On the Media: “Trump’s War On the Fed [EXTENDED VERSION]”

Date: January 21, 2026
Hosts: Brooke Gladstone (BG), Mark Blythe (MB)
Main Guest: Mark Blythe, Professor of International Economics & Public Affairs, Brown University

Episode Overview

This in-depth episode explores former President Trump’s public attacks and DOJ investigation into Federal Reserve Chairman Jerome Powell and what it means for the independence and relevance of the Fed itself. Host Brooke Gladstone and economist Mark Blythe dive deep beyond headlines, dissecting the history, role, and influence of the central bank, and challenge widely held beliefs around central bank “independence” in an age of political volatility and populist disruption.

Key Discussion Points & Insights

1. Backdrop: The Criminal Probe & Political Assault

• DOJ launches a criminal investigation into Fed Chair Powell over testimony about a pricey renovation ([00:53]).
• Trump calls for a 10% cap on credit card interest and attacks Powell as “incompetent or crooked” ([17:55]).
• MB: “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the President.” ([01:13])

2. Deconstructing the Fed’s Power

• BG & MB clarify: The Fed doesn’t fully control money creation—as commonly believed, most money comes from commercial bank loans, not the central bank ([03:49], [04:06], [06:50]).
• MB: “The vast majority of money in the world is not central bank money. It’s commercial bank credit.” ([06:50])
• The Fed’s ability to manipulate the economy is limited; the bond market, driven by global investors, has ultimate power over borrowing costs ([09:50], [10:31]).
• “If they lose faith in what the government's doing, they will demand more interest to hold that debt. So you might cut [rates] on the front end, but it goes up on the back end.” ([10:47])
• Deregulation since the 1980s means central banks are now less pivotal than most people think ([03:49]).

3. Fed Independence: Myth, History, and Present Day

• US didn’t always have a Fed; its independence is relatively recent and only formalized after 1951 ([11:41]).
• The Fed’s dual mandate—price stability and maximizing employment—means it never was totally independent ([11:41]).
• Independence peaked before the 2008 Financial Crisis; post-crisis, the sheen of technocratic expertise has faded ([14:24]).
• MB: “Central bank independence reaches its zenith basically just before the global financial crisis. And then they’re kind of discredited because...there was a huge crisis that engulfed the whole world.” ([14:24])

4. Historical Parallels and International Examples

• The Turkey example: President Erdogan forced down rates, causing currency collapse and high inflation ([16:22]).
• MB: “That’s the cautionary tale...Erdogan...was like, no, we’re basically going to have lower interest rates to combat inflation. Of course, that didn’t work. They ended up with very high inflation. It crashed their currency...” ([16:22])
• The U.S. dollar’s global reserve status insulates the US—somewhat—but not entirely ([11:20], [16:44]).

5. Theories for Trump’s Fed Offensive

a. Authoritarian Power Play

• Undermining the Fed is consistent with Trump’s approach to other “stabilizing” institutions.
• MB: “The Fed is the titular, observable, obvious institution...If you push this over and put your yes man in charge, you’re signaling to every other independent agency...You will now do what I say.” ([20:46])
• BG: “It’s like going into the prison and beating up the big guy.” ([21:00])

b. Political Distraction

• Flood the news cycle with chaos; draw attention away from less favorable headlines.
• MB: “It’s just. It’s flood the zone.” ([21:42])

c. A Global Trend

• Global surge in populist right leaders seeking to reduce central bank independence ([16:02]).
• Discrediting central banks plays to an electorate tired of “experts,” especially when expertise failed to prevent or predict crises ([18:47], [19:08]).

6. Limits of Central Bank Power & Public Perception

• Americans overestimate what the Fed can do, especially regarding prices for everyday items ([23:35]).
• MB: “Groceries are up 20%...and they’re not coming down...there’s nothing that the central bank can do about that.” ([23:52])
• The central bank is wrongly cast as “Master of the Universe” ([25:04]).
• MB: “Independent central banks, you can’t live with them, you can’t live without them...The mistake...was to treat these guys as the Masters of the Universe. And they’re not.” ([25:04])

7. Media, Expertise, and Democratic Legitimacy

• MB challenges the “expert technocrat” model, pointing to fragile knowledge and societal frustration ([27:19]).
• On the myth of the expert: “If your experts aren’t actually experts and they’re just marginally better at guessing the future...then it’s not really the thing you want to hang your hat on.” ([27:19])
• The true crisis is a weakened, sclerotic Congress and a hollow democracy, not just technocratic overreach or populist takeover ([28:06]).

Notable Quotes & Memorable Moments

• “There’s a kind of feeling amongst Americans...Moses found the tablets, handed them to George Washington, and the 11th Commandment is, Thou shalt have an independent central bank...That’s not what happened.” — Mark Blythe ([11:41])
• “You should be skeptical.” — MB, on media coverage of Fed drama ([24:52])
• “It’s about worrying about that rug that’s on fire when the rest of the house is burning down.” — MB, on focus on Fed independence amidst greater turmoil ([25:54])
• “How about we stop thinking about Marvel movies as a guide to how we should govern ourselves?” — MB ([26:51])
• “Democracies are lotteries. They’re not guarantees.” — MB ([27:05])

Timestamps for Key Segments

• [01:13] — Powell fires back at White House over threats.
• [03:49] — How modern money comes from commercial credit, not just central banks.
• [09:50] — On whether Fed caving to short-term politics could “destabilize the world.”
• [11:41] — History lesson: The myth of Fed independence.
• [14:24] — After the 2008 crisis: Why faith in central banks is eroding.
• [16:22] — Turkey: The cautionary tale for messing with central banks.
• [20:46] — How attacking the Fed is a signal to all agencies.
• [21:42] — The “Flood the zone” theory—chaos as political tactic.
• [23:52] — What the central bank can and can’t fix in real lives.
• [25:04] — MB’s “you can’t live with them, can’t live without them” central bank summation.
• [26:51] — Marvel movies, expertise, and the realities of democracy.

Takeaways for Listeners

• Don’t Overestimate Central Bank Power: The Fed cannot fix everything, and its ability to steer the economy is often misrepresented.
• Independence Is Relative and Recent: Fears of dictatorial control should be balanced by understanding the limits and history of the Fed’s role.
• Populist Attacks Are a Trend—But So Is Overreliance on “Experts”: Both are reactions to public disillusionment with governing institutions.
• Focus on What Matters: Everyday concerns like grocery prices aren’t fixed by controlling the Fed.
• Democracy vs. Technocracy: The core issue is not just “who runs the Fed,” but whether U.S. democratic institutions hold up under stress.

In Mark Blythe’s words ([25:04]):

“Independent central banks, you can’t live with them, you can’t live without them. ... The mistake that we made, if we made a mistake, was to basically treat these guys as the Masters of the Universe. And they’re not.”

For those who haven’t listened:
This episode gives a rich primer on the real (and often exaggerated) drama around the Fed, using wit, skepticism, and deep historical context. It’s a window into how power works in America, often behind the curtain of technical expertise—and why sometimes, the supposed fire is just a distraction from the house burning down elsewhere.