The escalating verbal attacks launched by former President Donald Trump against Federal Reserve Chair Jerome Powell are not merely political bluster but a calculated attempt to intimidate the entire Federal Reserve system, according to leading Harvard economist Kenneth Rogoff. In an interview with “Der Spiegel” Rogoff characterized Trump’s sustained criticism as a power play designed to ensure future Fed leadership aligns with his personal agenda.
“Whoever follows Powell will be loyal to Trump” Rogoff stated, highlighting a chilling prospect for the independence of the central bank. He elaborated that Trump’s focus isn’t solely on Powell, but on the broader Federal Reserve Board of Governors, effectively sending a message: dissent will be met with potentially ruinous consequences.
Rogoff’s analysis suggests a deliberate targeting of board members who may lack the financial resources to defend themselves against allegations, a tactic particularly harmful to those without Powell’s capacity to absorb extensive legal fees. “It’s no accident that the accusations involve criminal matters” Rogoff explained. “Because in those cases, the Fed doesn’t pay the lawyer fees. If you’re a professor, you can’t afford it.
Beyond legal intimidation, Rogoff cautioned that Trump commands a vast network of government agencies – the National Security Council, the FBI, the CIA and even housing oversight bodies – capable of dredging up damaging information. “He doesn’t even need proof. The accusation is enough” Rogoff asserted, revealing a deeply concerning pattern of leveraging state power for personal gain and control.
Rogoff expressed grave concerns that Trump’s efforts may prove successful, warning of a dangerous erosion of institutional independence. “To put it bluntly, such attacks on a central bank are typically only seen in banana republics” he cautioned, citing experiences from his time at the International Monetary Fund, where he witnessed instances of extreme actions against central bankers who disagreed with ruling powers, including a gruesome example of a central banker being physically harmed.
The remarks serve as a stark warning about the potential fragility of American institutions when subjected to sustained political pressure, particularly when that pressure leverages the threat of legal and bureaucratic persecution. Whether the Fed can withstand such attacks and maintain its operational autonomy remains a critical question for the future of economic stability and democratic governance in the United States.