Tangle

The Fed's independence faces its biggest test yet.

Aug 27, 2025
Recent events have put the independence of the Federal Reserve on the line. Donald Trump has sought to remove Governor Lisa Cook, claiming mortgage fraud, sparking debate on the president's authority. The political fallout raises questions about the Fed's credibility and its role in economic governance. As tensions rise, contrasting viewpoints highlight the broader implications of these actions, including risks to democratic processes and calls for electoral reforms. Can the Fed maintain its autonomy amidst such pressures?
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INSIGHT

Presidential Firing Power Under Test

  • Trump's removal order for Fed Governor Lisa Cook tests the legal limits of presidential firing power over independent agencies.
  • The legality is unclear and Cook plans to sue, leaving Fed independence at stake.
INSIGHT

Markets React To Perceived Fed Weakening

  • Editorials warn that undermining Fed independence could raise long-term Treasury yields and inflation expectations.
  • Market moves after the firing attempt signaled investor concern about central bank credibility.
INSIGHT

Legal Challenge And Stakes Highlighted

  • Paul Krugman argues the firing is illegal and urges Fed Chair Powell to demand a legal basis.
  • If the court or Powell accepts the firing, the precedent could seriously damage Fed independence.
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