Does Trump want to control the Fed? This is what happened in the ’70s the last time a president tried
Donald Trump’s feud with the Fed has been splashed over the pages of the media for months, and now he wants to take control.
Every time Donald Trump hears the words ‘Jerome Powell’, it appears that his blood pressure rises by a not insignificant amount. The President has, time and time again, made public his feud with the head of the Federal Reserve; tariffs have caused worldwide chaos yet Mr. Powell has simply refused to give in, sticking to his instincts and not allowing Trump to bully him into lowering interest rates.
Earlier this week, Trump fired a top Federal Reserve official, Governor Lisa Cook, in a move that has shaken the usually rock-solid world of the Fed to the core; the worry is that the President could go even further and fire the head of the 111-year-old central bank. It is a rivalry not seen since Nixon was in charge of the most powerful country on Earth, and things look bleak either way.
While interest rates being lowered would increase spending, that’s not necessarily a good thing: former Fed Chair and former Treasury Secretary Janet Yellen told CNN that “it’s really important for Americans to understand how dangerous this is.” The report cites the lowering of rates in Hungary, where inflation has “spiralled” and effectively collapsed the currency; Argentina is examined too, where “hyperinflation peaked at 292% in April 2024.”
As for the US, back in 1970, President Richard Nixon fired then-Fed Chair William McChesney Martin and appointed a Republican loyalist in the name of Arthur Burns.
While it’s unknown whether or not the subsequent expansion in money supply was directly instigated by Nixon, Burns’ immediate decision to do so led to huge levels of inflation, with rates shooting upwards, going from 3.3% in 1971 to 11.8% in 1974. It’s hard not to draw parallels with Trump’s ambitions in the same field.
And Trump’s actions may have consequences across the world. Reuters revealed that “Global central bankers are starting to fear that the political storm surrounding the Federal Reserve may engulf them too,” adding “a dangerous precedent would be set from Europe to Japan” should Trump take the bold step to fire Powell for his own gain.
“Banks around the world have already started preparing for the fallout”
Their report on the matter explains that “Central banks around the world have already started preparing for the fallout, telling lenders on their watch to watch their exposure to the U.S. currency.”
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Whatever happens, it seems that those who will lose out the most are, once again, the hard-working American people, the working classes and those who struggle to meet their bills at the end of the month. These are the people who were tricked by Trump and his cronies into voting for what they believed would be a better future. And look where we are now. But remember, he wears baseball caps and does a funny dance, so he can’t be that bad, right?
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