## Summary of "This authoritarian Trump statement didn’t get the attention it deserves" This news report from **ABC News**, authored by **Alan Kohler**, discusses the perceived implications of Donald Trump's actions and statements regarding the US Federal Reserve and broader governmental control, arguing that financial markets are overlooking a significant shift towards authoritarianism with global consequences, particularly for allies like Australia. **Key Information and Findings:** * **Dismissal of Fed Governor Lisa Cook:** Donald Trump announced the removal of Lisa Cook, one of the seven governors of the Federal Reserve, citing "for cause" based on an unproven allegation of fraud. * **Market Indifference:** Financial markets did not react significantly to this announcement or to Trump's subsequent statements about gaining a majority on the Federal Open Market Committee (FOMC) to lower interest rates and boost housing. * **Trump's Assertions of Power:** The report highlights Trump's statement, "I have the right to do anything I want to do. I'm the President of the United States," as a critical, yet under-attended, declaration. * **Broader Pattern of Actions:** The dismissal of Cook is presented as part of a series of actions by Trump, including: * Deploying National Guard troops in Washington D.C. * Welcoming Russian President Vladimir Putin. * Announcing the US government would take a **10% stake in Intel Corporation for free**. * Instructing Cracker Barrel to abandon its new logo. * Mandating federal architecture must be "beautiful again." * Advocating for Roger Clemens' induction into the Baseball Hall of Fame. * **Market Optimism Explained:** The report suggests market indifference is due to: * A preference for lower interest rates, even if it leads to inflation and recession. * Obsession with AI, exemplified by Nvidia's **$39.8 billion (US$26 billion) quarterly profit**. * Lisa Cook's legal challenge to her dismissal. * The fact that Trump only has a majority on the Fed's seven-person Board of Governors, not the FOMC which has 12 members. * **Federal Reserve Structure and Trump's Influence:** * The FOMC, which sets interest rates, comprises the seven Fed governors and the president of the New York Fed, plus four rotating regional Fed presidents. * If Cook is removed, Trump will have appointed four of the seven governors. His influence will extend to five governors when Chairman Jerome Powell's term ends next May. * Regional Fed presidents are chosen by their respective boards but require approval from the main Fed's Board of Governors. Trump could potentially block appointments until he gets his preferred candidates. * The next significant change for regional Fed presidents is due at the end of February 2026. * **"Unitary Executive Theory" and Project 2025:** The report links Trump's actions to the "Unitary Executive Theory," a core tenet of Project 2025, which advocates for the president to have complete executive authority over all federal government institutions, including traditionally independent ones like the Department of Justice, FBI, Bureau of Labor Statistics, and the Federal Reserve. * **Constitutional Interpretation:** This theory is based on Article II, Section 1, Clause 1 of the US Constitution, which vests executive power in the President. The Trump/MAGA regime interprets this literally, aiming to bring all executive power under presidential control. * **Erosion of Independence:** The report argues that Trump's actions, supported by Supreme Court decisions that have upended long-standing practices regarding the dismissal of independent commissioners, signal a move towards direct presidential control over institutions like the Fed, which has historically been independent. * **Global Implications:** The erosion of the Fed's independence is seen as a "Rubicon once crossed" that could lead to no part of the US government being free from direct presidential control, with significant implications for dependent allies like Australia. * **Checks and Balances Undermined:** While the report acknowledges that the literal interpretation of Article II might align with the Constitution's drafters' intent, it highlights that Trump is also stacking the Supreme Court and bypassing Congress, undermining the intended checks and balances. * **"Competitive Authoritarianism":** The report suggests the US may be heading towards "competitive authoritarianism," where autocrats take turns to rule and plunder, unless future administrations reverse "Trumpism." **Key Statistics and Metrics:** * **Federal Reserve Board of Governors:** 7 members. * **FOMC Members:** 12 members (7 governors + NY Fed President + 4 rotating regional Fed presidents). * **Intel Stake:** 10% for free. * **Nvidia Quarterly Profit:** $39.8 billion (US$26 billion). * **Mortgage Rates:** Most US mortgages are 30-year fixed, tied to longer-term government securities, not the Fed's cash rate. Many switched to new mortgages in 2020-21 when rates were low and won't roll over until 2050. **Notable Risks and Concerns:** * The slide of the US into authoritarianism. * The potential for the president to have complete executive authority over all government branches. * The undermining of the Federal Reserve's independence. * The precedent set by the dismissal of independent officials. * The possibility of "competitive authoritarianism" in the future. **Report Provider/Author:** * **Provider:** ABC News * **Author:** Alan Kohler (finance presenter and columnist on ABC News, and writer for Intelligent Investor) **Date/Time Period Covered:** * The report discusses recent events and announcements, with the publication date being **August 31, 2025**. The events described, such as the dismissal of Lisa Cook and Nvidia's earnings, are presented as current.
This authoritarian Trump statement didn’t get the attention it deserves
Read original at ABC →Financial markets are missing the point about Donald Trump's takeover of the Federal Reserve.It's not really about getting interest rates down or even just about the Fed. America is in the midst of an authoritarian revolution with global implications, especially for dependent allies like Australia.Last week, Trump announced that he was removing Lisa Cook, who is one of the seven governors of the US central bank, the Federal Reserve.
The reason: "for cause", based on an unproven allegation of fraud in mortgage applications while she was a professor.Markets did not freak out, surprising analysts everywhere, even after Trump followed up by telling a televised cabinet meeting that: "We'll have a majority [on the FOMC — the Fed's Federal Open Market Committee] very shortly.
Once we have a majority, housing is going to swing, and it's going to be great. People are paying too high an interest rate."But it's not about housing, which is already too pricey, or the interest rate, about which Trump has been badgering and insulting Fed chairman Jerome Powell for months. It's another step, albeit a big one, in America's slide into authoritarianism and the Trump/MAGA regime's takeover of every aspect of government.
Most mortgages in the US are on a 30-year fixed rate and are set according to the market rate of longer-term government securities, not what the central bank does to the cash rate, as in Australia.Also, almost everyone switched to a new 30-year mortgage in 2020-21 when rates were super low and they won't rollover until 2050.
The announcement about Lisa Cook came after Trump had said: "I have the right to do anything I want to do. I'm the President of the United States." Trump's statement needed more attentionIt was a statement that did not get the attention it deserved.A week earlier, Trump announced that National Guard troops would be deployed in Washington DC to quell a fabricated crime wave, before flying to Alaska for a red-carpet welcome onto American soil of Russian President Vladimir Putin, applauding him as he approached.
Then last week he announced that the US government would take — for free — a 10 per cent stake in Intel Corporation, instructed restaurant chain Cracker Barrel to abandon its new logo, mandated that federal architecture must be "beautiful again", played a round of golf with former New York Yankees pitcher and accused drug cheat Roger Clemens before demanding that he be admitted into the Baseball Hall of Fame and then announced that he had sacked Lisa Cook.
Obviously, the last of those was the most consequential, although nationalising a 10th of a big company is a weird sort of capitalism.Markets were untroubled. Why?The fact that markets were untroubled by an attempted political takeover of monetary policy is probably explained by a few things:Markets like it when interest rates come down, until the economy gets hit by higher inflation and has to have a recession;They're obsessed with AI, helped by AI chip maker Nvidia last week reporting a $39.
8 billion ($US26 billion) quarterly profit, one of the biggest by any company in history;Lisa Cook is challenging her sacking in court so there is some way to go with that;Trump won't actually have a majority on the FOMC, which sets interest rates, only on the Fed's seven-person board of governors.The FOMC has 12 members: the seven Fed governors, the president of the New York Federal Reserve Bank, and four of the 12 other regional Federal Reserve Banks rotating through 12-month terms.
If Trump succeeds in getting rid of Cook, he'll have appointed four of the seven governors, which will become five next May when chairman Jerome Powell's term ends.The regional Fed presidents serve concurrent five-year terms, with the next big switch due at the end of February 2026 when they all must be renewed or replaced.
Trump does not get to appoint them — they are chosen by the directors of each regional Fed — but they do have to be approved by the main Fed's board of governors, so if Trump controls that he could keep knocking them back till he gets those he likes.But that's all a way off, at least six months, which is a long time in the markets these days, and their habit is to remain optimistic until the last possible moment.
Market traders are watching each other, not the world, or as JM Keynes put it, what matters for investors is understanding the average opinion of the average opinion.If they were watching the world, they would see a highly focused, carefully planned and very significant change in the way government is carried out in the United States.
If Trump controls the Fed's board of governors he can have influence over the selection of regional Fed presidents next year. (Reuters: Larry Downing, file photo)A strategy to remove independenceThe animating idea behind Project 2025, which contained the blueprint for the second Trump presidency, is called Unitary Executive Theory, which is based on the proposition that the president should have complete executive authority over every part of the federal government.
That means eliminating the customary independence of any government institutions, such as the Department of Justice, FBI, the Bureau of Labor Statistics and the Federal Reserve and bringing them under the direct control of the president.It's based on what's called the Executive Vesting Clause, which is Article II, Section 1, Clause 1 of the constitution, which says simply: "The executive Power shall be vested in a President of the United States of America."
Article I gives legislative power to Congress and Article III vests judicial power in the courts, specifically the Supreme Court, and "such inferior Courts as the Congress may from time to time ordain and establish".The Trump/MAGA regime has made no secret of its belief that Article II should be taken literally and that all executive power should be vested in the president and his cabinet and staff.
Also note that no government institution, including the Federal Reserve, has legislative independence from the White House.In line with that, Trump's sacking of several normally independent commissioners has been supported by the Supreme Court, up-ending long-standing practice.Now it's the Fed's turn and given its revered independence from the caprices of politics — along with that of most other central banks, including Australia's — it is a Rubicon once crossed there will be no part of the government not under the president's direct day-to-day control.
Democrats, other Trump opponents and most economists decry all this, but it does seem, at least on the surface, to be what the drafters of the constitution had in mind — as long as there are meaningful checks and balances from Congress and the Supreme Court.The Trump/MAGA regime believes all executive power should be vested in the president and his cabinet and staff.
(Reuters: Jonathan Ernst)It's not just the FedThe trouble is Trump has also stacked the Supreme Court and is ignoring or bypassing Congress, which was not anticipated back in 1787 when the constitution was signed.He is now working on gerrymanders around the country, starting in Texas, to ensure that Republicans are more likely to be elected.
Trump did assure Americans before the election last year that it would be the last one that they'd have to worry about, that there wouldn't be any more elections, but still — it's hard to imagine the United States becoming a fully fledged autocracy.There will be more elections, so perhaps a more realistic concern for voters is that future presidents might be reluctant to give up the unitary executive power that Donald Trump has bestowed on them.
Political scientists call that "competitive authoritarianism", in which autocrats take turns to rule and plunder.That may be what the US is heading for unless a future administration and Congress undo Trumpism.Alan Kohler is finance presenter and columnist on ABC News, and he also writes for Intelligent Investor.
