There is no good monetary cure for Trump’s economic carnage.View this email in your browser [link removed]

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****SEPTEMBER 15, 2025****

****On the

**Prospect **website****

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Republicans Escalate Their War on America’s Cities [link removed]

While some establishment Democrats attack their leftward drift

**BY HAROLD MEYERSON** [link removed] [link removed]

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In Chicago, ICE Creates a Regime of Terror [link removed]

On Friday, ICE agents killed a man in a suburb and fired pepper balls at peaceful protesters.

**BY EMMA JANSSEN** [link removed] [link removed]

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What Would a No Kings Budget Look Like? [link removed]

Democrats are publicly conditioning a budget agreement on health care changes. But they also have powerful options to arrest the slide to authoritarianism.

**BY DAVID DAYEN** [link removed] [link removed]

****Kuttner on TAP****

**The Federal Reserve is out of tricks**

**And so is Trump’s maneuver to take over the central bank. Even if he were to succeed, there is no good monetary cure for Trump’s economic carnage.**

On Wednesday, the Federal Reserve will decide whether to cut rates and by how much. Thanks to Trump’s perverse economic policies, the Fed has run out of ways to reconcile high employment with low inflation. Both indicators have been worsening.

The most recent revision of the **Consumer Price Index** [link removed], released Thursday, shows rising inflation. It was up 0.4 percent in August, for an annual rate of 4.8 percent, or more than double the Fed’s target of 2 percent. Grocery prices were up at an annual rate of 7.2 percent.

Unemployment and wage indicators are also getting worse. The rising inflation rate has undermined real wages. A year ago, real inflation-adjusted wages were growing at an annual rate of 1.3 percent; the latest report cuts that almost in half, to 0.7 percent.

And the most recent data on new **unemployment insurance claims** [link removed], for the week ending September 6, shows that they are at their highest level since September 2021, when America was still suffering from the pandemic.

When the Fed meets again Tuesday and Wednesday, it’s almost certain that the Federal Open Market Committee will cut the federal funds rate by a modest quarter-point. Trump and his allies on the Fed want a much deeper cut, but Trump has also run out of room to stack the Fed, at least for the next several months.

The effort by Bill Pulte, a MAGA zealot who heads the Federal Housing Finance Agency, to smear and fire Fed governor Lisa Cook has now blown up in Trump’s face. Documents reviewed by major media organizations show that **Cook indeed described her Florida condo as a second home or a vacation home** [link removed], and that she paid higher than prevailing interest rates for a primary residence.

Pulte didn’t do his homework. He apparently reviewed standard documents that Cook signed but not supporting materials providing additional details. It also turns out that **Pulte’s own wealthy parents did commit the same kind of mortgage fraud** [link removed] that he falsely attributes to Cook, claiming primary residence in both Michigan and Florida. Tax officials in Bloomfield Township, Michigan, immediately revoked the exemption entitling the Pultes to a lower property tax rate.

Pulte is the one who should be fired. And it’s time for the ever-prudent Fed chair Jay Powell, who has been trying to play it straight while avoiding Trump’s wrath, to come to the defense of his colleague Cook.

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The exposure of the supposed fraud case against Cook as itself a fraud will make it even harder for Trump to prevail in court in his claim that he not only has the right to fire Fed governors before their terms expire for cause but that he may determine what constitutes cause.

But here’s the truly insane part. Over the weekend, Trump doubled down on his effort to fire Cook. He filed another set of arguments with the U.S. Court of Appeals for the D.C. Circuit, where judges are considering his emergency request to proceed with firing Ms. Cook after a lower court **halted those plans last week** [link removed]. The latest revelations totally vindicate that decision by district court Judge Jia M. Cobb. But the most recent filing by Trump’s lawyers **doesn’t even deign to mention** [link removed] that Trump’s pretext for firing Cook has been revealed as a fake.

Meanwhile, back at the Fed, depending on whether the Republican-led Senate succeeds in gaming the rules to rush through the confirmation of Trump’s latest Fed appointee, White House economist Stephen Miran, in time for Wednesday’s vote, Trump’s pressure for a deeper rate cut will likely get just two, or at most three, votes out of 12 on the Federal Open Market Committee.

So normal order at the Fed will prevail. The problem is that normal monetary policy isn’t good enough in the face of Trump’s engineered stagflation.

Tariffs are only one source of rising consumer prices. Extreme economic concentration facilitated by Trump combined with Trump’s war on immigrant workers continues to push up prices. Trump’s firing of federal workers, his clawback of federal grants and contracts, and his suspension of public projects all raise unemployment.

Within broad limits, as Keynesians have long established, deficits need not raise interest rates. But Trump’s deficits, driven by his tax cuts, are well beyond those limits. And that massive increase in public debt also bids up borrowing costs.

Trump has tried to alter reality by seeking to commandeer the Bureau of Labor Statistics. That hasn’t worked. Nor can Trump cure his own economic mess by trying to hijack the Fed.

**~ ROBERT KUTTNER**

Follow Robert Kuttner on Bluesky [link removed]

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