Nobel Prize-winning economist Paul Krugman has unleashed a scathing attack on Donald Trump's unprecedented attempt to fire Federal Reserve Governor Lisa Cook. Krugman called the president's move "completely insane" during a CNN interview, warning of dire economic consequences.
Trump announced on Monday night he was removing Cook from her position over mortgage fraud allegations. The president claims Cook committed fraud by allegedly listing two different properties as primary residences on mortgage applications.
"This is completely insane," said Krugman, the 2008 Nobel Memorial Prize winner in Economic Sciences. He stressed there's "no evidence" that would warrant Trump's firing efforts.
Constitutional Crisis
Cook has vowed to remain in her post and plans to file a lawsuit challenging her removal as illegal. Her attorney Abbe Lowell announced the legal challenge, with Cook maintaining she hasn't been charged or convicted of any wrongdoing.
The Federal Reserve Act allows presidential removal "for cause" but this power has never been tested by a US president. Cook, appointed by Joe Biden in 2022, became the first Black woman to serve as Fed governor.
Market Impact
The attempted firing has already rattled financial markets. According to the BBC, long-dated US government securities sold off as investors expressed concerns about Federal Reserve credibility.
Krugman warned in his Substack newsletter that if Fed Chair Jerome Powell caves to pressure or the Supreme Court validates Trump's "illegal declaration", the implications will be "profound and disastrous".
Authoritarian Comparison
The economist drew a chilling parallel to Turkey, where President Recep Tayyip Erdoğan's interference with the central bank sent inflation soaring to 80 percent. "The United States will be well on its way to becoming Turkey," Krugman cautioned.
Critics believe Trump's move represents pure intimidation tactics designed to install loyalists on the Fed board. The Daily Mail reports Trump seeks a four-seat majority on the seven-member board to control interest rate policy.
"This is pure intimidation, it's personal intimidation," Krugman said of Trump's approach. "This is the authoritarian playbook."
Sources used: "HuffPost", "CNN", "BBC", "Guardian", "Daily Mail"
Note: This article has been edited with the help of Artificial Intelligence.
