🔥 Let's talk plainly: Will Trump's direct confrontation with the Federal Reserve blow up the US financial system?

This time, Trump directly confronted the Fed and clashed with Powell on the spot. It's not just a momentary impulsive stunt; it's the result of a year-long political power struggle and economic calculations. The Fed's independence has truly been pushed to the brink. A financial earthquake probably won't happen instantly, but aftershocks and the risk of a collapse are already certain!

First, why is Trump so determined to hold onto the Fed and even tear into it face-to-face? His core demands boil down to three points, all about real interests, with no fakery:
✅ First: Force a rate cut to "lighten" the $37.7 trillion US debt. Currently, the Fed's rate is 3.5%-3.75%. The US pays over $1.32 trillion annually in debt interest. Trump wants to cut rates to 1%. Every 1% drop saves about $400 billion a year! He criticizes the Fed's rate cuts as "political manipulation," but that's double standards—he's pushing for more aggressive, politically motivated rate cuts, criticizing Powell for being too slow and small, which isn't enough for him.
✅ Second: Purge personnel, remove the "stubborn" members of the Fed. The attempt to dismiss Cook is just an excuse related to "mortgage fraud." Cook is a key figure opposing unlimited rate cuts at the Fed. Trump wanted to fire her back in August, but courts, including the Supreme Court, blocked him. The final hearing is in January next year. If he can oust Cook and replace Powell with his loyalists (like Wosh or Hasett), then the White House will fully control the Fed's monetary policy.
✅ Third: Protect the midterm elections by maintaining loose policies to support the stock market and economy. The 2026 US midterms are coming. The stock market is Trump's "performance showcase." Currently, AI is propping up the market, but bubbles are growing. Only by cutting rates and easing can he stabilize stocks and boost domestic demand. He wants "economic prosperity before the elections," regardless of the Fed's long-term inflation concerns.

Now, about the Fed's situation: outwardly tough, but internally compromised. Powell claims "the Fed only looks at economic data and is non-political," and internally, the Fed is in a "strategic silence." It seems to hold the line, but in reality, the Fed has already cut rates three times this year. The recent 25 basis point cut is a compromise between "economic rationality" and "political pressure." Even more concerning is the internal rift—out of 12 voting members, 3 oppose rate cuts. Among them, Trump-installed director Milan demanded a 50 basis point cut, aligning fully with Trump's stance. This means the White House has already infiltrated the Fed's decision-making, and the so-called "independent decision-making" has long been mixed with politics.

The key question: will a major financial shock erupt? My answer: probably not immediately, but definitely a "slow collapse," with risks increasing steadily.
▶️ ✅ Why won't it be an "instant earthquake"?
The Fed's independence isn't "paper-thin"; it's supported by a century-old system and laws: the president can nominate the chair, but the Senate must approve; nominees serve 14-year terms, not just a snap appointment; and most of the core decision-makers are professional economists, not fully swayed by politics. The Supreme Court rejected Trump's case against Cook, showing the system's firewall is still intact. No matter how aggressive Trump is, he can't completely swallow the Fed's independence. Plus, markets have anticipated this pressure since Trump's inauguration in January. Wall Street has already priced in "policy uncertainty," so a face-to-face dispute won't cause panic or collapse. Short-term, the stock market and bonds might fluctuate slightly, and the dollar could weaken, but no "earthquake" is imminent.

▶️ ❌ Why do I say "aftershocks are continuous and the risk of collapse is extremely high"?
This is the most frightening part—the potential "collapse of the Fed's credibility"—which could be more deadly than a single financial crash. The core value of the Fed isn't just interest rates; it's the global trust in its "independence, professionalism, and reliability." The world holds dollars, US bonds, and believes in the stability of US stocks largely because the Fed isn't politically manipulated and uses professional judgment to manage economic risks. But now, Trump has turned the Fed into a "White House ATM + election tool": if personnel are manipulated or rate cuts are coerced, the Fed's decisions won't be about "controlling inflation and stabilizing employment," but about "serving the president's political interests." Over time, markets will lose trust in the Fed: inflation expectations could spiral out of control (rate cuts will push prices up), US debt ratings could fall, foreign investors might gradually withdraw from US stocks and bonds, and the dollar's dominance could be gradually eroded. This damage is irreversible and long-term: it's not an instant blowout but a slow hollowing out. When markets finally stop trusting the Fed altogether, that will be a true financial earthquake—one that can't be fixed easily.

Finally, my outlook boils down to three straightforward points:
1. Short-term (1-3 months): The Fed will likely cut rates once more by 25 basis points, a sign of another compromise with Trump. US stocks will rebound slightly, bond yields will decline, and this will be a "short-lived calm after the storm."
2. Mid-term (January-May next year): The Cook case goes to court, and Powell's successor is decided. These are critical. If Trump wins the Cook case or successfully installs a loyalist as Fed chair, the Fed's independence will be substantially compromised. Markets will react immediately with increased volatility, and safe-haven assets like gold and Bitcoin will surge.
3. Long-term: Political interference in the central bank will become the norm in the US. The Fed's authority will weaken, and global confidence in the dollar will continue to decline. This is also why the world is de-dollarizing now—no one wants to keep their money in a "politically manipulated" central bank.

In summary: Trump's challenge to the Fed isn't a joke but a blatant suppression of economic expertise by political power. The Fed's independence won't collapse overnight, but a big crack has already appeared, and that crack will only widen. The so-called "financial earthquake" isn't sudden; it's slowly brewing through repeated "concessions and erosions."

Do you think Trump can ultimately replace Powell? Feel free to share your thoughts!