What does it mean if Trump can "control" the board of the Federal Reserve? Understand with one article

This week, President Trump unilaterally announced the dismissal of Federal Reserve Board Governor Lisa Cook, sparking concerns across various sectors. Some analysts point out that this is not just about firing someone, but a strategy. If successful, it would signify a seismic shift in an institution that has long been viewed as superior to politics. From Trump's perspective, he is seeking to reform this long-unpopular institution, which is often blamed as the culprit for "uncontrolled inflation in America after the pandemic". Trump believes that lowering interest rates is a way to control the ever-expanding federal debt while boosting the housing market, which has always been a balance for economic growth. However, legal scholars, financial market experts, and current and former Federal Reserve officials alike have expressed that Trump's actions could not only politicize the Federal Reserve further but also undermine a key pillar of the U.S. financial system. Professor Kathryn Judge of Columbia Law School stated, "We are on a path toward eroding central bank independence. The cost will be incredible for the long-term economic health if the Fed loses the credibility it has built up over decades." For the Federal Reserve, "independence" refers to its freedom to make monetary policy decisions that are in the best interest of the U.S. economy without external political interference, even if these decisions are unpopular. However, the implications go beyond just whether interest rates will be lowered in September. Experts point out that if Trump truly succeeds in "taking control" of the Federal Reserve, by having most board members vote in the way he wants, he would gain control of the crucial levers of the economy and the national financial infrastructure. Professor Robert Hockett of Cornell Law School stated, "If Trump succeeds, it means the Fed's board of governors is just a rubber stamp. It fundamentally tells us that any lunatic who happens to occupy the White House in the future will set monetary policy." He added that the result could lead to severe hyperinflation, similar to what Latin American banana republics experienced under dictators' monetary policies, or what Turkey has witnessed in recent years under a dictator's monetary policies. At the same time, Trump administration officials do not believe they are undermining the independence of the Federal Reserve, but they do see the Fed as an out-of-control institution that needs to be "reformed." Critics, however, point out that Trump's aims go beyond just structural reform. Former Federal Reserve Vice Chairman Roger Ferguson said in an interview, "This is really a story about trying to overturn 90 years of Federal Reserve independence. The original goal was to give the Fed independence in making very important decisions on monetary policy. And now, for the first time, we see people directly undermining that." Krishna Guha, the global policy and central bank strategy head at Evercore ISI, said that if the President succeeds, it could have broad effects on the economy and markets. In a recent report, he stated, "We believe that the fundamental situation should be that by 2026, there will be a very serious Trumpization of the Federal Reserve, even though this does not automatically correspond to significant policy and practice changes, but we need to seriously consider this possibility, that it could lead to a break from past practices and create a completely different response function, with significant implications for the markets." Ultimately, the future of the Federal Reserve as an institution also faces enormous risks. Hockett said, "In our entire history as a republic, the independence of the Federal Reserve has never been under such a serious threat because of Trump's actions. I do believe that the long-term confidence in our central bank and in our currency will be shaken once again." This article is reprinted from Caishen; GMTEight editor: Chen Xiaoyi. (Note: Some names may not have a direct translation and may remain as romanized versions of the Chinese names.)