<p>The establishment financial media is in a tizzy this week over Trump's firing of <a href="https://youtube.com/shorts/Q6M-QM92elM?feature=shared" rel="noopener noreferrer" target="_blank">Fed Governor Lisa Cook</a>, a Biden appointee accused of mortgage fraud. They complain that this firing is an assault on the Fed's independence.</p>
<p>In reality, though, the notion of 'Fed independence' is a myth.</p>
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<p>Most recently, the Fed played politics last year by slashing rates to stimulate the economy heading into a tough presidential election for the incumbent Democrats.</p>
<p>And the Fed suddenly got stingy as soon as Trump got elected — halting rate cuts for almost a year so far.<br /><br />But here's the big picture…</p>
<p>The Federal Reserve is an inherently political institution – not only because the seven members of its Board of Governors are appointed by the President with Senate confirmation, but also because America's entire monetary system is political in nature.<br /><br />We no longer have sound money backed by gold but political money, where policymakers centrally plan the economy via market interventions — including changes to monetary policy.</p>
<p>By design, the Fed engages in price fixing activity by setting the price of money (i.e., interest rates) — and it bails out the federal government by funding its debt when market participants will not.</p>
<p>Since the Federal Reserve was launched in 1913, the value of the currency has plunged 99%.<br /><br />On the other hand, inflation was almost non-existent throughout the first 125 years of our constitutional republic, when the dollar was defined as a particular weight of gold and silver — and there was no permanent central bank.</p>
<p>It seems today the Fed 'losing its independence' is code for the Fed "cutting rates at the same time Trump wants it to do so."<br /><br />In reality, though, Wall Street also desires <a href="https://www.moneymetals.com/news/2025/07/31/hurry-up-and-wait-the-fed-stands-pat-at-july-meeting-004233" rel="noreferrer">lower interest rates</a> right now.</p>
<p>The federal government appears desperate for lower rates, too, since its annual debt service costs are now well above $1 trillion and rising. After all, the Treasury needs to refinance over $10 trillion in federal debt by next year, not counting the need to finance the <a href="https://www.moneymetals.com/news/2025/08/14/feds-runs-another-massive-budget-deficit-in-july-despite-surge-in-tariff-revenue-004266" rel="noreferrer">current budget deficit</a>.</p>
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<p>Lower rates are inevitable.<br /><br />This means we should soon expect a period of more steeply negative real interest rates where the true inflation rate is higher than interest rates. And that's <a href="https://www.moneymetals.com/news/2025/08/26/a-major-move-is-ahead-for-interest-rates-004293" rel="noreferrer">rocket fuel for gold</a>.</p>
<p>The Federal Reserve System has played a key role in getting us into the current predicament of inflation, runaway federal spending, and runaway debt.</p>
<p>The purchasing power of the Federal Reserve Note against real assets, especially gold and silver that cannot be printed or debased, continues to be on the chopping block.<br /><br />Prepare accordingly.</p>
