US President Donald Trump announced the dismissal of Federal Reserve Governor Lisa Cook, raising questions about the reliability of the US dollar.
In a Tuesday post, the White House Rapid Response X profile published a letter signed by Trump removing Cook from her role at the Federal Reserve. He accused her of having made false statements on one or more mortgage agreements and, addressing her directly, wrote:
“I have determined that faithfully executing the law requires your immediate removal from office.“
According to a Tuesday Associated Press report, Cook said she would not step down. She said Trump was attempting to remove her from her post “for cause,” but claimed that “no cause exists under the law,” and added that Trump “has no authority” to remove her. She concluded that she “will not resign.”
Related: Rising Fed rate chatter may be a red flag for crypto: Santiment
The Fed’s independence is critical
The Federal Reserve has a significant degree of independence from the US government. Founder of Obchakevich Research, Alex Obchakevich, told Cointelegraph that the Fed’s independence “is the foundation for the stability of the US economy.” He explained:
“It ensures objective monetary policy, like rates, inflation without politics, maintaining investor confidence and preventing crises. Without it, there is a risk of manipulation and economic instability, as in authoritarian countries.“
Obchakevich suggested that Trump decided to fire Cook for “political reasons” and that his decision undermined the Fed’s independence. This leads toward market uncertainty and worsens economic sentiment, he said, adding:
“This causes volatility, a weakening of the dollar and a threat to its reserve role with the risk of recession.“
When asked whether Bitcoin (BTC) could be a potential solution, Obchakevich said that in the long term, “Bitcoin could weaken the dollar’s role as a reserve currency.” Still, he said Bitcoin did not appear to be a near-term solution.
Related: US Fed to end oversight program for banks’ crypto activities
Trump’s clashes with the Federal Reserve
The news followed repeated clashes between Trump and the Federal Reserve’s leadership. In mid-April, Trump bashed Federal Reserve Chair Jerome Powell for allegedly cutting interest rates too slowly amid a US-initiated trade war.
He then went so far as to suggest firing him. “Powell’s termination cannot come fast enough!” Trump said.
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