Cogito Ergo Non Serviam
Trump Illegally Fires Fed Governor
Donald Trump has tried to take control of the Federal Reserve so that he can run monetary polucy for America. He claims to have fired Lisa Cook, one of the Fed Governors, alleging mortgage fraud. Had Mr. Trump ever worked for a real corporation and not the family business, he would know that he cannot do that without cause, and an allegation of wrongdoing does not rise to the level of a firing offense especially in the absensce of proof. Mr. Trump, a convicted fraudster, is projecting here. If he succeeds, though, the American economy will never recover from the loss of an independent central bank.
The Associated Press reported, "Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week. Pulte alleged that Cook had claimed two primary residences -- in Ann Arbor, Michigan, and Atlanta -- in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent."
This is, of course, pure bovine excrement. This is an accusation he trots out at the drop of a hat. He has also accused Congressman Adam Schiff (D-CA) and NY State Attorney General Tish James of mortgage fraud. Because he is familiar with this kind of loan fraud, he feels everyone must commit it (he presumes everyone does as he does, as he lacks imagination).
The facts, however, do not matter in Trumpland. She is a black, woman, and therefore, considered a DEI hire by the administration, who must be removed. That alone would be gratifying to this racist administration, but there is the matter of filling a vacant seat. That job falls to the president, with the advice and consent of the Senate. Given the cowardice on display by Congressional Republicans, whomever the president chooses will get the seat, no matter how unqualified.
Mr. Trump views appointees as his servants. "I got you the job, so you do what I say," is the maxim of the Oval Office. Most of them view it the same way. By and large, his appointees follow instructions more often than not. At the Fed, that would have disastrous consequences.
The entire point of having a central bank that is independent of the government is to prevent monetary policy from becoming a political issue rather than an economic one. Governors have a 14-year- term of office, while the president has just 4. That means that a govenror will serve through three plus presidential terms. Not having to answer to a politician leaves the bankers free to do as they see fit in pursuing the dual mandate of low inflation and low unemployment. Lopng-term goals are not sacrificed on the altar of short-term political gain.
Mr. Trump has made no secret of his desire for lower rates. As a debtor himself ("I am the king of debt," he once proclaimed), lower rates lessen his debt burden. They would also lower US national debt-servicing costs. If he had control because he can fire governors at will, he would lower rates now. That would push prices, which are already rising because of his tariffs, even higher. The dollar would drop in value to the point that its status as the global reserve currency would be called into question. The only cure for it would be a massive deflation, which would put millions out of work.
Governor Cook has vowed to sue to clarify that she cannot be fired without real proof of wrongdoing. The courts need to hold the line on this, as it is probably more important than any other case touching on economic management. This journal says the smart money is on Ms. Cook winning, but the odds are only about 4:1 in her favor. If the Supreme Court is willing to hear it, those odds become 1:1.
© Copyright 2025 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.
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