Bulwark Takes - Markets React Violently to Trump’s Fed Power Play (w/ Ben Walsh)

Episode Date: August 26, 2025

Donald Trump says he’s firing Federal Reserve Governor Lisa Cook. He claims that she falsified mortgage records, though she’s never been charged with wrongdoing and was confirmed by the Senate. Tim Miller and economics reporter Ben Walsh break down what this move means, whether Trump even has the legal authority to do it, and why markets are reacting with gold soaring and the dollar sinking. Could this be the opening shot in Trump’s war on Fed independence, and Jerome Powell himself?  You can read Ben's work at Sherwood News here

Save up to 50% off at Ecotech Windows and Doors and enjoy 0% financing available for two years. You'll see the difference right away with Ecotechwindows.ca. Quality and comfort you can trust and afford, ecotechwindows.ca. Hey, everybody. This is Tim Miller from the Bullwark here. We have some breaking news tonight. Lisa Cook has been removed from the Board of Governors of the Federal Reserve, according to a bleat from Donald Trump.

I guess that is how we are getting our news now. and this says real ramifications. I mean, it is in line with like Bill Crystal and I we're talking about this morning when it comes to Donald Trump creeping or maybe even marching towards despotism and, you know, what the ramifications of that are going to be for obviously people that are working

for the government, but for the economy at large. And so, you know, this is just one of the latest examples that it has far, far reaching implications and, you know, we're going to be getting into, on this channel, a bunch, the political side of it. But I wanted to focus tonight on what it means for the economy and how that's going to be affecting everybody. So I wanted to bring in a fellow who has been willing to help us on economic news, who

was able to jump in tonight on breaking news. And Ben Walsh, she's over at Sherwood News, that's an independent news site that is an arm of the Robin Hood Corporation. We're talking about whether Ben's getting enough Robin Hood stock out of that deal. He's been covering economics for a long time. And we brought him in because this is how we get news now. Donald Trump bleated on his social media feed that he's planning on firing Lisa Cook from the Board of Governors of the Federal Reserve.

If you haven't been following this that closely, he's been justifying this firing based on some accusations that some anti-Jrome Pile people in the administration leveled that Cook falsified records to obtain favorable terms. on a mortgage, essentially that she had named two different properties or primary residents. I should note here and point up the Times, Cook was confirmed by the Senate, has not been charged with any wrongdoing. She is the first black woman to serve on the board.

So there it is. She gets the boot. Ben, give people a little color on why you think this is happening. This is happening because Donald Trump is basically at war with the Fed right now. He does not like the Fed's interest rate policy. He thinks that rates should be cut in order to stimulate economic activity. Rates being cut now would help because tariffs are inflationary and cutting rates would help to, in his mind, I guess, stimulate the economy and keep things flowing. Yeah.

And so just kind of give you the basics on how this works because obviously there's been a lot and we've just. discuss on this channel a bunch has threats about firing Jerome Powell. The Fed is not just kind of like one man making decisions by Fiat. Not exactly. You know, there's this board of governors. The board has been split, like mostly largely in the Powell camp with some minority members of the board in the we actually should cut rates camp. So, you know, how does Cook kind of fit into that dynamic? Well, I think that the broad point is the important one, which is that Trump has made Jerome Powell, the centerpiece of his anti-Fed campaign and is very mad at Jerome Powell for, in his mind, not cutting interest rates kind of on his own. That's the picture that Donald Trump wants the pain, is that this is something that he can do because Jerome Powell wants to. The Federal Reserve Open Market Committee is the body that kind of sets, quote unquote, sets the interest rate.

that's a group of people and they are kind of monomaniacly focused on consensus. It was a very big deal that at the recent meeting, two people dissented and said, no, we should cut rates when they were held steady. That's not something that's happened for a very long time. Powell specifically is very focused on getting everyone on board and making sure that the, you know, decision that they come out with represents as close to the opinion of everybody on the committee. And so this is really about, not about Lisa Cook.

It's about a broad scale pressure campaign against the Fed and their interest rate setting body. And so the idea here, I guess my question is, so firing her, you know, I mean, well, there's sort of two sides to this, but like on the actual rate cuttings out of it. I mean, if it's just, she's just one person on the board, like what do they think they're getting out of it? Hoping that they're going to be bullying the other members of the board to get in line, essentially. Yeah, I mean, I think that that would be the idea. And I think that the other thing that's important to say right here is that, you know, the kind of the headline right now, I would say is that Donald Trump claims to have fired because it's an open fact of law, whether he has the authority to do this, given the information that we know about Lisa Cook's mortgages, you know, as has been discussed a lot by you guys, you know, the president does have the ability to remove Fed officials for cause, whether or not. having two primary residence mortgages is cause for being fired from your job, I think is a very open question and it will almost certainly be litigated very quickly.

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show and tell them we sent you give your skin the scientifically proven gentle care it deserves with one skin i guess what i'm trying to get at um and what i want folks to understand is like why you know the reaction to this um particularly in like econ circles is so dramatic when like on the one hand you look at it and it's like okay well this is another example of donald Trump bullying people who dissent within the administration. It's another example of him bullying people who are career, public service employees, particularly anybody that he feels like could fit in a DEI bucket, if you will. And that's been happening in a lot of places. That's a problem in its own right about whatever you want to call it, authoritarian creep.

But like on the economic side of things, it's just this one governor, right? Like, why now are we seeing, you know, gold prices skyrocket and the dollar drop? Like, what is the significance of this one seat in particular that maybe is, or not this one seat in particular, but of this move that is greater than just, you know, Lisa Cook's in particular, you know, personal. Well, I think that the reason why is that markets broadly view the U.S. as a safe haven for assets. You know, there's not until now been this kind of frontal assault on the independence of the kind of the largest American financial institution and the government. side. There is a premium in dollar-denominated assets that comes from the good governance and smooth functioning of these very large institutions like the Fed. The idea that even incrementally they could be subjected to this kind of pressure or these sorts of actions will decrease investor

confidence and make people worried about, you know, hey, is there going to be a period where for two, three, four years, six years, you know, American interest rate policy just doesn't make sense with reality because that's what the president wants, which, you know, in economist jargon, they would call persistent policy errors, which is not something that people think the Fed kind of makes over a long period of time, but maybe they will. We don't know. And so that's why people are scared. I mean, I guess it also just augurs poorly about the questions around Powell, right, which is that, okay, you know, if we have this, if the question of Fed independence, you know, whether the Fed is independent and whether they can make policy actions without fear

that if it hits the disfavor of the president that they will like come up with random charges that are kind of unrelated to their work and smear people and bully them or fire them out of the government like if he's doing that for this one governor then you know that is not a great sign for Powell next and it's a potential sign for you know kind of the whole Fed independence setup to essentially collapse, right? I mean, that's kind of like the worst case scenario for people. Sure. Yeah.

No, I mean, whatever percentage you had in your mind as the possibility that Trump would fire Jerome Powell, you know, at 6 p.m. tonight is now significantly higher. Right. It has to be because he's closer to taking that step, you'd have to say. And just sort of looking then at the macro here, what's what we've got going on with the economy. Trump, the other thing we haven't got to tonight is Trump had the South Korean leader in today. They're discussing closing the tariff deal, the tariffs will, you know, at some lower to stay on South Korea. So we have these persistent tariffs, any more persistent than some had thought it would be after he kind of had pulled back, you know, following Liberation Day.

We have the dollar falling now on this, on this Cook News, increased worries about Powell. like what you know on the other hand we've seen you know a decently steady market like how do you kind of balance you know how this stuff fits in the macro economic environment right now well it's definitely kind of a market of kind of I guess you could say like pulling at two sides of a sheet almost on the one hand you have extremely high growth companies in high tech sectors specifically like AI and kind of adjacent things that are just on an absolute tear and on the the other side, you have, you know, tariffs, and I would put, for kind of related, somewhat related reasons, I'd put this whole fight over the Fed on kind of the same side as the tariffs, which is that

it's a persistent drag on economic activity to have this fight going on. And the thing with tariffs specifically is that, you know, in a weird way, it feels like the back and forth has been going on forever, but in real kind of supply chain terms, as like these things work their way through the guts of, you know, Walmarts logistics operation or whatever, it's still early days. And that's what the companies have been saying is like, you know, hey, we're still kind of eating through inventory that we rush to get into the U.S. before. Liberation Day. Or, yeah, we'll eat, you know, some higher costs for a quarter or a couple of quarters. But now we're going to have to start sort of slowly passing these costs along to

consumers. And so that's one of the reasons why the stock market in particular is so frothy right now is because a lot of these costs have not yet been passed on to consumers fully. All right, well, I'm looking at the futures here down a little bit following the cook news, dollar way down. Gold way up, kind of just like a gold shooting up. So I don't know, maybe this is a galaxy brain thing, but maybe Trump is doing all this because all of the elderly people that are, we're investing in gold based on the ads on Fox News. Maybe it's like a little, you know, just like a little, just a little something, a little land yap for the, for the folks that have been watching conservative media and, and, and. and hopping on the gold advertisements. Gold never goes up on good news.

That's the one thing you can take away from this. If gold is skyrocketing, something is wrong. All right. Well, we'll continue to follow us tomorrow. We're going to give this out tonight. Appreciate you, Ben, jumping on Lisa Cook. As you rightly point out, is said to have been fired. It's extremely unclear whether he has the legal ability to do that

and kind of how this things will shake out in the courts. But at his news, it's rollicking the... the markets, an econ world, and I appreciate you giving us your insights on that. Thanks, Tim. Glad to be here.