President Trump’s attempt to fire Federal Reserve Governor Lisa Cook is the most dramatic step yet in his drive to bend the central bank to his will. The Wall Street Journal called it “uncharted waters,” and they’re right.
Cook, refusing to step down, said bluntly: “The president has no authority to remove me.” Her lawyer, Abbe Lowell, vowed to fight in court: “We will take whatever actions are needed to prevent his attempted illegal action.”
Now, the entire Federal Reserve Board of Governors and its very independence is under assault by Trump’s Great Reset strategy . (source: Wall Street Journal)
The Federal Reserve Act of 1913 says governors can only be removed “for cause” — meaning malfeasance, not politics.
Trump cites alleged mortgage fraud (charges Cook denies) as his justification.
But the timing is telling: markets sit at historic highs, tech valuations are stretched to perfection, and even the hint of volatility could topple the indexes.
Trump has spent months berating Jerome Powell for not cutting rates. Now he’s maneuvering to add enough loyal voices to the Board of Governors to outvote him. If successful, the Fed’s independence — already wobbling — could collapse.
As Peter Conti-Brown of Penn put it: “If we allow this to become the norm, then this is the end of Federal Reserve independence as we know it.”
And that’s the game: engineer lower rates even as inflation creeps back. It’s dangerous, and you ignore it at your own peril.
The Bigger Play: Control of the Fed
Jim Bianco points out something most people miss: all twelve Fed District Bank presidents serve five-year terms, ending in years ending in “1” and “6.” That means February 2026, just six months away, the entire slate of presidents comes up for renewal.
The Board of Governors has veto power. With Cook out, Trump would have four allies on the Board — including Powell’s eventual successor. That could spell trouble for Chicago Fed President Austan Goolsbee (who barely scraped through his last reappointment) and even John Williams at the New York Fed.
Never in 112 years has the Board vetoed a district president. But Trump has shown no hesitation to break precedent. A radical restructuring of the Fed is now in play.
Markets Party On
The irony is rich: against this backdrop of political chaos, asset markets are partying like it’s 2021. The combined valuation of U.S. stocks has surpassed the peaks of both 1929 and the dotcom bubble.
Tech companies on the S&P are priced to perfection, a handful of megacaps pulling the whole index higher.
As Fed independence and the banking system come under attack, nature’s money is getting some overdue attention (Source: Bloomberg)
Gold jumped above $3,376 an ounce on the Cook news, a hedge against uncertainty and a weaker dollar. Bitcoin hovers near record highs, although it has pulled back amid some signs of large holders – dubbed whales in the industry – have rung the cash register.
Amid the sturm and drang of the Trump reset , gold and bitcoin have been exerting the kind of stability and flight to safety normally reserved for the Federal Reserve and US Treasury. (Source: Kobeissi Letter)
Every asset owner knows what Powell’s pivot means: more liquidity, more fuel for prices.
As Ludwig von Mises warned: “Inflation can be pursued only so long as the public still does not believe it will continue. Once the people generally realize that the inflation will be continued on and on… the fate of the money is sealed.”
Looks like Trump and the crew are going to “f’ around and find out,” as the kids these days are sayin’.
Commanding Heights, Part I: Washington Buys In
But who are we kidding?
It’s not just the Fed. The U.S. government is taking unprecedented steps into the market itself. Last week, Washington announced it will take a nearly 10% position in Intel, in exchange for grants to fund its long-delayed Ohio “megafab.”
It’s not alone. MP Materials, America’s rare-earth producer, has received federal support. A “golden share” arrangement was cut with Nippon Steel earlier this year.
National Economic Council Director Kevin Hassett said these are just “down payments” on a sovereign wealth fund President Trump wants to establish.
The questions are immediate: who oversees such a fund? What happens when administrations change? Will corporate strategies follow market signals — or political mandates?
Commanding Heights, Part II: A Dangerous Precedent
History is clear on this point. Lenin spelled it out a century ago: “The State must take control of the commanding heights of the economy.” Once the government decides who thrives and who fails, markets no longer discipline capital allocation.
Politics do.
Tavi Costa added his own modern warning: “At some point, a new political party will come into power — it’s inevitable. The question is: How will government involvement in these companies evolve under new leadership? Administrations will change, but these equity stakes won’t. This could lead us down a dangerous path, one we’ve seen before in less stable or less developed economies.”
Intel may look like a chipmaker. MP Materials may look like a miner. But with government on their cap tables, they are something else — a hybrid of market and state, vulnerable to the kind of mission creep that distorts whole economies.
What’s at Stake
For you, the individual investor, compounding your investments will help you build wealth. That’s the simplest way to describe our task.
Disrupt the flow, as politics is wont to do, and decades of progress can vanish overnight.
Powell made it clear on Friday: the music for the party on Wall Street isn’t stopping — at least not yet. Asset owners will keep winning, for now. But corrections inside this “terrifying bull market” can hit fast and hard, especially in AI darlings whose valuations float far above fundamentals.
The clock is ticking. The financial system is being tested in unprecedented ways. Ignore it at your peril.
~ Addison
P.S.: That’s why I’ve invited Bloomberg’s #1 labor market analyst, Andrew Zatlin, to join us for Grey Swan Live! this Thursday. He’ll walk us through the jobs data Powell is watching — and how it could flip this market from euphoria to panic in weeks. Don’t miss it.
P.P.S. We’re helping you prepare for the most terrifying bull market this week. And one step: Stop giving the IRS too much of your money.
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Your thoughts? Please send them here: addison@greyswanfraternity.com
