🧐 A short explainer due to recent events: Why is central bank independence such a big deal?
Context: Yesterday, Donald Trump announced the removal of Federal Reserve Governor Lisa Cook, allegedly due to mortgage fraud. This is a very rare (and highly controversial) move by the US-government trying to replace a Fed Governor (whose term still runs until 2038).
❓ Why is this a big deal: Politicians are not well-incentivized to conduct reasonable monetary policy.
In simple terms: Governments have a natural incentive to print money, which fuels inflation, and erodes investor trust in the currency and financial markets.
👉 That's why the boards of all important central banks around the world are quite well protected against being fired by politicians.
So far, markets are rather calm about this. But if the Trump administration is successful in taking over the Fed's decision-making, the potential impacts are profound, and will make an impact for many years to come.
❗A very important topic, and not always easy to grasp.
I intend to share more insights and thoughts of mine in the near future, so stay tuned! 👍
Ingvar
$SPX500$NSDQ100... Show More
Absolutely, central bank independence is critical. Political interference in monetary policy risks higher inflation and undermines trust in markets. It’s a situation worth watching closely.
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If he can fire everyone and replace everyone with everyone in favor of trumps policies which is what the Americans voted for would send markets to record highs and potentially start a bull market. Saying that though, the fact it’s likely he will fail in firing cook, that’s why markets have been bearish... Show More
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Wed Nov 05 2025 02:49:45 GMT+0000 (Coordinated Universal Time)
