The Fed Is Losing Control

The Fed Is Losing Control. You Need to Act Before the Fallout Hits

Political pressure is rising, debt costs are exploding, and the dollar is breaking down. This is no longer theoretical.

Last month, the U.S. dollar fell to a three-year low.

The move caught many investors off guard. But the cause was no mystery.

President Trump called Fed Chair Jerome Powell “terrible” and suggested he might replace him with someone more loyal.

Markets got the message. If Powell resists, he’s out. If he caves, inflation risks coming back with force.

The dollar index dropped 10 percent year-to-date. Traders are betting the Fed will cut rates to ease pressure on $36 trillion in government debt, even if it sparks another inflation wave.

Anyone who still thinks the Fed is fully independent hasn’t been paying attention.

This Isn’t the First Time Political Pressure Broke the Fed

In the 1970s, politics infiltrated monetary policy and nearly destroyed the dollar. G. William Miller, appointed by President Carter, refused to raise rates even as inflation passed 10 percent. His inaction only made the crisis worse.

Inflation kept climbing. The dollar lost value. Confidence in the Fed evaporated.

It took Paul Volcker’s brutal rate hikes to stop the bleeding. That came at the cost of a deep recession and millions of lost jobs.

We learned the hard way that when the Fed becomes a political tool, inflation spirals and the consequences last for years.

Fast forward to today. Inflation just came off 40-year highs. The Fed hiked rates aggressively. Now political pressure is building to reverse course.

History is not just rhyming. It’s playing on repeat.

The Fed’s Not Just Politicized. It’s Cornered by Debt

This isn’t just a political problem. It’s a math problem.

The U.S. government is running trillion-dollar deficits in a non-crisis economy. Debt has ballooned to $36.6 trillion.

Last year, interest payments hit $659 billion. This year, they are projected to reach $1 trillion.

We now spend more on interest than on Medicare or national defense.

And if the Fed keeps rates high, those costs will keep climbing.

That is why policymakers are floating the idea of capping Treasury yields through something called “yield curve control.”

This is not new. The Fed did it during World War II. But doing it now, in a high-inflation environment, would be reckless.

Capping yields means printing money to keep interest costs low. It means abandoning inflation control in favor of financing government debt.

That would erode trust in the Fed. And it would send a clear signal to global investors: the United States is no longer serious about price stability.

The Dollar Is Weakening Because Global Trust Is Breaking

The dollar’s strength depends on belief in U.S. institutions. That belief is fading.

This year, central banks have been buying gold at the fastest pace in decades. At the same time, they are quietly reducing their dollar holdings.

A recent survey found that 70 percent of reserve managers are now hesitant to hold dollars due to U.S. domestic politics. That figure has more than doubled in the past year. Allies are taking notice.

Some are stress-testing scenarios where they can no longer rely on the Federal Reserve in a crisis. Germany has even revisited plans to repatriate its gold from New York.

This isn’t about headlines. It’s about long-term positioning. And the message is clear.

If the Fed becomes a political instrument, global demand for the dollar will decline.

The Next Fed Chair Could Accelerate the Damage

Jerome Powell’s term ends next May. If he stays the course, he may be replaced.

Trump has already floated names like Larry Kudlow and Kevin Warsh, people who have signaled they favor low rates and looser policy.

That is exactly what investors fear. Not just that the Fed might make a mistake. But that it might stop trying to do the right thing altogether.

In the late 1970s, investors started believing the Fed would tolerate inflation to avoid political pain. That belief triggered a selloff in the dollar, a spike in gold, and years of instability.

We are not there yet. But we are moving in that direction.

Position Yourself Before the Fed Loses Its Grip

You can’t control the debt spiral or political theater in Washington. But you can control how exposed your financial life is to the fallout.

Here’s how to start protecting yourself:

This is not about fear. It is about optionality. You want to be in a position where if the Fed cracks, your portfolio does not crack with it.

The Real Risk Is Doing Nothing

This moment feels familiar to anyone who studied the 1970s. Political influence is rising.

Inflation has not been conquered. And debt has grown far beyond what most people realize.

The Fed is in a tightening vise. And the world is watching it squirm.

The dollar’s slide this year is just the start. If Powell is replaced with a loyalist, or if rate caps return, trust in U.S. assets could fall further—and much faster than most expect.

You don’t need to predict the exact timing.

You just need to decide if you want to be caught off guard like investors were in 1978… or prepared like those who positioned early for what was coming.

This is not a drill. This is the window,

Gideon Ashwood