Trump Finally Fires Fed Governor Lisa Cook — How Should We Invest Going Forward?

President Trump has dismissed Federal Reserve Governor Lisa Cook. Officially, the administration cited her personal issues and professional misconduct as justification, but few believe this explanation. In reality, this move is best understood as part of Trump’s effort to tighten control over the Federal Reserve. And behind this lies America’s structural challenges and its grand strategy for global hegemony.

America’s Strategy: Future Technology and Manufacturing Revival

Today, America’s top priority is crystal clear: winning the U.S.–China power struggle and preserving its global hegemony. To achieve this, the U.S. has chosen two paths:

1. Securing leadership in future technologies – AI, semiconductors, advanced manufacturing, energy, and other growth engines.

2. Reviving domestic manufacturing – reshaping global supply chains to be centered on the United States and bringing industrial bases back home.

   
   

To this end, the U.S. government has weaponized tariffs. These are not just protectionist measures but a political tool to restructure supply chains. At the same time, Washington is deploying massive fiscal policies and tax cuts to boost the growth of big tech and critical manufacturers. In short, the U.S. is mobilizing its full national capacity for the industries of the future.

The Clash with the Fed

The problem lies with the Federal Reserve. Even if the U.S. successfully rebuilds its supply chains and reestablishes itself as the industrial hub for big tech, the next step is to sell its products abroad. To do so, the U.S. will need a weak dollar strategy—lowering the value of the dollar while allowing foreign currencies to strengthen, thereby boosting global demand for U.S. goods.

At the same time, America’s enormous national debt makes lower interest rates inevitable in the long run. Lower rates mean reduced interest expenses, greater demand for Treasuries, and an increased global appetite for dollar assets. Ultimately, America’s long-term vision requires a low interest rate–weak dollar regime.

The Fed, however, sees things differently. It worries about inflationary pressures from tariffs while also grappling with potential employment risks. The specter of stagflation looms. As a result, most Fed officials are reluctant to pursue rapid rate cuts. This places the central bank directly at odds with the Trump administration’s policy agenda.

The Meaning of Lisa Cook’s Dismissal: Shifting Balance of Power

This is why Trump has moved to assert control over the Fed. Of the seven current Fed Board members, four—including Chair Jerome Powell—are seen as relatively independent, while three (Christopher Waller, Michelle Bowman, and Stephen Miran) are considered aligned with Trump. With Lisa Cook’s removal, that balance shifts from 4–3 to 3–4 in favor of Trump.

Looking ahead, Powell’s term ends next year. If Trump appoints a new Fed Chair, at least five of the seven Board seats could be filled with Trump-aligned officials. This would mean the complete politicization of the Fed—and effectively, that Trump’s policies become Fed policies.

Market Implications

If the Fed begins operating in line with Trump’s agenda, several outcomes are likely:

1. Rapid Rate Cuts

   • With the central bank reflecting political will, rate cuts could accelerate.

   • This would drive Treasury prices higher and ignite a bond rally.

2. Massive Liquidity Expansion

   • Rate cuts combined with Trump’s tax reductions, fiscal expansion, and increased demand for Treasuries (including via stablecoins) could unleash unprecedented levels of liquidity into the financial system.

   • Risk-on sentiment would flourish, with capital flowing into equities, real estate, and digital assets.

3. The Shadow of a Bubble

   • Abundant liquidity would inflate asset values, especially in sectors tied to future technologies like AI, semiconductors, and energy.

   • But every bubble eventually bursts. The question is when and how severe the fallout will be. For investors, this environment offers extraordinary opportunities—but also immense risks.

   • 
     

What Investors Must Consider

Lisa Cook’s dismissal is not just a personnel decision. It is a turning point for U.S. monetary policy, the credibility of the Fed, and the structure of global capital markets. The erosion of Fed independence directly undermines confidence in the dollar and reshapes capital flows worldwide.

For investors, this means living with dual realities:

• On the one hand, unparalleled opportunities created by unprecedented liquidity.

• On the other, the inevitability of bubble formation and collapse.

The real question is not whether a bubble will form—it will—but how investors position themselves:

• Ride the rally in the short term?

• Stay defensive against long-term risks?

• Or attempt a dual-track strategy balancing both?

  
  

Conclusion

Trump’s bid to control the Fed is inseparable from America’s grand strategy. Supply chain restructuring, manufacturing revival, and big tech dominance all require a low interest rate, weak dollar system. The dismissal of Lisa Cook is a political maneuver to clear the way, with Fed independence sacrificed in the process.

Markets will cheer in the short run: rate cuts and liquidity will fuel rallies across bonds, equities, and crypto. Yet the longer-term consequence is clear: a bubble, and eventually its collapse. For investors, now is the time not to be lulled into complacency, but to prepare for both—the extraordinary opportunity of the bubble’s rise and the inevitable dangers of its fall.