Former President Donald Trump revealed this week that he has fired Lisa Cook from her job as one of the seven governors of the Federal Reserve. This zealous, eyebrow-raising decision serves as another reminder of the increasing centralization of power in the executive branch. For context, this move comes just days after Trump had claimed to have such authority to act unilaterally as president.
Now, Trump’s third announcement could signal a major shift in the balance of power at the Federal Reserve. If he’s successful in ousting Cook, he’ll have appointed four of the seven gubernatorial appointees. That number is set to go up to five in May when Fed Chairman Jerome Powell’s term ends. The ex president’s losing battle for even greater control of the nation’s central bank leads to a lot of attractive speculation about its potential effects on monetary policy and U.S. governance.
Power Dynamics at the Federal Reserve
The Federal Reserve plays a crucial role in shaping the U.S. economy, with its governors responsible for making decisions that impact interest rates, inflation, and overall economic stability. Trump’s bait and switch to take control over this vital institution tracks with his overall aim of centralizing more executive power.
According to opponents, these moves are in line with a mobilizing push toward authoritarianism taking hold in American government, at every level and in all branches. They cite his often-repeated claims that all executive authority should be vested in the president and his senior staff. Perhaps not surprisingly, most observers agree with this view. Above all, they think that during his administration, Trump has made systematic and purposeful efforts to erode checks and balances we find in government.
An indirect strategy through sweeping control over regional Fed directors, whom he cannot directly appoint. These appointments need to be approved by the full board of Governors of the Fed. This new requirement would be just one more hurdle to his dreams. Nonetheless, the prospect of Trump gaining control over a majority of the Fed’s governing body has sparked renewed debates about accountability and independence within this vital institution.
“I have the right to do [anything I want] to do. I’m the President of the United States.” – Trump
Authoritarian Trends in Governance
Beyond monetary policy, Trump’s latest moves have sounded the alarm on a nascent authoritarian revolution in America. His agenda is about concentrating power in almost every aspect of government. This carries the weight of these corrupt gerrymandering efforts to ensure Republican dominion in electoral politics across the country.
Beginning in Texas, Trump has been very publicly pumping the brakes on redistricting efforts that critics say aim to suppress democratic engagement. By gerrymandering districts, he seeks to maximize Republican seats in the U.S. House and state houses. This tactic illustrates a perverse trend in which the pursuit of political power is taking precedence over the pursuit of equitable representation.
Furthermore, Trump’s directives regarding federal policies, such as mandating that federal architecture must be “beautiful again,” reflect a desire to impose his aesthetic preferences on government projects. Such decisions may appear innocuous but reflect a pervasive culture of disregard for institutions and expertise and the affirmation of personal preference above all else.
The Broader Implications
Even more curious that Trump called this stake a “very big thing” is the recent announcement of a 10 percent stake in Intel Corporation. The U.S. government’s decision to take this stake at no cost to taxpayers represents a new model for federal-corporate partnerships. We’re left to wonder what potential conflicts of interest led to this disturbing decision. This action, combined with other directives aimed at private enterprises and industries, demonstrates an inclination toward governmental intervention that some see as inconsistent with traditional free-market principles.
Moreover, Trump’s public feud with Fed Chairman Jerome Powell has been ongoing for months. The ex-prez never misses an opportunity to denigrate Powell’s monetary policy judgments or autocratic leadership approach. This rhetoric is making executive overreach in monetary policy more acceptable. Trump claims that once he achieves a majority on the Federal Open Market Committee (FOMC), significant changes will occur in housing markets and interest rates.
“We’ll have a majority [on the FOMC — the Fed’s Federal Open Market Committee] very shortly. Once we have a majority, housing is going to swing, and it’s going to be great. People are paying too high an interest rate.” – Trump
Trump is currently doing everything he can to assert his influence – politically and economically. Analysts caution that his policies may be detrimental not only for America’s place in the world but for domestic issues.
