1. Banana Republic
One of the things we talk about here is how difficult it will be to repair the damage Donald Trump is doing to various liberal institutions. Who will have the stomach to cleanse the FBI and DoJ? I ask. How much political capital would it take to rationalize the Supreme Court and de-Trumpify the Pentagon?
But those problems at least have theoretical answers. Trump is also creating structural problems to which there are no solutions.
The first is his attempt to politicize the central bank. Catherine Rampell wrote about this last night, and it’s about more than just putting a puppet into the role of Federal Reserve chair with an explicit litmus test that the prospective nominee commit to cutting interest rates. Trump is also:
Trying to fire sitting Fed governors
Appointing new Fed governors who literally still work at the White House
Floating a plan to purge the existing Fed regional bank presidents by instituting a residency requirement that would make most of the incumbents ineligible
As Catherine explains, if Trump succeeds in turning the Fed into a political agency, as he has done with the FBI and Department of Justice, it is likely to be very bad for the American economy.
But here’s what worries me: