Podcast Summary: "Why the Federal Reserve Crisis Matters"

It Could Happen Here
Aired: January 22, 2026 | Host: Mia Wong | Produced by Cool Zone Media and iHeartPodcasts

Episode Overview

This episode of It Could Happen Here dives into the ongoing crisis around the Federal Reserve’s independence, analyzing the Trump administration’s attempts to exert direct control over the Fed. Host Mia Wong unpacks the complicated structure and function of the Federal Reserve, explains why its independence is foundational to U.S. and global capitalism, and outlines the existential risks posed by political interference. The episode also reflects on the deeper consequences of this power struggle, ranging from financial collapse to geopolitical ramifications.

Key Discussion Points & Insights

1. The Federal Reserve as the Center of the Current Crisis

• Jerome Powell’s Public Defiance: Jerome Powell, the Fed Chairman, released an unprecedented video claiming that Justice Department threats and grand jury subpoenas were attempts to force his resignation and undermine Federal Reserve independence.
• Supreme Court and Board Member Firing: Another Trump initiative—attempting to fire Federal Reserve Board member Lisa Cook—has reached the Supreme Court, which thus far has resisted Trump’s attempts to remove Fed officials.
• Significance: Mia stresses that this is not just another example of executive overreach, but rather a direct attack on one of the most “central institutions of global capitalism” ([04:30]).

2. What is the Federal Reserve? The Structure and Its Messiness

• Public vs Private Debate: Wong humorously highlights contradictions within official Fed websites about whether the institution is public or private, noting: “These are two different websites run by two different parts of the Federal Reserve... and they sound like they’re arguing with each other.” ([10:55])
• Complex Structure:
  • 12 Regional Banks
  • Board of Governors (appointed by the President, confirmed by Congress)
  • Federal Open Market Committee (FOMC)
• Quote:

  "We are dealing here with an absolute goddamn mess." – Mia Wong [12:13]

3. What Does the Fed Actually Do?

• Money Creation:
  • The Fed is the only entity empowered to “print money”—more technically, to create Federal Reserve notes, which are the basis of U.S. currency and global reserve assets.
  • U.S. dollars are explained as government debt instruments held by the Fed ([18:00]).
• The Interest Rate Lever:
  • Main function: setting the federal funds rate, which indirectly determines how much banks charge each other to borrow overnight.
  • The interest on reserve balances (IORB) is the main tool for influencing this rate.
  • Simplified Take: "What the Fed is normally doing is... setting their own interest rate for how much money you can get from just leaving your money in the Federal Reserve." ([25:50])

4. Why Fed Independence Matters – and What’s at Stake

• Political Control:
  • Trump’s efforts to lower interest rates through personal and judicial pressure represent a direct challenge to the Fed’s technocratic independence.
  • Historical Analogy: Autocrats who seize control of central banks, like Erdogan in Turkey, generally produce economic disaster via runaway inflation ([32:15]).
• Capital’s Red Line:
  • Even Trump-allied senators, big banks, and major capital interests oppose this interference, recognizing that "fucking with the Federal Reserve is fucking with the money." ([07:15])
  • Mia emphasizes:

    "This is actually a line at which segments of capital are willing to break with Trump because this is an existential threat to them." ([35:25])

5. The Function of the Fed Beyond Interest Rates

• Vast Powers:
  • Manages the U.S. payment system, overseeing $2 trillion in daily transactions.
  • Holds the gold reserves of many countries.
  • Maintains a $6.5 trillion balance sheet that underpins stability across global markets ([30:15]).

6. Dangers of Political Interference – The “Greenspan Put” and 2008 Redux

• Trump’s Desired Policies:
  • Looking to replicate Alan Greenspan’s 1990s policy of lowering rates at the slightest sign of economic distress—essentially fueling asset bubbles.
  • Quote on this mindset:

    “If you have spent your life closely following American macroeconomic policy, that is nuts. That is a terrifying statement. Utterly horrifying.” ([34:15])

7. War, Power, and the Deeper Meaning of Money

• David Graeber’s Insight:
  • Modern money and central banking are ultimately tied to military and state power.
  • The U.S. dollar’s global dominance is inseparable from American military might.
  • Quote from Graeber:

    “There’s a reason why the wizard has such a strange capacity to make money out of nothing. Behind him, there is a man with a gun.” ([36:29])

8. The Endgame: A Clash Between Two Fraught Options

• Neither Side “On Our Side”:
  • Trump’s regime and the Fed both ultimately serve capital, not ordinary people.
  • Yet, the critical hope is that a showdown might lead powerful economic actors to stand aside rather than suppress popular resistance:

    “What is necessary is that these massive and powerful economic institutions stand aside and not defend the regime.” ([37:05])

Notable Quotes & Memorable Moments

• On the Supreme Court’s hesitation:

  "The Supreme Court has been willing to allow Trump to fire the heads of other... independent entities... However, so far, the Supreme Court has balked at doing this for the Federal Reserve." – Mia Wong [03:45]

• On the Fed’s unique structure:

  “Is it a public or private entity? And they can’t agree on it. And this is, to use a technical term, a fucking nightmare.” – Mia Wong [12:50]

• On Trump’s threat to the global economy:

  "Trump is trying to take control of one of the most powerful economic institutions that has ever existed in human history." – Mia Wong [31:30]

• On faith in the Fed vs. faith in Trump:

  “Has [Fed management] been good for us? No, not really. However, comma, putting that power directly into the hands of Donald Trump is an even worse idea.” – Mia Wong [36:15]

• On the ultimate stakes:

  “There is, on the one hand, the possibility of Donald Trump just immolating the entire economy, and on the other... these people standing aside when we attempt to build a world where we are not being lit on fire for profit.” – Mia Wong [37:20]

Timestamps for Key Segments

• [00:10] — Introduction, the Powell video, framing the crisis
• [03:00] — Trump’s actions against the Fed and Supreme Court response
• [06:15] — Why the Federal Reserve’s independence is so jealously guarded
• [09:20] — The Fed’s structure: public/private mess
• [12:13] — Disagreement within Fed definitions, highlighting confusion
• [18:00] — The mechanics of money creation and debt
• [25:50] — How interest rates are actually set and why it matters
• [32:15] — The specter of Turkey, capital’s panic, and historical examples
• [34:15] — Dangers of a “Greenspan mindset” and asset bubbles
• [36:29] — Graeber quote: Money, debt, and military power
• [37:05] — The episode’s end: What happens when old alliances crack

Final Thoughts & Key Takeaways

• The Federal Reserve’s independence is foundational to the stability of the U.S. and global economy; direct political control risks catastrophic instability.
• Trump’s attempts to strong-arm Fed policy are uniting unlikely coalitions of capital, state, and legal actors against him, demonstrating that “fucking with the money” is a near-universal red line.
• Historical and contemporary analogies warn of dire outcomes should central bank independence be breached.
• Ordinary people must remember: neither the technocracy of capital nor the personalism of autocrats works in their interest, but there is hope in moments when divided elites might refuse to suppress popular movements for a better world.

For a deep, critical, and at times darkly humorous look at America’s most powerful (and least understood) financial institution, this episode provides both technical clarity and urgent warnings for the future.