Bitunix Analyst: Trump Pressures the Federal Reserve, U.S. Economy May Fall into a Stagflation Cycle

ChainCatcher reports, the US monetary system is facing a new round of political shocks. The confrontation between Trump and the Federal Reserve has escalated from a war of words to a substantive power struggle. He is attempting to remove Governor Cook and install economic advisor Milan into the FOMC, aiming to create a "super majority" in favor of aggressive rate cuts. Several economists, using model simulations, have pointed out that if monetary policy falls under political control, the US will first experience a brief period of growth and low unemployment, followed by structural consequences such as accelerating inflation, rising nominal interest rates, and declining economic growth. The risk of stagflation reminiscent of the 1970s will re-emerge. The analysis also notes that when politicians dominate interest rate decisions, these are often closely tied to election cycles. While short-term stimulus may create superficial prosperity, the cost is runaway inflation and subsequent deep adjustments. If Trump succeeds in reshaping the Board of Governors before 2026, the independence of the Federal Reserve may be eroded, and the reserve status of the US dollar as well as long-term borrowing costs could be repriced by the market.

Bitunix analyst's view: From historical precedents to current tactics, Trump's strategy clearly targets direct intervention in the interest rate path, and the consequences will not be short-term fluctuations, but a devaluation of institutional credibility. If the Federal Reserve is forced to turn dovish with inflation still uncontrolled, the US economy will enter a typical cycle of "prosperity first, stagflation later." For global capital, the real risk is not Trump himself, but the loss of the last line of defense in US monetary policy.