabinet meeting at the White House in Washington, D.C., U.S., August 26, 2025. REUTERS/Jonathan Ernst/File Photo

Donald Trump thinks he can control all aspects of American life, including free market interest rates. The Fed chair, and the global economy, disagree.

If the Fed were to fall under the influence of an elected official seeking to tie interest rates to his political agenda, economic consequences would be dire: Investors would face heightened market volatility due to uncertainty and artificially manipulated interest rates, causing confidence in US assets to drop.

In his second term, Trump has made repeated threats to remove officials from the Federal Reserve, including Fed chair Jerome Powell and governor Lisa Cook. Trump is unhappy that the Fed has not yet lowered interest rates to mask economic fallout from his ill-conceived tariffs, which have caused unprecedented levels of volatility and uncertainty.

Trump’s threats have already jeopardized the Fed’s goals, destabilized global markets and eroded trust in US fiscal autonomy. AInvest reports early market responses to his threats and stresses in sum that “the Fed’s independence remains critical to global stability, as political interference risks undermining dollar dominance and triggering cascading effects on bond yields and equity valuations.”

Usurping the Fed’s role

In his latest attempt to pressure the Fed to lower interest rates, Trump seeks to fire Cook, whose appointment can only be terminated for cause under Section 10 of the Federal Reserve Act, in effect since 1913.

“For cause” in this legal context does not mean whatever Trump wants it to mean. It is statutorily defined as “inefficiency, neglect of duty, or malfeasance in office.”

Trump, no surprise, is trying to remove Cook for allegations falling outside that statutory definition. In response to unsubstantiated allegations from a Trump ally that Cook made false statements on a mortgage application in 2021, before she joined the Federal Reserve, Trump purported to fire her on Aug. 25.

In a letter addressed to Cook, Trump wrote, “In light of your deceitful and potentially criminal conduct in a financial matter … I do not have confidence in your integrity.”

Trump, convicted of 34 felonies for falsifying business records, whose organization was found guilty on 17 counts of criminal tax fraud, whose “Trump University” defrauded students to the tune of 25 million dollars, and who is illegally enriching himself from the presidency in unprecedented ways, appears blind to irony.

If he succeeds in removing and replacing Cook, Trump will have appointed the majority of the seven-member Board of Governors, giving him direct, improvident, and economically catastrophic influence over their decisions.

Cook says not so fast

Cook is fighting back. In a civil suit filed on Aug. 28, Cook avers that the attempted firing violates her due process rights as well as the Federal Reserve Act. Seeking an emergency injunction to block her firing and confirm her status as a member of the Fed’s governing board, Cook’s attorneys pled that, “The President’s effort to terminate a Senate-confirmed Federal Reserve Board member is a broadside attack on the century-old independence of the Federal Reserve System.”

The Supreme Court, despite having granted nearly all of the Trump administration’s 19 emergency appeals on its shadow docket, may finally be poised to tell Trump ‘No’ on this one.

In May, SCOTUS reiterated the Fed’s independence in Wilcox v. Trump, ruling that, “the Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States,” distinguishing the operational independence of the Fed from that of the National Labor Relations Board, the Merit Systems Protection Board, and other quasi-independent agencies such as the Federal Trade Commission and the Federal Communications Commission.

Although the Roberts court often limited the powers of the executive under the Biden administration, it has done a 180 for Trump. The Republican majority now embraces the unitary executive theory on steroids, vesting an unstable president with broad Article II authority over the entire executive branch. They have let Trump ignore agency expertise, eliminate agencies altogether, and remove agency staff and directors without cause.

But in Wilcox, they bent over backward to protect the independence of the Fed, distinguishing it from other federal agencies now subject to Trump’s ruinous fiat and whim.

The law is not what Trump says it is

If Trump is allowed to go on a fishing expedition to discover infractions in personal life that he can then use to terminate employees whose terms are statutorily protected, regardless of whether those infractions have any bearing on their performance, then there is no such thing as “for cause” termination restrictions. This would suit delusional Trump, who claims Americans yearn for a dictator, just fine. But it would not serve Americans or the economy.

It is fairly obvious that short-term political interests of a president often diverge from sound long-term fiscal policy. It is also fairly obvious that Trump, who still doesn’t understand how tariffs work, is economically illiterate. Trump favors lower interest rates today to support the appearance of economic strength, because he doesn’t understand the long term economic implications.

Only an independent Fed can prevent administrations from using monetary policy for self-serving political ends in other ways, like simply printing more money to finance debt. If left unchecked, like his tariffs, Trump’s short-sighted and self-serving economic impulses could lead to total economic collapse. They could also lead to the collapse of the US dollar, which may explain Trump’s bitcoin obsession.

Even for a Trump-stacked MAGA court willing to let a criminal president run roughshod over civil liberties, the environment, education, science, and healthcare, letting him kill the US dollar may be a bridge too far.

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Sabrina Haake is a columnist and 25+ year federal trial attorney specializing in 1st and 14th A defense. Her Substack, The Haake Take, is free.