The Rest Is Money 202. What's The Cost Of Trump Controlling The Fed?
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Aug 27, 2025 The podcast delves into Trump's controversial bid to exert influence over the Federal Reserve, raising questions about the U.S. economy's stability. It highlights the paradox of declining short-term interest rates amid rising long-term borrowing costs, warning of inflation risks. The discussion also considers the balance between central bank independence and government accountability, especially in times of crisis. Additionally, the sharp rise in UK government borrowing costs poses significant economic implications as both the UK and France navigate low growth challenges.
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Politicising The Fed Spurs Market Split
- Trump's move to remove Fed governors threatens Fed independence and could politicize interest-rate decisions.
- Markets price this as short-term rate cuts and higher long-term yields from expected future inflation.
Lisa Cook's Removal And The Lawsuit
- Steph explains Trump fired Fed governor Lisa Cook and she is suing to block removal over alleged mortgage misstatements from 2021.
- The hosts note Trump has previously accused political opponents of mortgage fraud to undermine them.
Yield Curve Reflects Credibility Concerns
- Markets have seen short-term rates fall and long-term yields rise on fears of politically driven rate cuts leading to inflation.
- That pattern reflects investor anxiety about stimulus now and inflation-led damage to long-term growth.