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

Summary

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Bulwark Takes — "Markets React Violently to Trump’s Fed Power Play" (with Ben Walsh)

Podcast: Bulwark Takes
Release Date: August 26, 2025
Host: Tim Miller
Guest: Ben Walsh (Sherwood News)

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Episode Overview

This episode dives into the abrupt removal—via a social media "bleat" by Donald Trump—of Lisa Cook from the Federal Reserve Board of Governors, unpacking not only the political drama but its earthquake effects across financial markets. Host Tim Miller is joined by economics journalist Ben Walsh to analyze why this move has triggered such acute market volatility, what it signals about the Fed’s independence, and the chilling implications for future U.S. monetary policy.

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Key Discussion Points & Insights

1. The Breaking News: Lisa Cook Fired by Trump

• [00:32] Donald Trump announces via his social media that he has fired Lisa Cook, the first Black woman to serve as a Fed Governor.
  • Trump claims justification based on allegations around Cook’s mortgage filings—though she has not been charged with wrongdoing, and the event is wrapped in ongoing, highly politicized anti-Fed rhetoric.
• Context: Lisa Cook was confirmed by the Senate and her removal is legally contentious.
• The news aligns with previous episodes’ concerns about Trump’s growing authoritarian tendencies and increasing pressure on independent government institutions.

2. Trump’s Broader War on the Fed

• [02:35] Ben Walsh:

  “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."

  • Trump wants lower rates to counter inflationary tariffs and spur growth ahead of the election, and is mounting an unrelenting campaign against both current Fed Chair Jerome Powell and broader Fed leadership.

3. How the Federal Reserve Works & Political Pressures

• [03:08] The Fed is governed by a Board, not just Jerome Powell. Recently, most of the Board has supported him, but there’s a smaller faction on the side of cutting rates.
• [03:36] Per Walsh, attacking Lisa Cook is less about her personally and more about pressuring the Fed as an institution, signaling to other governors the consequences of dissent:

  “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."

4. The Question of Legality & Precedent

• [05:02] Walsh explains the legal ambiguity:

  “It's an open question whether he has the authority to do this, given the information that we know about Lisa Cook's mortgages."

  • The President can only remove Fed officials "for cause." Whether Cook's paperwork constitutes "cause" is expected to be challenged in court quickly, maybe as soon as the next day.

5. Why Markets Reacted So Sharply

• [07:11] Tim Miller presses for economic significance: Why are markets so sensitive to one Governor’s removal?
  • [08:07] Walsh answers:

    “Markets broadly view the US as a safe haven for assets… 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…will decrease investor confidence."

  • The independence of the Fed is fundamental to both domestic and global faith in U.S. markets.

6. Implications for Jerome Powell and Fed Independence

• [09:12] There’s concern this sets the stage for possible actions against Powell and further erosion of institutional independence.
  • [09:59] Ben Walsh:

    “Whatever percentage you had in your mind as the possibility that Trump would fire Jerome Powell…is now significantly higher."

  • There’s a risk that the whole “Fed independence setup could essentially collapse,” with unpredictable outcomes for economic stability.

7. Markets, Tariffs, and the Macro Backdrop

• [10:17] The news coincides with persistent tariffs (including developments with South Korea) and a sharp drop in the dollar, with gold prices soaring.
  • High-tech equities are rising, but tariffs and political attacks on the Fed are a "persistent drag" on the broader economy.
  • [10:58] Walsh notes much of the inflationary cost of tariffs has yet to hit consumers—when it does, market conditions could become much more volatile.

8. Memorable Market Analogy and Closing Insights

• [13:12] Ben Walsh with a memorable line:

  “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."

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Notable Quotes & Timestamps

• Ben Walsh on Trump’s Motives ([02:35]):

  “Donald Trump is basically at war with the Fed right now. He does not like the Fed’s interest rate policy.”

• Ben Walsh on pressure campaign ([03:36]):

  “This is really about, not about Lisa Cook, it’s about a broad-scale pressure campaign against the Fed.”

• Ben Walsh on legal ambiguity ([05:02]):

  "Whether or not having two primary residence mortgages is cause for being fired from your job, I think is a very open question and will almost certainly be litigated very quickly.”

• Walsh on market reaction ([08:07]):

  “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…they could be subjected to this kind of pressure…will decrease investor confidence.”

• On gold’s spike ([13:12]):

  “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.”

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Key Segment Timestamps

| Timestamp | Segment Description | |-----------|---------------------------------------------------------| | 00:32 | Breaking news: Trump announces Lisa Cook's firing | | 02:35 | Ben Walsh on Trump’s motives and Fed policy | | 03:36 | Discussion on Fed Board dynamics | | 05:02 | Legality and process of removing a Fed Governor | | 07:11 | Why markets reacted dramatically | | 08:07 | Walsh discusses confidence in US markets and institutions| | 09:59 | Risk to Powell and the broader Fed | | 10:58 | Macro impacts: tariffs, supply chains, and market movements| | 13:12 | Gold price spike and what it signals |

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Tone & Final Takeaways

The conversation is urgent, clear-eyed, and slightly incredulous—reflecting just how extraordinary such a direct intervention in the Fed is. The guests’ language is accessible but pointed, especially in highlighting the long-term risks this moment signals for economic governance and US market stability.

Bottom Line:
Lisa Cook’s removal isn’t just another headline—it’s a direct challenge to Fed independence that has spooked markets, raised doubts over the future of U.S. economic policy, and opened legal and institutional questions that will reverberate for months or years. As Ben Walsh puts it, "If gold is skyrocketing, something is wrong."

Transcript

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[Tim Miller]

Hey everybody, this is Tim Miller from the Bulwark here.

[Host/Interviewer]

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 has real ramifications. I mean it is in line with what Bill Kristol and I were talking about this morning when it comes to Donald Trump creeping or maybe even marching towards despotism and 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 this is just one of the latest examples. But it has far, far reaching implications. And 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 willing to help us on economic news and who was able to jump in tonight on breaking news. And Ben Walsh is over at Sherwood News, that's an independent news site that is an arm of the Robinhood Corporation. We're talking about whether Ben's getting enough Robinhood 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 bleed it 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 Jerome Powell people in the administration leveled that Cook falsified records to obtain favorable terms on a mortgage, essentially that she had named two different properties, her primary residence. I should note here, I'm pulling up the Times. Cook, who is 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?

[Ben Walsh]

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. And 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.

[Host/Interviewer]

Yeah.

[Tim Miller]

And so just kind of give you the basics on how this works because.

[Host/Interviewer]

Obviously there's been a lot, and we've discussed on this channel a bunch his 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.

[Tim Miller]

The board has been split like mostly largely in the Powell camp with some.

[Host/Interviewer]

Minority members of the board in the we actually should cut rates camp. So, you know, how, how does Cook kind of fit into that dynamic?

[Ben Walsh]

Well, I think, I think that the, 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 to paint, 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 monomaniacally 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.

[Tim Miller]

And so the idea here, I guess.

[Host/Interviewer]

My question is firing her. I mean, well, there's sort of two sides to this, but like on the actual rate cutting side of it. And if 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.

[Ben Walsh]

Yeah, I mean, I think that that would be the idea. And I think that the other thing that's important to 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 whether or not having two primary residence mortgages is cause for being fired from your job, I think is a very open question and will almost certainly be litigated very quickly. I would not be surprised if this is in court tomorrow morning.

[Tim Miller]

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[Host/Interviewer]

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[Host/Interviewer]

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[Host/Interviewer]

I guess what I'm trying to get at and what I want folks to understand is like why the reaction to this particular in econ circles is so dramatic when 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, you know, 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 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 was just this one, it's this one. Governor, why now are we seeing gold prices skyrocket and the dollar drop? 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 Lisa Cook's personal.

[Ben Walsh]

Well, I think that the reason why is that markets broadly view the US As a safe haven for assets. There's not until now been this kind of frontal assault on the independence of the largest American financial institution in 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, if 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.

[Host/Interviewer]

I mean, I guess it also just augurs poorly about the, about the questions around Powell. Right. Which is that, okay, you know, if we have this, if the question of Fed independence, you know, if 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, you know, charges that are kind of unrelated to their work and smear people and bully them and, 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. And that's kind of like the worst case scenario for people. Sure.

[Ben Walsh]

Yeah. No, I mean, whatever percentage you had in your mind as the possibility that Trump would fire Jerome Powell, you know, at 6pm tonight is now significantly higher.

[Host/Interviewer]

Right.

[Ben Walsh]

It has, it has to be because he's closer to taking that step.

[Host/Interviewer]

You'd have to say, and just sort of looking then at the macro here of what we've got going on with the economy. The other thing we haven't got tonight is Trump had the South Korean leader in today. They're discussing closing the tariff deal, the tariffs at some level to stay on South Korea. So we have these persistent tariffs seeming more persistent than some had thought they would be after he kind of had pulled back following Liberation Day. We have the dollar falling now on this Cook News. Increased worries about Powell. On the other hand, we've seen a decently steady market. How do you balance how this stuff fits in the macroeconomic environment right now?

[Ben Walsh]

Well, it's definitely a market of, I guess you could say, 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 other side you have 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, Walmart's 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 US 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.

[Host/Interviewer]

All right, well, I'm looking at the futures here down a little bit following the Coke 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 were investing in gold based on the ads on Fox News, maybe it's like a little, just a little something, a little lag yap for the folks that have been watching conservative media and hopping on the gold advertisements.

[Ben Walsh]

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.

[Host/Interviewer]

All right. Well, we'll continue to follow this 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 it is news that's rollicking the markets and Econ World. And I appreciate you giving us your insights on that.

[Ben Walsh]

Thanks, Tim. Glad to be here.