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President Donald Trump could be close to taking over the Federal Reserve. On September 9, a federal district judge blocked Trump’s effort to remove Lisa Cook as a Federal Reserve governor; on Thursday, the administration petitioned the Supreme Court to allow the firing to go through. If the high court ends up siding with the administration, then Trump will have a clear path to filling the central bank with loyalists willing to vote the way he directs them to.
So far, most of the hand-wringing over this possibility has centered on Trump’s desire to dramatically cut interest rates, which could juice the economy and improve the GOP’s political prospects in the short term, but make inflation worse and destroy the Fed’s credibility in the long term. But the Fed has far more power than just setting rates; in fact, setting rates is the least of what it can do. The central bank determines the supply of money flowing through the economy, decides which institutions can have access to the financial system, and can print and spend money at will. If Trump takes control of the Fed, he will have attained extraordinary power to reward his friends and destroy his ene
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