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

The U.S. 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 substantial power grab, as he attempts to dismiss Governor Cook and install economic advisor Milan into the FOMC, aiming to create a "super majority" that supports significant interest rate cuts. Several economists have pointed out through modeling that if monetary policy falls under political control, the U.S. will first experience a brief prosperity characterized by growth and low unemployment, followed by structural consequences of re-accelerating inflation, rising nominal interest rates, and declining economic growth, with the risk of stagflation from the 1970s re-emerging. Analysis also indicates that politicians' dominance over interest rate decisions is often closely tied to election cycles; while short-term stimulus can create superficial prosperity, the cost is uncontrollable inflation and subsequent deep adjustments. If Trump succeeds in reshaping the board before 2026, the independence of the Federal Reserve may be eroded, and the dollar's reserve status and long-term borrowing costs could be re-priced by the market.

Bitunix analysts' perspective: From historical examples to current tactics, Trump's strategy clearly points to direct intervention in the interest rate path, and the consequences will not be short-term fluctuations, but rather a credit discount at the institutional level. If the Federal Reserve is forced to make significant dovish shifts before inflation is under control, the U.S. economy will enter a typical cycle of "prosperity first, then stagflation." For global capital, the real risk is not Trump himself, but the loss of the last line of defense in U.S. monetary policy.