Trump’s Fed Playbook: Find Dirt, Make Noise

Nobody is more critical of the Federal Reserve than me. I’ve long argued the Fed has become way too comfortable stuffing crack up the ass of the economy while pretending to be the nation’s high priests of monetary wisdom.

With a seemingly uncanny ability to not be able to forecast inflation (“it’s a mystery”) and/or the neutral rate of interest (asked repeatedly over the last few years, Powell has never given a specific answer) while they implement policy that widens the inequality gap they claim to be fighting, the whole institution just looks like a sad sideshow run by the covert CIA agents dressed like clowns the 1987 classic Real Men.

But even I can see what’s happening now. President Donald Trump today urged Federal Reserve Governor Lisa Cook to resign after Federal Housing Finance Agency chief Bill Pulte called for a Justice Department probe into alleged mortgage fraud.

Pulte accused Cook of mortgage fraud, alleging she falsely claimed two different homes as her “primary residence” within weeks in 2021, then rented one out. In short, misrepresenting occupancy status could mean cheaper loans, easier approval, and higher leverage for property purchases.

Illegal, if true? Hell yes. Should she be held accountable? Of course.

But I think Trump is officially bullhorning this mortgage-fraud probe and tying it to Chair Jay Powell for another reason. I think it could be the setup for something bigger. Specifically, if you ask me, it looks like Trump could be laying the groundwork to fire Powell “for cause.”

Trump’s animosity toward Powell isn’t exactly breaking news. During his first term, Trump repeatedly attacked Powell for not cutting interest rates fast enough, at one point even exploring whether he could demote Powell from Chair to a mere governor. Legal scholars reminded him that the Fed Chair can only be removed “for cause” — not simply for making the president mad. But that didn’t stop Trump from calling Powell an “enemy” of economic growth. Back in office, he faces the same problem: a cautious Fed Chair blocking his desire for easy money. This time, though, Trump looks like he’s coming in with a plan.

Jim Bianco of Bianco Research spelled it out bluntly on the Wealthion podcast just a day ago: “That would sound like to me that Jay Powell should go to Jackson Hole and say, ‘I’m not cutting rates in September.’ If he goes to Jackson Hole on Friday and he says, ‘I’m not going to cut rates,’ then he better hire a lawyer cuz Donald Trump’s going to fire him.”

Bianco explained that Powell isn’t “at will” like other officials, but “for cause”: “If you want to fire him, and the president has the ability to fire him, it has to be for illegal activity, malfeasants, something unethical or something. It’s not we disagree with you on policy.”

And there’s the trick. Trump can’t just boot Powell for being stingy with rate cuts. He needs a narrative of misconduct, waste, or fraud. Suddenly, the Lisa Cook probe makes more sense. If investigators tie her activities to broader Fed oversight — and then to Powell’s leadership — Trump has his scaffolding for “cause.” It doesn’t even need to win in court. The process alone forces Powell to squirm under the pressure, which may be the real goal.

We’re already seeing how this pressure campaign looks in practice. Trump has gone after the Fed’s absurd multi-billion-dollar headquarters renovation, branding it wasteful. And here I’ll admit: I’m with him. The Fed doesn’t need a Versailles-sized palace while the rest of America struggles to afford groceries. But let’s not pretend this is about fiscal prudence alone. It’s part of the playbook. Find a vulnerability, blast it on the loudspeaker, and connect it to Powell.

As Bianco put it: “If you’re looking at a government building that’s being done and you want to look hard enough, you’re going to find something that’s untold and then you could say, ‘Well, Jay Powell’s the guy that approved all of this.’ That’s why that’s such an important issue here.”

So the Cook case isn’t just about Cook. It’s about Powell. And it’s about Trump creating a running narrative that the Fed isn’t just wrong on policy, but possibly corrupt, possibly negligent, possibly both. Once you build that cloud, you don’t need lightning — the storm itself is enough.

This is only the beginning. Expect more probes, more leaks, more “accountability reviews.” Trump is going to keep ratcheting up the pressure until Powell either caves or breaks. Because even if Powell survives, the mere threat of firing him might be enough to drag the Fed’s so-called independence into line with Trump’s agenda.

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