Yellen warns: The United States faces the danger of becoming a "banana republic"

Former Federal Reserve chair Janet Yellen recently stated, "We are facing the danger of becoming a 'banana republic.' I am deeply convinced of this." Currently, the Federal Reserve, where Yellen once worked, is under unprecedented pressure. President Trump has been calling for interest rate cuts and has threatened to fire Federal Reserve Chair Jerome Powell several times. Yellen said that Trump not only demands lower interest rates but also cites reducing the government debt burden as a reason for this request. In her view, this is a double taboo: not only does it break the long-standing tradition of elected officials not interfering in monetary policy, but it also explicitly calls for the Federal Reserve to ignore its statutory duty to pursue full employment and stable inflation. Doing so will blur the boundaries between congressional fiscal policy and Federal Reserve monetary policy, destroying the Fed's reputation in controlling inflation.