Trump wants to break 110-year-old U.S. record, Powell is in panic!
Federal Reserve Chairman Powell may not have imagined that Trump would really beat the Federal Reserve, and still hit him in a buzz-down way.
Once Trump really controls the Federal Reserve, will it be good or bad for us in China?
Trump and Powell.
Since Trump took office, he has been asking the Federal Reserve to take the initiative to cut interest rates to ease the debt pressure of the United States, but he didn't want to be rejected by Powell.
The two of them also started a tug-of-war, and they were in a battle for several months, and neither of them dared to take a step back.
Per someone will be curious that the Federal Reserve is not an American agency, and why can the Fed chairman not obey the orders of the US president?
This should be mentioned from the Federal Reserve Reform Act of 1977, according to which the bill stipulates that the Federal Reserve obeyes only the Congress of the United States, and the president of the United States has no right to issue orders on the Federal Reserve.
That is, Powell’s power is independent of the president, he is the real ruler of the U.S. economy, and Trump can only consult with him and not direct orders.
But the reality is that Trump has used various ways in the past few months, and Powell has always insisted on not lowering interest rates.
The means of Trump
Although the U.S. Constitution stipulates that the President of the United States cannot interfere with the decisions of the Federal Reserve, it gives the President of the United States the right to nominate the governors of the Federal Reserve. Trump seized this point and gave Powell a drastic salary.
The Federal Reserve has a total of seven governors, who cooperate and supervise each other with the chairperson of the Federal Reserve. Major decisions of the Federal Reserve require the votes of seven governors.
Therefore, the choice of the top seven directors is the starting point, and the US president can use his nominees to interfere with the internal decisions of the Federal Reserve.
However, successive U.S. governments have also been wary of this, so the term of office of the Ministry of Justice in July is 14 years, and the term of office of the U.S. president is only 4 years.
Coincidentally, Trump was re-elected as President of the United States after a four-year hiatus. And the two Fed governors he nominated in his first term are still within the Federal Reserve.
In this way, Trump has two core personnel within the Federal Reserve, and as long as Trump nominates two more governors in his second term, Trump's internal staff will account for more than half.
Trump really did this. After Powell rejected his requests to cut interest rates continuously, he had nominated Milan, chairman of the Economic Advisory Council, as the governor of the Federal Reserve, filling one of the vacancies.
For the first time in 110 years.
And on August 25, Trump made an astonishing decision, publicly announcing the removal of the position of Fed Chairwoman Lisa Cook, a news that shocked the world.
The U.S. president has no power to appoint and remove the Federal Reserve's personnel but only nominate them, so Trump has obviously exceeded his authority. And his behavior was the first time in more than 110 years since the founding of the Federal Reserve!
Anyone with a clear eye can see that Trump is punishing Powell for not listening to him, and Trump is also trying to arrange his people into the Federal Reserve, after all, there is only one place left.
However, Lisa Cook is not a weak leader either. In the face of Trump's overreach, Lisa Cook has made it clear that she will not resign voluntarily or listen to Trump.
Obviously, Trump's plan to indirectly control the Federal Reserve by changing board members has been blocked. As long as Lisa Cook resolutely refuses to resign, Trump's order is useless.
If both sides insist on not backing down, it can only be decided by the U.S. Supreme Court. In this way, things will drag on forever, and Powell will be prepared to respond.
For Powell, things have not yet developed to the point where Lisa Cook is forced to leave, and the board is not something Trump wants to control.
As long as Powell insists on disagreeing with Trump’s nomination, Trump will still be unable to control the Federal Reserve Council with a vote advantage.
Of course, Powell does not want to be completely at odds with Trump. After all, Trump's term has just begun. If the Federal Reserve remains on the opposite side of Trump, he may not have an easy time in the next few years.
Therefore, Powell's attitude towards interest rate cuts has also begun to be less tough, and there is even news that the United States is about to cut interest rates.
So once the Federal Reserve cuts interest rates, will it be good or bad for China?
First of all, we must understand that Powell's insistence on not lowering interest rates is to keep international funds in the United States. After all, it is more rewarding to deposit money in the Federal Reserve at high interest rates.
The higher interest rates represent the higher interest rates on the U.S. government’s debt to repay, and the vast majority of the U.S. government’s foreign debt is in the hands of U.S. financiers, which is a good thing for U.S. capital.
This is the conflict point between Trump and Powell. Although both consider the interests of the United States, one represents the U.S. government and the other represents the capital of the United States.
Now that Powell is unable to withstand the pressure to cut interest rates, international capital will surely move to countries with high interest rates, especially for some countries with more stable monetary value and investment environments.
As in China, for example, once the Federal Reserve cuts interest rates, a large amount of international funds will surely flow back to China, and this return will not necessarily be a deposit bank, but will also increase investment in our country.
The most important thing is that a large amount of international funds enter our country, which will inevitably cause the RMB exchange rate to rise. As for how much it rises, it depends entirely on our country's decision.
So the Fed's interest rate cut is good for our country, and it will also increase a lot of job opportunities for ordinary people.
Conclusion:
I have to say that Trump's ambitions are indeed great. Not only does he have control over the US military and political affairs, he also has control over the US finances.
I just don't know what shocking things Trump will do after he masters the Federal Reserve.
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References:
Trump Announces Immediate Removal of Lisa Cook - Luzhong Morning News
2025-08-26
Federal Reserve responds for the first time to Trump's firing of director Cook: Will respect judicial rulings-World Wide Web
2025-08-27
Lisa Cook sues Trump for Trump to remove her Fed executive post
2025-08-29
Trump Says Will Nominate Stephen Milan for the Board of Directors of the Federal Reserve (China News Network)
2025-08-08