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      Donald Trump maelstrom likely to leave US economic model unrecognisable | Heather Stewart

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      Donald Trump observed blithely last week that if his cherished tariff regime is struck down by the US supreme court, he may need to “unwind” some of the trade deals struck since he declared “liberation day” in April.It was a reminder, as if it were needed, that nothing about Trump’s economic policy is set in stone. Not only does the ageing president alter his demands on a whim, but it is unclear to what extent he has the power to make them stick.Yet even if the “reciprocal” tariffs first announced on 2 April are rolled back, they are only one aspect of a much wider assault on the last vestiges of what was once known as the “Washington consensus”.To name just a few of Trump’s recent interventions, he has taken a 10% government stake in the US tech company Intel, demanded 15% of the revenue of Nvidia’s chip sales to China and suggested the chief executive of Goldman Sachs should go.This at the same as taking a sledgehammer to Federal Reserve independence by lobbing insults at the chair, Jerome Powell, and trying to sack Lisa Cook from the central bank’s board.The head of the Bureau of Labor Statistics was removed by Trump after a run of poor jobs data; the chief of the National Labor Relations Board, Jennifer Abruzzo, was fired, too.The tech bros who back Trump loathe the NLRB for its role in upholding workers’ rights – mandating unionisation ballots at Amazon warehouses, for example.Trump’s approach is simultaneously systematic, in its determination to smash existing norms, and utterly chaotic. It is hard to categorise: corporate America is being unleashed – through the wilful destruction of environmental and labour standards, for example – and brought to heel.The leftwing senator Bernie Sanders welcomed Trump’s efforts to take a stake in Intel in exchange for government grants, for example – something he advocated in the Guardian back in 2022 – while some Republicans have condemned the approach as (heaven forbid) “socialism”.Partly because it coincides with the AI-fuelled stock boom that has propelled the value of tech companies into the stratosphere, the market response to this torching of the status quo has so far been modest.Whatever emerges from another three and a half years of this maelstrom is likely to be unrecognisable as the US economic model of recent decades.Its destruction has not happened overnight. The days were already long gone when the US, as the world’s undisputed economic superpower, could export free market, financialised capitalism worldwide.After the 2008 crash, the conditions for which were created in Wall Street boardrooms, any moral or practical claim the US had to offer an economic example to other nations evaporated.As the turmoil rippled out through the global economy, and the US government responded by bailing out large chunks of its financial sector, the lie of laissez-faire was laid bare.The crisis exposed the risks of turbocharged capitalism to countries outside the US, too – not least in the former Soviet bloc – that had been advised to adopt the model wholesale.As Ivan Krastev and Stephen Holmes put it in their compelling polemic The Light that Failed, “confidence that the political economy of the west was a model for the future of mankind had been linked to the belief that western elites knew what they were doing. Suddenly it was obvious that they didn’t.”skip past newsletter promotionafter newsletter promotionBack home in the US, meanwhile – as in the UK – the perception that banks had been bailed out, while the galaxy brains behind the crisis got off scot-free, sowed the seeds of a corrosive sense of injustice.Similarly, even before the crash, the idea that ever-expanding free trade brings economic benefits was bumping up against the fact that even if that is true in aggregate, for workers across the US rust belt, just as in the UK’s former manufacturing heartlands, it brought deindustrialisation and unemployment.This was fertile ground for Trump’s populist economic message. His first-term China tariffs were, with hindsight, a relatively modest stab at, as he saw it, tilting the playing field back towards the US.Joe Biden did not unwind those tariffs, which went with the grain of geopolitics, as any hopes that economic liberalisation would bring China into the fold of democracies were sadly dashed, and President Xi’s regime took on an increasingly authoritarian bent.Biden also took a muscular approach to the state’s role in the economy, with the billions in grants and loans distributed under the Inflation Reduction Act linked to national priorities of cutting carbon emissions and creating jobs.So the idea that before Trump arrived on the scene, free market US capitalism was motoring along unchallenged is misleading, but the pace at which he is crushing its remaining norms is extraordinary.There is ample ground for legitimate disagreement here: taxpayer stakes in strategic companies are much more common in European economies, for example. Trump may be laying down tracks that future US governments with different priorities could follow.Given that it is so unclear even what kind of economy he is groping towards, the overriding sense for the moment is of radical uncertainty. Friday’s weak US payrolls data, with the unemployment rate close to a four-year high, suggested companies may be responding with caution.Investors appear to have decided to avert their eyes for now, buoyed up by the prospect of Fed rate cuts, and the mega returns of the tech companies. However, with every chaotic week that passes, the risks must increase – and as the UK has learned in the wake of the Liz Truss debacle, economic credibility is quicker to lose than to rebuild. More

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      US justice department reportedly opens criminal inquiry into Fed governor Lisa Cook

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      The US justice department has initiated a criminal investigation into mortgage fraud claims against Federal Reserve governor Lisa Cook, according to new reports, as a lawsuit she filed against Donald Trump over her firing makes its way through court.Lawyers with the justice department have issued subpoenas for the investigation, according to the Wall Street Journal.Last month, Trump moved to fire Cook over unconfirmed claims that she listed two properties as her primary residence. Bill Pulte, the director of the Federal Housing and Finance Agency and a close ally of Trump, alleged Cook had lied on bank documents and records to obtain a better mortgage rate.Cook, a voting member of the Fed board that sets interest rates, said she has “no intention of being bullied to step down” and that she would “take any questions about my financial history seriously”.In response to Trump’s bid to dismiss her, Cook filed a lawsuit against the president arguing that her removal was unconstitutional and threatened the independence of the Fed. Cook’s lawyers say the firing was “unprecedented and illegal” and that federal law requires showing “cause” for a Fed governor’s removal.“An unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not [cause],” her lawyers said in court documents.In court documents, lawyers for Cook suggested that a “clerical error” may be behind the discrepancies found in her mortgage records.Cook was appointed by Joe Biden in 2022 for a 14-year term on the board that was set to end in 2038. She is the first Black woman to be appointed to the board.US district court judge Jia Cobb heard arguments for the lawsuit last week and said she will expedite the case, which is ultimately expected to be taken up by the US supreme court.Trump’s attacks against Cook come against the backdrop of a long fight the White House has waged against the Fed, which has historically been treated as nonpartisan.skip past newsletter promotionafter newsletter promotionEarlier in the year, Trump threatened to fire the Fed chair, Jerome Powell, for not lowering interest rates, but ultimately walked back his threats after negative responses from investors. Trump also tried to accuse Powell of fraud over renovations at the Fed’s headquarters, which have cost more than anticipated.Abbe Lowell, Cook’s lawyer, told the Journal that “it takes nothing for this DoJ to undertake a new politicized investigation”. The justice department did not immediately respond to the Guardian’s request for comment.This is the third mortgage fraud inquiry the justice department has launched against Democrats and Democratic-appointed officials. Experts have called the pattern a type of “lawfare” as Trump and his allies use their roles to take down other officials.Last month, the US attorney general, Pam Bondi, appointed a special attorney to investigate similar mortgage fraud allegations the White House has levied against California senator Adam Schiff and the New York attorney general, Letitia James. More

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      ‘Racist as hell’: Trump’s cabinet is almost all white, and he keeps firing Black officials

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      A day after Donald Trump announced that he was firing Lisa Cook, the first Black woman to serve on the board of governors of the Federal Reserve, the White House proudly released a photo. It showed Trump, his cabinet and other officials giving a thumbs-up. Of the 24 people in the Oval Office, only one was Black.For those who have studied the US president’s long and troubling history of racism, the two events were more than mere coincidence. They were indicative of a man who has recently brought white nationalist perspectives from the margins back to the mainstream.Trump has vehemently denied that he is a racist, pointing to a modest increase in support among African American voters in last year’s election, when his opponent was a Black woman. But critics suggest that his effort to oust Cook fits a pattern of purging diverse voices from the higher ranks of leadership.“He chose to fire her out of all the governors because she’s a Black woman,” said LaTosha Brown, co-founder of the organisation Black Voters Matter. “His goal is to get control of the Federal Reserve and for that to no longer be an autonomous, independent body. But what he does recognise is that in America everything is about race. It is as lethal as a nuclear bomb.”Cook taught economics and international relations at Michigan State University, and was previously on the faculty of Harvard University’s Kennedy School of Government. She was a Marshall scholar who received degrees from Oxford University and Spelman College, a historically Black women’s college in Atlanta.Cook dedicated much of her scholarship to examining how racial discrimination and targeted violence created barriers to economic advancement for African Americans. She also advised the Nigerian and Rwandan governments on banking reforms and economic development.In 2022 she was confirmed to the Fed’s board of governors by the Senate in a party-line vote. Republicans argued that she was unqualified and found her research overly focused on race; Democrats brushed off such critiques as unfounded.On Monday, Trump said he fired Cook after the director of a housing regulatory agency, whom the president appointed, alleged that she committed mortgage fraud. She refused to resign and filed a lawsuit claiming that Trump has no power to remove her from office.Trump’s order aligned with his effort to expand his power across once independent parts of the federal government and broader economy and culture. It also marked another potential high-profile removal of a Black leader from the federal government amid Trump’s broader crusade against diversity and inclusion policies.Brown observed: “He knows that racism and sexism is a very effective tool to cast doubt and that’s the pathway. Lisa Cook isn’t even the chair of the board. So why would you pick her?“He picked her because he is betting that, in an industry that is probably 90% or more white male, his odds of removing her are greater than the odds for removing others from the board. That in itself is rooted in the history and how insidious racism is built into the fabric of how we see people of colour in this country.”Over the past seven months Trump has targeted other prominent Black leaders. He fired Gen Charles Q Brown Jr, chair of the joint chiefs of staff, the second Black man to serve in the position. Brown had delivered speeches about racial discrimination and issued policies that promoted diversity, equity and inclusion (DEI) programmes in the military.The president dismissed Carla Hayden, the first Black person to serve as librarian of Congress, after a conservative advocacy organisation accused her of being a “radical”. He ousted Gwynne Wilcox, the first Black woman to sit on the National Labor Relations Board, which hears private-sector labour disputes.View image in fullscreenTrump’s critics argue that his life and career have given succour to white supremacists. In 1973 he and his father were sued for housing discrimination in New York; in 1989 he took out full-page ads in several newspapers calling for the death penalty for the Central Park Five, Black and Latino youths who were later exonerated.Trump broke through in national politics with the “birther” conspiracy theory, falsely claiming that Barack Obama was not born in the US and therefore ineligible to be president. After a 2017 white supremacist rally in Charlottesville, Virginia, Trump said there were “very fine people on both sides”.He has reportedly described Haiti and African nations as “shithole countries”, has called Covid-19 the “Chinese virus” and “kung flu”, and, on the campaign trail last year, said immigrants were “poisoning the blood of our country”, echoing the rhetoric of Adolf Hitler.Since returning to the White House, Trump has imposed a travel ban on many of the world’s poorest countries even as the US granted refugee status to about 50 white South Africans, claiming they were victims of racial persecution and “white genocide”.He issued executive orders to curb DEI initiatives in the federal government and even sought to blame DEI for an air crash. He is seeking to purge “divisive, race-centered ideology” from Smithsonian Institution museums, suggesting that there is too much focus on “how bad Slavery was”.The attempt to fire Cook is the most dubious move yet, prompting an outcry from Democrats and civil rights groups, who pointed to her gender and race as vital factors.skip past newsletter promotionafter newsletter promotionCongresswoman Nanette Barragán of California posted on the X social media platform: “If you haven’t noticed yet – this is a disturbing pattern for Trump. Fire or drive out smart, competent women, in particular women of color, from high ranking positions and fill many of these positions with white men.”Derrick Johnson, president and chief executive of the National Association for the Advancement of Colored People (NAACP), said: “Dr Cook’s credentials outshine Trump’s entire cabinet. This president simply cannot stomach Black excellence when it reveals his failures, particularly those in positions of power. In reality, this is about bending the Federal Reserve to Trump’s will, and he’s using racism as a tool to do it.”But Trump’s actions are being cheered on by white nationalists. Far-right groups such as the Oath Keepers and Proud Boys have been quoted as saying that they no longer need to take to the streets to demonstrate because the president has so comprehensively adopted their talking points and embraced their agenda.Antjuan Seawright, a Democratic strategist, observed: “When you have white supremacists who are holding key roles in government and you have leaders in this country who come and play footsie to their drumbeat they don’t have to resist because what they want is laid out for them in the form of a buffet.”Trump has been quick to point to Black allies when politically expedient, such as Tim Scott, the South Carolina senator, the representative Byron Donalds of Florida and Alveda King, a niece of the civil rights leader Martin Luther King. But critics note there is no guarantee this will translate to policies that address racial injustice.Nor has it manifested in significant representation at the heart of government. Towards the end of the first Trump presidency, the Washington Post identified 59 people who had held cabinet positions or served in top White House jobs. Only seven were people of colour and only one – the housing secretary, Ben Carson – was Black.In his second term, Trump has picked only one Black person to serve in his cabinet: Scott Turner, the secretary of housing and urban development. Joe Biden, by contrast, appointed the most diverse cabinet in history with more women and people of colour than any that had come before.Seawright said: “We went from generational progress to generational rollback, and what this president and this administration has done in seven months could take 70 years at least to replenish. It should be a friendly reminder for all people, but particularly African Americans, that all progress is not permanent.”Trump’s cabinet includes Pete Hegseth, a former Fox News host with no experience of running a major organisation, at the Pentagon; Robert F Kennedy Jr, a vaccine sceptic, at the health department; and Linda McMahon, a former professional wrestling executive, at the education department. The White House deputy chief of staff, Stephen Miller, has associated with white nationalist thinkers and groups and is the architect of his hardline immigration policy.Rashad Robinson, a civil rights leader and former president of the group Color of Change, added: “We live in a very diverse country, a country with many different types of people that come from many different backgrounds, and the president exhibits his values by who he puts in office.“This is not simply that Donald Trump has put only one Black person in his cabinet. It’s that Donald Trump has gone out of his way to find some of the most unqualified and ill-equipped people to put in those jobs as a way to actually avoid having to put Black people in his cabinet.”For Brown, the voting rights activist, Trump’s cabinet picks demonstrate that he is “as racist as hell”. She added: “Quite frankly, I’m glad he doesn’t have a whole lot of Black people in his cabinet because that would be deeply embarrassing to me. Who would work in that mess?” More

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      The Guardian view on Trump and the Fed: independence is no substitute for accountability | Editorial

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      Donald Trump’s attempt to sack the Federal Reserve governor, Lisa Cook, is the familiar authoritarian trick of bending institutions to serve the leader’s immediate ends. The widespread condemnation is deserved. This is not some daring experiment in popular control of monetary policy. Yet what should follow censure is reflection. For the furore over Ms Cook has revealed a peculiar reflex: to defend the Fed’s independence as though it were synonymous with democracy itself.But is independence of the Fed, or central banks generally, really that? Eric Levitz at Vox thinks so, or at least that it is close enough. He argues that Congress sets the Fed’s objectives; independence applies only to the means. Without independence, politicians would be free to game rates for votes – as Richard Nixon did in 1972, leaning on the Fed to juice growth before the election. On this view, independence is not anti-democratic but prudent delegation.The historian Adam Tooze says that argument misses the point. The Fed, he says, is not a neutral technocracy: its regional boards give business elites formal seats at the table, while labour and consumers are marginal or absent. Independence is not independence from politics; it is independence from electoral accountability. To defend this arrangement as democracy’s bulwark, Prof Tooze maintains, is to confuse professional consensus with popular legitimacy.The leftwing economist Michael Roberts goes further. In his blog this week he argues that central bank independence was never really about technocratic efficiency at all. It blossomed in the neoliberal era because it suited finance. He notes that the 1980s and 90s saw a sharp rise in central bank independence while inflation fell. The correlation has been taken as proof of causation. Yet Mr Roberts argues that the decline in prices owed more to slowing global growth and the end of one-off supply shocks.Central banks proved no better than anyone else at forecasting crises: the former Fed chair Alan Greenspan admitted the 2008 crash left him in “a state of shocked disbelief”. Turkey’s recent bout of hyperinflation was blamed on presidential meddling – but Mr Roberts suggests the real culprits were trade deficits, political instability and a collapsing lira. Monetary policy is too blunt an instrument, as many commentators concede, to deal with today’s volatile world. So where does this leave informed opinion? Certainly not with Mr Trump. To replace one form of unaccountability with a demagogic strongman is no gain. The real task is to ask what a democratic politics of central banking would look like.The academic Saule Omarova’s People’s Ledger is one radical answer: treat the Fed as a public utility, offering universal bank accounts and explicitly aligning its balance sheet with public priorities. A National Investment Authority could channel long-term finance towards infrastructure and decarbonisation, rather than leaving investment decisions to Wall Street. Efforts could be made to broaden board representation beyond business, require distributional impact assessments and tighten “for cause” clauses so that presidents cannot hound governors from office on flimsy pretexts.Mr Trump’s assault must be denounced – and Ms Cook defended. But if voters stop there, a deeper lesson will be missed. Central bank independence was never democracy incarnate. At best it was a compromise suited to an earlier era. Today’s challenge is to rebuild monetary authority on firmer, more democratic ground.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. More

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      Step back and take it in: the US is entering full authoritarian mode | Jonathan Freedland

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      If this were happening somewhere else – in Latin America, say – how might it be reported? Having secured his grip on the capital, the president is now set to send troops to several rebel-held cities, claiming he is wanted there to restore order. The move follows raids on the homes of leading dissidents and comes as armed men seen as loyal to the president, many of them masked, continue to pluck people off the streets …Except this is happening in the United States of America and so we don’t quite talk about it that way. That’s not the only reason. It’s also because Donald Trump’s march towards authoritarianism is so steady, taking another step or two every day, that it’s easy to become inured to it: you can’t be in a state of shock permanently. And, besides, sober-minded people are wary of sounding hyperbolic or hysterical: their instinct is to play down rather than scream at the top of their voice.There’s something else, too. Trump’s dictator-like behaviour is so brazen, so blatant, that paradoxically, we discount it. It’s like being woken in the night by a burglar wearing a striped shirt and carrying a bag marked “Swag”: we would assume it was a joke or a stunt or otherwise unreal, rather than a genuine danger. So it is with Trump. We cannot quite believe what we are seeing.But here is what we are seeing. Trump has deployed the national guard on the streets of Washington DC, so that there are now 2,000 troops, heavily armed, patrolling the capital. The pretext is fighting crime, but violent crime in DC was at a 30-year low when he made his move. The president has warned that Chicago will be next, perhaps Baltimore too. In June he sent the national guard and the marines into Los Angeles to put down protests against his immigration policies, protests which the administration said amounted to an “insurrection”. Demonstrators were complaining about the masked men of Ice, the immigration agency that, thanks to Trump, now has a budget to match that of the world’s largest armies, snatching people from street corners or hauling them from their cars.Those cities are all run by Democrats and, not coincidentally, have large Black populations. They are potential centres of opposition to Trump’s rule and he wants them under his control. The constitution’s insistence that states have powers of their own and that the reach of the federal government should be limited – a principle that until recently was sacred to Republicans – can go hang.Control is the goal, amassing power in the hands of the president and removing or neutering any institution or person that could stand in his way. That is the guiding logic that explains Trump’s every action, large and small, including his wars on the media, the courts, the universities and the civil servants of the federal government. It helps explain why FBI agents last week mounted a 7am raid on the home and office of John Bolton, once Trump’s national security adviser and now one of his most vocal critics. And why the president hinted darkly that the former New Jersey governor Chris Christie is in his sights.View image in fullscreenIt’s why he has broken all convention, and possibly US law, by attempting to remove Lisa Cook as a member of the board of the Federal Reserve on unproven charges of mortgage fraud. Those charges are based on information helpfully supplied by the Trump loyalist installed as federal housing director and who, according to the New York Times, has repeatedly leveraged “the powers of his office … to investigate or attack Mr Trump’s most recognisable political enemies”. The pattern is clear: Trump is using the institutions of government to hound his foes in a manner that recalls the worst of Richard Nixon – though where Nixon skulked in the shadows, Trump’s abuses are in plain sight.And all in the pursuit of ever more power. Take the firing of Cook. With falling poll numbers, especially on his handling of the economy, he craves the sugar rush of an interest rate cut. The independent central bank won’t give it to him, so he wants to push the Fed out of the way and grab the power to set interest rates himself. Note the justification offered by JD Vance this week, that Trump is “much better able to make those determinations” than “unelected bureaucrats” because he embodies the will of the people. The reasoning is pure authoritarianism, arguing that a core principle of the US constitution, the separation of powers, should be swept aside, because all legitimate authority resides in one man alone.Of course, the greatest check on Trump would come from the opposition winning power in a democratic election, specifically Democrats taking control of the House of Representatives in November 2026. Trump is working hard to make that impossible: witness this month’s unabashed gerrymander in Texas, where at Trump’s command, Republicans redrew congressional boundaries to give themselves five more safe seats in the House. Trump wants more states to follow Texas’s lead, because a Democratic-controlled House would have powers of scrutiny that he rightly fears.Meanwhile, apparently prompted by his meeting with Vladimir Putin, he is once again at war against postal voting, baselessly decrying it as fraudulent, while also demanding a new census that would exclude undocumented migrants – moves that will either help Republicans win in 2026 or else enable him to argue that a Democratic victory was illegitimate and should be overturned.In that same spirit, the Trump White House now argues that, in effect, only one party should be allowed to exercise power in the US. How else to read the words of key Trump adviser Stephen Miller, who this week told Fox News that “The Democrat party is not a political party; it is a domestic extremist organisation.”It’s the same picture on every front, whether it’s plans for a new military parade in Trump’s honour or the firing of health officials who insist on putting science ahead of political loyalty. He is bent on amassing power to himself and being seen to amass power to himself, even if that means departing from economic conservative orthodoxy to have the federal government take a stake in hitherto private companies. He wants to rule over every aspect of US life. As Trump himself said this week, “A lot of people are saying, ‘Maybe we’d like a dictator.’” The former Obama adviser David Axelrod is not alone when he says, “We have gone from zero to Hungary faster than I ever imagined.”The trouble is, people still don’t talk about it the way they talk about Hungary, not inside the US and not outside it. That’s partly the It Can’t Happen Here mindset, partly a reluctance to accept a reality that would require, of foreign governments especially, a rethink of almost everything. If the US is on its way to autocracy, in a condition scholars might call “unconsolidated authoritarianism”, then that changes Britain’s entire strategic position, its place in the world, which for 80 years has been predicated on the notion of a west led by a stable, democratic US. The same goes for the EU. Far easier to carry on, either pretending that the transformation of the US is not, in fact, as severe as it is, or that normal service will resume shortly. But the world’s leaders, like US citizens, cannot ignore the evidence indefinitely. To adapt the title of that long-ago novel, it can happen here – and it is.

      Jonathan Freedland is a Guardian columnist More

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      Trump faces key legal test in effort to exert control over Federal Reserve

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      Donald Trump’s battle to exert control over the Federal Reserve faces a key legal test today, with a governor of the central bank seeking a temporary block on his extraordinary attempt to fire her.Lisa Cook sued the US president on Thursday, with her lawyers describing his attempt to dismiss her as “unprecedented and illegal”, and based on “pretextual” allegations.The case is widely expected to be ultimately decided by the supreme court. While it makes it way through the courts, Cook is seeking a temporary restraining order against Trump’s attempt to “immediately” dismiss her from the Fed’s board.A hearing on the motion is set for 10am in Washington on Friday. The case has been assigned to US district judge Jia Cobb, an appointee of Joe Biden.Trump wrote to Cook on Monday, telling her that he was removing her from her position “effective immediately”, based on the allegation from one of his allies that she had obtained a mortgage on a second home she incorrectly described as her primary residence.The president has spent months attacking the Fed, where most policymakers – including Cook – have so far defied his calls for interest rate cuts. He has spoken of rapidly building “a majority” on the central bank’s board, calling into question the future of its longstanding independence from political oversight.Firing Cook, whose term is not due to expire until 2038, would enable Trump to nominate a replacement. But she has argued the president has “no authority” to remove her.“An unsubstantiated allegation about private mortgage applications submitted by Governor Cook prior to her Senate confirmation is not [cause],” her lawyers argued in the complaint. “President Trump’s letter purporting to fire Governor Cook did not cite appropriate cause for removing her from the board of governors.”The White House claimed on Thursday that Cook had been “credibly accused of lying” by the administration. But the accusations are unconfirmed, and her lawyers said Trump and his officials had not explicitly alleged that any error on her mortgage paperwork was intentional.It comes as the Fed gears up to resume rate cuts as soon as next month, albeit not at the scale or pace Trump has repeatedly demanded – and its chair, Jerome Powell, has cautioned that the president’s tariffs and immigration crackdown have disrupted the global economy and knocked the US labor force. More

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      Trump is out to end the Fed’s autonomy. Here’s how he’s trying to get his way

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      When Donald Trump stepped up his campaign to influence the US Federal Reserve, he traveled less than a mile from the White House, to tour the central bank’s headquarters. But as the administration considers how to actually get what it wants, one of the US president’s acolytes looked about 500 miles south.A condominium above the Four Seasons hotel in Atlanta, Georgia, is at the heart of an extraordinary battle over the future of the Fed, and the independence of its power of the world’s largest economy.For a generation, presidents have respected the Fed’s autonomy. They might disagree with its decisions. But they allowed it to make long-term calls in the best interest of the economy, even if they caused short-term political discomfort.Trump has ignored this precedent.Since returning to office in January, he has lambasted the Fed publicly and relentlessly – calling its chairperson, Jerome Powell, a “moron”, a “numbskull” and a “disaster” – and accused the central bank of damaging the US economy by failing to cut interest rates.As the Fed declined to lower rates at five consecutive meetings, Trump escalated his attacks, even suggesting (without evidence) that multi-billion dollar renovations of its Washington headquarters were tantamount to fraud.But policymakers held the line. With most rate-setting officials wanting to wait and see the impact of Trump’s policies – from trade wars to deportations – on the economy, they sat on their hands.While the Fed might be on the cusp of resuming rate cuts, Powell has made clear rates are unlikely to fall as drastically as the president wants.So how does Trump actually get what he wants?Back to that condo in Atlanta. It was allegedly bought by Lisa Cook, a respected economist appointed by Joe Biden to serve on the Fed’s board of governors, in July 2021. Trump’s officials claim she took out a mortgage which listed the property as her primary residence – two weeks after taking out another mortgage, which listed a property in Ann Arbor, Michigan, as her principal residence.The allegations – similar to those that the administration has leveled against other opponents – are unconfirmed. But that didn’t stop Trump from immediately demanding Cook’s resignation.When Cook refused to be “bullied”, he tried to fire her. Cook has insisted Trump has no authority to do so, and her attorney has pledged to sue the administration over its bid to remove her from her post.The Fed’s rate-setting Federal Open Market Committee (FOMC) is in Trump’s sights. There are 12 seats around the table, filled by five representatives of local reserve banks and seven governors.Fed governors, once appointed, are hard to replace. A full term lasts 14 years, enabling them – in theory – to take a longer view on the economy than, say, presidential administrations working on four-year cycles.Cook’s term is not due to expire until 2038. It now appears likely that her future at the Fed will be settled in court. But Trump’s bid to exert control over the central bank, and its rate-setting committee, does not end there.He has already nominated one ally to sit on the Fed’s board of governors, following the exit of Adriana Kugler, another Biden appointee, earlier this month. Two other governors have already publicly sided with the president on rate cuts, and reportedly made the administration’s shortlist of potential successors to Powell.Powell’s term as Fed chair is due to end in May. His term as a governor is not due to expire until January 2028, but departing chairs have typically left the board at the same time.The Fed has so far defied Trump’s demands. But each departure enables him to build his influence over its policy committee – with view to obtaining an outright majority. Like the supreme court, these nominations have implications for years to come.The administration is arguing a mortgage on a condo in Atlanta should allow it handpick another official to join the Fed’s board. Who knows what the next purported reason will be, should it have another go.Trump has made no secret of this plan. “We’ll have a majority very shortly,” he claimed to reporters at a cabinet meeting on Tuesday. “So that’ll be great.”Of course, receiving his backing today does not guarantee his support tomorrow.Eight years ago, when he tapped Powell to lead the Fed, the president delivered a strikingly different verdict to the ones he now routinely publishes on social media. “He’s strong, he’s committed and he’s smart,” said Trump. More

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      Who is Lisa Cook, the Fed governor facing removal by Trump?

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      Lisa Cook, the first Black woman to sit on the Federal Reserve’s board of governors, is now facing removal by Donald Trump, another obstacle in a long line she has faced and written about during her experiences as one of a small number of Black women in the field of economics.Cook was nominated to the Fed in 2022 by then president Joe Biden after building a career that spanned both government and academia, including work at the treasury department, service in the White House, and a long record of scholarly contributions.But her path to confirmation wasn’t without hostility. Republicans opposed her nomination, forcing Vice-President Kamala Harris to break a 50–50 Senate deadlock. That narrow vote made Cook the first, and so far the only, Black woman to serve as a Fed governor.Her potential dismissal comes just days after federal housing finance agency director Bill Pulte alleged on social media that she falsified records and other documents to obtain favorable mortgage terms prior to her appointment. Cook has not been charged with a crime or found guilty of misconduct.By law, governors on the Fed’s board are appointed to 14-year terms and can only be removed for “cause”, generally understood to mean corruption or serious wrongdoing. Cook has continued to push back. Last week, she declared she had “no intention of being bullied” and promised to gather “accurate information to answer any legitimate questions and provide the facts”.In a statement on Tuesday, she insisted that “no cause exists under the law, and he [Trump] has no authority” to strip her of the seat she has held since 2022. Her attorney has said they intend to sue.Since joining the board, Cook has consistently voted in line with chair Jerome Powell, supporting last year’s decision to cut interest rates and this year’s decision to hold them steady. She is sometimes described as a “dove”, a label economists use for officials who lean toward lower rates.Cook was born in Georgia, where she was raised by a hospital chaplain and a nursing professor. She and her sisters were among the first Black students to integrate their schools.She went on to study at Spelman College, then Oxford University as a Marshall scholar, before earning her PhD in economics from the University of California, Berkeley, in 1997.Her academic work often linked economics with the realities of race and discrimination. One of her most recognized works, Violence and economic activity: evidence from African American patents, described how lynchings and other acts of racial violence in the late 1800s and early 1900s drastically reduced patent activity among Black inventors.Cook has also written candidly about the challenges she has faced in her profession. In a 2019 opinion piece in the New York Times, she and a co-author argued that “economics is neither a welcoming nor a supportive profession for women”.She added: “But if economics is hostile to women, it is especially antagonistic to Black women.” More