1️⃣ Federal Reserve Governor Cook formally sues Trump.
Federal Reserve Governor Lisa Cook has filed a lawsuit against Trump over his dismissal, accusing the president of overreach. Trump had previously announced her immediate termination, sparking constitutional and legal controversies.
2️⃣ The independence of the Federal Reserve faces historic challenges.
The Trump administration is reportedly studying how to control the selection process of regional bank presidents of the Federal Reserve, attempting to reshape the monetary policy decision-making process through political appointments. Former Federal Reserve Vice Chair Brainerd warned: This move could completely undermine the independence of the Federal Reserve since 1951, leading to soaring inflation and rising long-term interest rates.
3️⃣ The market harbors systemic risks.
The U.S. Treasury market has shown signs of 'distorted steepening' (long-term rates rising, short-term rates falling), reflecting market concerns over inflation expectations and the politicization of policy. Analysts believe that if Trump successfully controls the Federal Reserve board, monetary policy may diverge from economic fundamentals and shift towards catering to political demands.
4️⃣ The world is closely watching the fall selection of the Federal Reserve chair.
Treasury Secretary Basant stated that Trump will announce a new Federal Reserve chair nomination in the fall. If Cook is dismissed, Trump’s allies may occupy a majority on the board, further pushing for loose monetary policy.
Inflation expectations boost crypto demand: If the independence of the Federal Reserve is compromised, inflation expectations may rise, increasing demand for 'digital gold' like Bitcoin. Historically, low interest rates and inflationary environments (such as 2020-2021) drove Bitcoin from $7,000 to $69,000.
Policy uncertainty suppresses investment: The politicization of monetary policy may also lead to increased uncertainty in the crypto market, with institutional investors possibly reducing their allocation to high-risk assets (such as cryptocurrencies) due to concerns over regulation and economic stability.
Decentralized narrative strengthened: The weakening of the Federal Reserve's independence may enhance the crypto community's support for decentralized finance (DeFi), emphasizing the attractiveness of blockchain technology as an alternative to the traditional financial system.
Warning: This game not only concerns the survival of the U.S. central banking system but may also reshape the global financial order. The risks not priced in by the market may be the calm before the storm🌪️.
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