A shocking news report — Trump demanded the resignation of Federal Reserve Governor Cook on the grounds of "loan fraud allegations" — the Federal Reserve is gradually being dismantled by Trump. Cook was nominated by Biden to the Federal Reserve Board, taking office in 2022, with a term until 2038.

The incident began when the director of the Federal Housing Finance Agency, Pruitt (a person from Trump's camp), exposed on social media that Cook applied for loans on two properties simultaneously in 2021, both labeled as "primary residences," suspected of mortgage fraud. The name — Pruitt — is not unfamiliar to the market. In July of this year, he called for Congress to investigate Powell, accusing the Federal Reserve of misleading Congress regarding headquarters renovation projects. Now targeting Cook, it is clearly not a "coincidental encounter."

Trump immediately followed up with: "Cook must resign immediately!"

Cook's response was firm: "Undoubtedly forced to resign."

Trump told aides that if Cook did not resign, then he would consider firing her. According to the law, the president cannot arbitrarily fire a Federal Reserve Governor unless "malfeasance or serious misconduct" can be proven. The question is — if the so-called "violation" occurred before her tenure, does it still count? Many legal experts find this reasoning too far-fetched. The Supreme Court emphasized this year that the Federal Reserve is a "special semi-independent institution" and presidential power is not that great.

In hindsight, the recent sudden resignation of another Federal Reserve Governor, Kugler, was not a "pure coincidence."

This event sent huge shockwaves through the market — the dollar plummeted instantly, gold surged by $30 at one point, and the U.S. stock market quickly recovered most of its opening losses — this scene resembled market speculation around interest rate cuts. The dollar will face a "risk discount" because a decline in central bank independence equates to weakened monetary credibility.

This is not a singular event. On the surface, Trump may hope to continue securing a board position, placing his allies inside the Federal Reserve. But the larger impact is that other Federal Reserve officials may be less inclined to express "hawkish sentiments" — if even a Federal Reserve Governor could be targeted by political forces, other officials will undoubtedly speak more cautiously (the space for hawkish rhetoric will be compressed), which will make the market "automatically lean dovish," even if the economic data itself does not support it. This is more "long-term" than a one-time interest rate cut or hike.

Last week, Trump harshly criticized Goldman Sachs CEO, saying, "You should go back to being a DJ," which has made Wall Street hesitant to openly bet against the U.S. stock market and economy.

What is truly intriguing is the "timing of the leak" — it occurred two days before Powell's speech in Jackson Hole, as if Trump already knew what Powell was going to say.