As any long-time reader can attest, I spent years (literally) warning on the clear and present danger Donald Trump posed to central bank independence, such as it is, in America.
During Trump’s first term, I penned dozens of articles detailing what I described as “Erdogan risk,” a reference to the cartoonish antics of Turkey’s strongman Recep Tayyip Erdogan, whose efforts to commandeer monetary policy are the stuff of legend.
I don’t want to say “nobody listened,” but as with everything to do with democratic backsliding in America under Trump, the prevailing consensus said the threat was overstated. That ultimately, the institutional safeguards and sundry redundancies which together shield the Fed from overt attempts to usurp (as opposed to covert efforts to influence) the policy-setting process were sufficient to protect it from an would-be autocrat.
That was accurate up to and until the “would-be” part no longer described Trump’s authoritarian inclinations, which is to say when Trump became a real autocrat last year, the threat to the Fed became all too real as well, first with the scheme to oust Lisa Cook and now with the threatened prosecution of Jerome Powell.
Trump says the looming indictment has nothing to do with interest rates, which is obviously a bald-faced lie. Reports indicate Bill Pulte, the mastermind of the plan to fire Cook for alleged mortgage fraud, was instrumental in pushing Trump to consider criminal charges against Powell.
From what I’ve been able to surmise from analyst notes and social media messages penned by “name brand” investors and ostensible luminaries, the same sort of desensitization which has left many Americans numb to the overtly outlandish nature of Trump’s anti-democratic (small “d”) second-term program has taken hold in market circles.
The President of the United States is threatening to indict the Fed Chair on charges everyone knows are bogus, and the Fed Chair has called the president out, in public, on the bogus nature of the charges, for all intents and purposes accusing Trump of behaving like a dictator, and it’s just another day in America.
Ben Bernanke, Janet Yellen, Alan Greenspan, Hank Paulson and Tim Geithner did their part to sound the alarm, calling the criminal inquiry into Powell “an unprecedented attempt to use prosecutorial attacks to undermine [Fed] independence.” “This is how monetary policy is made in emerging markets,” they said, in a joint statement. “It has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”
Thom Tillis, who doesn’t have to worry about being primaried because he’s not running for reelection, vowed to block any and all Trump Fed nominees until such a time as the case against Powell’s resolved.
Tillis is on the Banking Committee and he was blunt. “If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” he said.
On Monday, he was joined by Lisa Murkowski and, less abrasively, Kevin Cramer who said he doesn’t think Powell’s a criminal. Democrats (large “D” this time) were uniformly critical of Trump’s gambit. Elizabeth Warren — who does think Powell’s a criminal, just not in the sense that Trump means — decried a “corrupt takeover of the central bank [by] a wannabe dictator.”
Don’t roll your eyes at Warren for once. Because that’s an accurate description of what’s going on here, and everyone damn well knows it. I don’t want to say “I told you so,” but I did. This is, on the one hand, completely f–king crazy, if my more staid readers will pardon the expletive, but it was also entirely predictable. And I don’t just mean in the context of last summer’s Trump-Powell drama.
The prospective criminal charges against Powell, like so many other flagrant affronts to the rule of law witnessed over the past 11 months, are evidence that Trump’s largely succeeded in turning America into an autocracy.
Powell’s a rich white man and a lifelong Republican. In other words, he’s the “right” color, the “right” gender and, until 2020 anyway, voted for the right (figuratively and literally) party. Where he went wrong was in refusing to subordinate the Fed the way Pam Bondi has the Justice Department, Pete Hegseth has the military, Kash Patel has the FBI and so on.
I’d caution against pretending this can’t or won’t get worse, because it can and almost invariably will, mostly because no one who matters has braved any real pushback on Trump during his second term. When it comes to the process of building an autocracy, what those opposed don’t do today becomes impossible to do tomorrow.
As Masha Gessen, an expert on autocracies, put it while speaking to Ezra Klein this month, “what happens as autocracy establishes itself is that the space available for action shrinks very rapidly.”
Where is Scottie B. on all of this?
https://www.axios.com/2026/01/12/bessent-trump-investigation-powell-federal-reserve
I don’t know how reliable anything on Axios is.
But I bet at the next Mar a Lago gala, this time he’s going to punch Pulte out. (You know, the integrity thing – he said he was going to do it and now here’s his chance! He’s a man of integrity, right?)
We’ll see if Bessent has any integrity left…and will get fired or resign like so many in Trump’s first term – or will embrace the lies like all the other butt-sucking slime-ball weaklings who have sold their souls to the TrumpFather.
I got into some trouble “Trump trading” last year. That is – making bets on what will happen to markets based on an analysis of what Trump has done. That worked right up to the advent of the TACO trade. After that, the market stopped reacting to Trump’s moves – both announced and real. Fast forward to now, and it looks the same but feels different. Trump is obviously “flooding the zone” again. But this time, his Presidency and (probably) his freedom are on the line. If midterms happen, he will be impeached, and he may go to prison. I don’t think there are any guardrails from here to the end of the line.
You’ve been documenting so much on this and the whole arc towards, and into, autocracy. Your last two paragraphs clearly identify the risks of denial and inaction. And then its simply too late.
Definitely going to get worse, as you say. One additional cause: Trump is afraid of the midterms. Unsurprisingly, he acknowledged his concerns publicly. Wait until he starts publicly floating ideas about how he will survive the midterms. He is going to do everything he can to try to create the illusion that affordability is not a problem. He will do everything he can to interfere with and if possible eliminate the right to vote, including declaring an “emergency” (like a 5 year old running around wearing a fire chief hat) that shuts everything down on election day. He will try to prevent any new Democratic Senators and Representatives from being sworn or to otherwise meet qualifications necessary to serve in Congress. He will do much more “crazy” stuff than anyone can currently imagine.
And pinning some “terrorist” label on formidable Democratic opponents…
And order the broligarchs to broadcast his propaganda…
And commandeer the Fed to buy and lift whichever market that doesn’t like the Empire in 2026…
And bomb somewhere inside or outside the borders if other excuses to declare emergency do not work…
… ….
I know that “he hardly knew the guy”, but these antics have done one thing. We quit asking to see all the Epstein files.
indeed indeed…
I read that times article last night and as I read it realized you read it too
Equally terrifying was the apparent murder of a white protester by some seemingly under-trained federal agent and the associated blatant denials by the country’s “leaders”… if this is also normalized it’d be so much easier to “efficiently” go after those “enemies within”…
Maybe it’s just human nature, it’s so much easier to collude with the corrupt than to stand up against the wicked powerful…those who bravely push back might sacrifice their lives, being looked up at as martyrs by half the nation but disparaged, mocked, and humiliated in some conspiracy theory memes on almighty social media by the other half…their sacrifices (and their loved ones’) today would be for the people they do not even know, even the very people who wrong them, tomorrow… Not a good deal, is it?
Anyway, thanks for the illuminating articles on these topics all the while.
Notice how Tillis, like other Republicans, keeps trying to pin Trump’s actions on “advisers.” I suppose it’s easier to stay out of the MAGA crosshairs if you don’t blame Dear Leader and just paint him as a victim of nefarious advisers.
Jafar would be jealous of how well these advisers have hypnotized Trump to do their bidding.
I noticed, and Tillis is smart because I’ve also noticed the visceral reaction from MAGA cultists when you directly criticize the Orange Jesus, it’s like you’re personally insulting them. Tillis avoids the immediate feral over-reaction while also painting Trump as a puppet who does whatever the last person talking to him tells him to do (also true).
I dearly wish Greenspan to head a pushback against the Trump faction. Imagine the absolute confusion and consternation within the administration as to what precisely Greenspan’s strategy is, should he start outlining this in public.
Usually, I visit the Dept of Labor’s Twitter (I am still not calling it X) for one thing: to see how much they’ve quietly revised down last month’s job numbers. I go there expecting bureaucratic boredom. I do not expect Blood and Soil.
If you think I’m exaggerating, look at this recent gem from the DOL account:
“One Homeland. One People. One Heritage. Remember who you are, American.” .. Who remembers their history ?“Ein Volk. Ein Reich. Ein Führer!”
Since when did the agency in charge of OSHA violations and ERISA compliance pivot to 1930s-style nationalist poetry? They even have 1930’s Art Deco style posters , reminiscent of the good ‘ol mid 1930’s in Germany
It seems the mask is slipping. We thought we were dealing with incompetence; this rhetoric suggests we are dealing with zealotry.
Remember who you are: A tax mule for a bureaucracy that apparently thinks it’s your spiritual guide.