Economist Paul Krugman is raising the alarm against President Donald Trump’s attempts to destroy the Federal Reserve’s independence, in a push for personal control over monetary policy.

Dangers of ‘Fiscal Dominance’

In his newsletter on Sunday, Krugman highlighted the multi-pronged effort by Trump and his allies to “intimidate Fed officials,” to steer interest rate policy, something that he says could “Zimbabwify” America, referring to the economic declines of countries such as Zimbabwe.

Krugman referred to Trump’s recent attempted firing of Fed Governor Lisa Cook, followed by the nomination of Stephen Miran to the Board of Governors while retaining a post in the executive branch, and a broader campaign of threats and legal pressure.

See Also: Federal Reserve To Follow ‘Slower Rate Cutting Cycle’ Despite Trump’s Pressure As Beige Book Dampens Sentiment: Don’t Expect 50 Bps Cut Hints Shapiro

Krugman took issue with Trump's call for a lower federal funds rate, noting that the former president has urged a 300-point cut. “That’s an enormous drop,” he said, adding that it’s never been attempted except “in the teeth of a deep recession.”

He warned the moves signal a slide into “fiscal dominance,” where monetary policy is dictated by the need to cover budget deficits rather than achieve economic stability.

Krugman pointed to the move’s historical roots in monarchies that charged a fee for minting precious metals. “We still call that revenue seigniorage,” he says, while cautioning that under Trump, such practices might make a comeback in modern form.

Drawing parallels with other global economies, Krugman highlighted Turkey under President Recep Tayyip Erdoğan, alongside Zimbabwe and the Confederacy. “Sooner or later, the result is high inflation, sometimes hyperinflation,” he says.

Krugman wrote that an independent Fed has served America well, in large part because it helped prevent fiscal dominance. “But right now, things don’t look good.”

Neither the White House nor the Treasury Department immediately got back to Benzinga’s requests for a comment on this matter. This story will be updated as soon as we receive a response.

A Rare FOMC Majority

Cook’s firing could hand Trump a rare majority on the Federal Open Market Committee, according to Macro Strategist Craig Shapiro.

He said that with Cook’s seat now open, Trump can appoint two more governors, resulting in a 4-3 majority on the board, which can turn into a 5-2 majority after Chair Jerome Powell’s term ends in 2026.

Cook has since pushed back against Trump’s attempts to remove her, saying that inconsistencies in her mortgage applications were already known during her confirmation hearing. According to court filings, “any inconsistencies were known when she was confirmed and cannot give Trump grounds to fire her now.”

Read More:

Scott Bessent Says ‘Fed Must Change Course’ As Trump Weighs Jerome Powell Successors, Treasury Secretary Calls For ‘Nonpartisan Review’