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A new round of escalation between President Donald Trump and US Federal Reserve Chairman Jerome Powell could have devastating consequences for the entire global financial system. Economist Chris Hughes of the Economic Security Project warns of this in an article for The New York Times, cited by MSN.
The conflict erupted after Powell publicly stated that Trump’s tariff policy would lead to higher prices and pressure on the Fed to cut interest rates, a move that contradicts macroeconomic logic. In response, Trump launched a public campaign against Powell, whom he appointed to the post, and for the first time openly threatened to fire him.
“This is more than a personal quarrel. It’s a direct challenge to the foundations of the American economy,” Hughes said.
The Federal Reserve System, established in 1913, has always maintained institutional independence from the White House, which has helped to curb political interference in monetary policy. Interference by the presidential administration could undermine the credibility of the mechanisms for controlling inflation, investment, and employment.
Hughes draws a historical parallel with the 1970s, when Richard Nixon attacked Fed Chairman Arthur Burns for trying to curb inflation. Political pressure then led to catastrophic stagflation – and the current conflict, according to experts, looks much more dangerous.
“If Trump wins and the Fed is completely subordinated to the political cycle, interest rates will become a campaign tool rather than a reaction to the economy,” the analyst said. “The dollar could lose its status as the world’s reserve currency, which would be economic suicide.”
Instead of making America great again, the president, according to Hughes, is destroying the architecture that made it possible:
“Trump is not reforming the economy – he is dismantling the very system that has provided decades of American prosperity.”
Critics warn that the attack on the Fed is just one symptom of a larger trend in Trump’s second term, where personal power and political revenge prevail over the public interest and economic health.
