Original author: Rick Awsb
Reprinted by: Daisy, Mars Finance
Why must Trump threaten Powell and fire Cook?-- To eliminate the potential emergence of Volcker 'Paul Volcker was a giant of public service, a person of unwavering integrity and courage... His commitment to principled leadership will forever be an example for those of us who follow in his footsteps.'— Powell, Fed Chair. The news of Trump firing Fed governor Cook has resurfaced. Why has Trump relentlessly pressured the Fed from Powell to Cook? The key to understanding this issue lies in understanding Trump and the interest groups he represents. A good way to understand Trump and the interest groups he represents is to view him as a corporate founder. Founders do two things: they change the status quo and find shortcuts. Trump's long-term pressure on the Fed is essentially these two things: changing the default value of 'strong dollar' from 'the prestige of the central bank' to 'dollar assets + private issuance (stablecoins)'; moving the global settlement runway from the existing banking system to private and on-chain channels. Most people see this as 'trying to lower interest rates to secure midterm elections,' which is a bit superficial. The real motivation is at the institutional level: shifting the trust anchor of currency from credit based on the Fed's institutional credibility to collateral and contract execution that can be redeemed. As long as short dollar bonds and cash are the basis, stablecoin contracts can be redeemed, 'strong dollars' no longer need to rely entirely on the sanctity of the Fed and the institution it represents. You don't need to completely destroy the existing order; you just need to make people no longer see it as the only order.
1) The shell game of currency
After World War II, the world entrusted 'price stability' to central banks and 'growth and distribution' to fiscal authorities. This is an elegant division of labor and also a form of path dependency. What Trump seeks to challenge is this system. He wants an environment that can tolerate higher nominal growth and greater volatility, as that policy mix (tariffs, subsidies, re-industrialization, military-industrial and computing power investment) requires cheap capital and broader tolerance for error. The approach is quite direct and blunt, bringing the Fed down from its 'altar,' preferably stepping on it. When the Fed falls to earth, the trust anchor of currency will retreat, and stablecoins will just take over: privately issued within a legal framework, backed by T-bills and cash. The dollar has not disappeared; it has just changed its shell—from public credit to asset collateral and corporate credit.
2) Trump's calculations
Trump knows that in political struggles, personified responsibilities are more easily shifted. Personifying inflation, volatility, and asset inequality to the Fed is much easier than battling the complex narrative of 'global supply chains + population + technology.' For supporters, the story is simple: the experts have let you down; take back control. Once society believes that 'the central bank is nothing but a political tool,' parallel settlement tracks naturally become more attractive: the use of dollars can continue to expand through stablecoins, even if the image of the dollar is weakened. In other words, the network effect of the dollar and the symbolic authority of the dollar begin to decouple. For a politician who emphasizes negotiation leverage, this is usable leverage.
3) Short-term dividends
In the short term, the pressure and the returns from nominations are very specific:
Government centralization promotes construction: interest rate paths, liquidity tendencies, and regulatory attitudes are more easily aligned with tariffs, subsidies, and industrial policies. Capital costs decrease, and the tolerance range for nominal growth widens.
Narrative victory prepares for midterm elections: visible results of 'breaking the establishment,' mobilizing fundraising and media agendas. Supporters like to see the switch flipped.
Re-industrialization dividends: defense technology, AI computing power, and electrical infrastructure, along with on-chain finance, gain valuation and order bonuses for industries with 'positive elasticity' of nominal growth and volatility.
Supporting the successor ensures political legacy: long terms for Fed governors and chairs, spanning political cycles. The nominations of this term will continue to be valid for the next, serving as a form of institutional insurance.
4) Long-term effects
More importantly, once the precedent is established, future governments will find it easier to operate within the seams of 'central bank-fiscal division of labor.' The end result is not the disappearance of the central bank, but a fiscal-led approach becoming the new default: higher and more volatile nominal growth; short-term interest rates anchored by ‘stablecoin-T-bill’ demand, with longer-term term premiums being more sensitive; the asset pricing system placing greater emphasis on cash flow certainty and policy backstopping. Meanwhile, private dollars become established: stablecoins socialize a portion of the seigniorage to licensed private entities (issuance, custody, clearing), and the radius of dollar usage spreads through on-chain and API into jurisdictions that were previously unfriendly. Hegemony persists, but the vehicle shifts from public monopoly to public-private partnership: the form changes, but the function remains, allowing oligarchs to profit.
5) The global cost
Emerging markets will feel it most strongly. The penetration of stablecoin dollars weakens the monetary policy transmission of local central banks, and capital controls and dual exchange rates will become more common (yes, in some countries, dual exchange rate systems may very well return). Multilateral clearing and the existing global monetary financial system are marginalized, and more 'grouped' financial and security arrangements become the norm. This fragmentation does not mean the dollar is receding; quite the opposite—dollars continue to be used but are harder to control by a single institution or country, resulting in a de facto dollar decentralization.
6) Why Trump can never allow another Volcker to emerge
Volcker established the iron law of 'central bank independence + low inflation' with an iron fist, and also made the U.S. rely more on the prestige of the Fed and the independence of the central bank system for the credibility of a 'strong dollar' and inflation anchoring. For Trump and the interest groups behind him, this is completely contrary to group interests and does not help the dollar adapt to the new global landscape, further limiting the dollar's role in the new currency war. For a more sustainable fiscal policy, more supportive industrial policies, and a weaker dollar paired with friendly offshore outsourcing, Volcker's legacy must be thoroughly eradicated from the Fed. However, Powell, this stubborn old man, just happens to take Volcker as his spiritual mentor. Therefore, Trump has no choice but to pressure Powell, fire Cook, and weaken the Fed, until ultimately, replacing everyone inside the Fed with those who deeply understand Trump's governance philosophy (Mar-a-Lago agreement) and leaving no Volcker in the Fed!