The Silent Battle at the Heart of the Global Economy
In Washington, two centers of power are once again staring each other down. On one side stands the White House; on the other, the Federal Reserve. There are no sharp tweets, no open threats — only subtle signals, aggressive fiscal moves, and quiet but unmistakable political pressure.
Donald Trump, freshly back in the Oval Office, seems far from making peace with the institution he once called “the biggest enemy of American growth.”
The old tension between the president and the central bank has evolved — from a war of words into a struggle for structural control over U.S. monetary policy, and ultimately, over the stability of the global economy.
Toward Structural Control
During his campaign, Trump repeatedly blamed Jerome Powell for “killing the economy” through high interest rates. Now, back in power, he is pushing further — seeking to revise the Federal Reserve Act to give the White House greater influence over the direction of monetary policy.
The idea sounds simple but carries enormous risk: to make the Fed “more politically accountable.” For markets, that phrase reads as a euphemism for undermining central bank independence — the cornerstone of global trust in the U.S. dollar.
Powell, whose term runs until 2026, appears determined to stay the course under pressure. Yet Trump’s inner circle has already begun floating potential successors deemed more “aligned with an aggressive growth vision.”
A Cold War at the Core
No one calls it an open conflict, yet in Washington many now describe the relationship between the White House and the Fed as entering a new “cold war.”
Trump demands immediate rate cuts to fuel industrial expansion and job growth, while Powell and the Fed’s governors remain wary of inflation reigniting above 3%.
Reports from Politico and the Financial Times suggest Trump is exerting indirect pressure through fiscal policy — ramping up infrastructure spending and announcing sweeping tax incentives that effectively corner the Fed into softening its stance.
For many analysts, this is not just an economic disagreement. It is a contest over who gets to steer the wheel of global policy.
Global Ripple Effects
The impact of this quiet conflict stretches far beyond America.
Markets are beginning to price in a “Trumpian Monetary Policy” — a mix of rapid rate cuts and a weaker dollar to boost exports.
The result: global investors are flocking back to real assets such as gold, while emerging-market currencies swing wildly.
Christine Lagarde of the European Central Bank has called the trend “a form of monetary populism that could destabilize the post–Bretton Woods order.”
For Europe and Asia alike, the rift between Washington and the Fed represents a systemic risk. If the dollar weakens, the world’s financial equilibrium could shift with it.
Power and Will
For Trump, however, this issue goes beyond economics — it is about power. He sees rapid economic growth as proof of political success, and therefore believes monetary policy should serve the will of the people, not the judgment of technocrats.
That view, challenging the core of modern economic orthodoxy, places the world at a new crossroads: between electoral democracy and institutional independence.
Old Enemies, Unfinished Peace
The silent tug-of-war between the White House and the Federal Reserve reveals that beneath inflation data and interest-rate charts lies a deeper ideological struggle.
Will the global economy continue to be governed by technocratic prudence, or by political ambition promising rapid growth — whatever the risk?
Trump may no longer be tweeting about Powell. But behind closed doors, the battle endures — quiet, methodical, and capable of reshaping the face of the global economy.
DS
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