ECB President Christine Lagarde reckons that the world is once again on the brink of catastrophe. She admits that a loss of the Federal Reserve’s independence, whose actions have a global economic impact, is a realistic scenario.
According to Lagarde, if the US central bank loses its independence, this would entail a “danger to the entire world”. In that case, catastrophe and widespread chaos would be inevitable.
However, the ECB chief believes things may not be quite so dramatic. “It will not be easy for US President Donald Trump to take control of the American central bank,” Lagarde added. Her stance rests on legal precedents that limit the US president’s ability to insist on changes within the Federal Reserve’s ranks.
Still, if Trump succeeds in his goal and removes Fed Chairman Jerome Powell from office, both the US and global economies would be in serious jeopardy. “First and foremost, the stability of the US economy would suffer — and that would affect the entire world,” Lagarde stressed.
To recall, in mid-August, Donald Trump called on Lisa Cook, one of the Fed’s governors, to resign after reports emerged suggesting that she may have “falsified bank documents and real estate records to obtain more favorable loan terms, potentially committing mortgage fraud.”
