Would it explode if Trump really took over the Fed? Looking back at half a century of American history: the results of politicians dominating monetary policy.

Trump has recently frequently pressured the US Federal Reserve (Fed) and its chairman, Jerome Powell, to force the Fed to cut interest rates according to Trump's wishes. In this regard, Nobel laureate economist Paul Krumman pointed out that Trump's attempt to control the Fed could have disastrous consequences. (Synopsis: US think tank sprayed Trump Bauer: Fed interest rate cut is too much, "inflation is about to explode", economics has completely failed) (Background supplement: Trump choked Bauer "want to fire you faster than cut interest rates", the Fed's independence will impact the market? With his "America First" strategy and "Make America Great Again" slogan, Trump has continued to roll out a number of reforms, and recent tariffs have disrupted the global economy, drawing criticism from economists. Paul Krugman, winner of the 2008 Nobel Prize in Economics, earlier accused Trump's tariff policy of lacking basic economic logic, like quack economics. In response to Trump's recent frequent pressure on the Fed to cut interest rates sharply, and even threatened to replace the current Federal Reserve Chairman Powell, Krumman wrote an article yesterday (18) with the title "Why You Should Fear a Trumpified Fed", strongly refuting the disastrous consequences of Trump's attempts to control the Fed. Krumman: Why does the Fed need to remain independent? In this article, Krumman begins by using the history of 1982 to 1984 as an example of how the Fed profoundly influenced the economy through monetary policy. He noted that in 1982 the U.S. economy was in trouble, with unemployment as high as 10.8 percent, but the Fed's easing of monetary policy that summer led to "a sharp drop in interest rates, and about six months later, the economy began to make an astonishing recovery, with growth of 4.6 percent in 1983 and 7.2 percent in 1984." This history shows that the Fed's decisions can turn the economy around in a short period of time, and their impact goes far beyond ordinary government policy. In light of this, Krumman emphasized that the Fed's independence is the cornerstone of maintaining economic stability and the dollar's global standing. Monetary policy is "extremely easy to implement," he explained, with the FOMC, for example, directing the purchase of government bonds without the hassle of legislative process. Therefore, the Fed, because of its enormous influence and the ease of implementation of its policies, must be insulated from political pressure to avoid abuse. Krumman warned: The Fed's independence is crucial. When the chairman of the Federal Reserve is appointed by the president and confirmed by the Senate, he should be allowed to complete his term without political interference, otherwise he may become a political tool that shakes investors' confidence in the dollar and triggers global financial turmoil. Krumman went on to quote the Wall Street Journal report that Trump privately discussed the expulsion of Fed Chairman Powell and publicly declared: "If I want him to go, he will get out quickly, trust me." Krumman believes that Trump's move shows that he is ignoring legal restrictions, and his "madness" is evident in a post on his social platform Truth Social. If Trump succeeds in bringing the Fed under his control, the consequences will be unimaginable. Krumman warns: Trump may order the Fed to cut interest rates sharply to stimulate the economy, regardless of inflation risk, or even use the Fed's power to punish disobedient businesses or state governments, leading to economic chaos. More seriously, if international investors sell dollar assets because the Fed loses its independence, it could trigger a global financial crisis. Review of the history of Fed decision-making by US politicians It is worth mentioning that Krumman also cited the serious consequences of Fed decision-making in the United States in the 1970s after it was dominated by then-President Richard Nixon. In the early 1970s, when the United States faced a crisis of high inflation and economic slowdown (stagflation), the Nixon administration pushed for tax cuts and expansionary fiscal policies while pressuring the Fed to keep interest rates low and loose monetary policy to stimulate the economy and reduce unemployment, supporting its re-election in 1972. The final results show that Fed Chairman Arthur Burns allowed the money supply to grow rapidly in 1971, and M1 growth reached 6-7%, exceeding the long-term stability goal, although in the short term strong economic growth in 1972 (GDP growth of 5.3%) and unemployment fell to 5.6%, helping Nixon win re-election; But a long period of excessively loose monetary policy exacerbated inflation, which led to a surge in inflation to 11% in 1973-1974, which, combined with the oil crisis in 1973, led to severe stagflation (high inflation + high unemployment) in the United States. In addition to this negative history, in the past half century, the United States has also had positive cases of the Fed resisting the intervention of politicians - in 1979, Fed Chairman Paul Volcker took aggressive interest rate hikes to control inflation by 13.5% (the federal funds rate peaked at 20% in 1980-1981), triggering the 1981-1982 recession, and the unemployment rate reached 10.8% in 1982. At the time, the Reagan administration publicly criticized high interest rates, and some members of Congress threatened to amend the law to limit the Fed's independence. However, Paul Volcker insisted on independence and refused to give in. Eventually, inflation fell to 3.2% of what it was in 1983, setting the stage for an economic recovery in the mid-to-late 1980s. Related stories Trump tired? Suddenly shouted "I don't want to add Chinese tariffs": Beijing took the initiative to contact me, Xi Jinping is smart Trump choked Bauer "want to fire you faster than cutting interest rates", the Fed's independence will affect the market? Trump backstabbed Jensen Wong! Nvidia H20 "first talk good is useless" was banned by the United States to lose 5.5 billion magnesium, how to enlighten TSMC at the end of the bright card negotiations? 〈If Trump really takes over the Fed, will it explode? Looking back at the half-century history of the United States: Looking at the results of politician-led monetary policy" This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".