The efforts of President Donald Trump, the governor of the Federal Reserve, Lisa Cook, could endanger the independence of the central bank, according to the long -time investor Rebecca Patterson.
“We shouldn't ignore that at all. This is a big deal that is going on,” said “Fast Money”, the former investment strategist of the Bridgewater Associates Chief Investment strategist from CNBC.
Patterson, now Senior Fellow in the Council on Foreign Relations, has analyzed for more than two decades how politics and political global markets shape the global markets. She warns that the politicization of the FED undermines its legitimacy and could have long -term economic consequences.
Patterson is based on her economic research in countries that have lost institutional integrity and finds a well -known pattern: weaker stock market services, higher inflation and long -term returns, depreciation currencies and reduced foreign direct investment.
Patterson warns that the unique role of the United States as the world's largest economy does not make it immune.
She warns that the replacement of Cook would probably be Trump's first step to stack the Fed with loyal political decision -makers who will push for lower prices.
Patterson believes that markets could initially react positively to lower installments. However, she warns that the long -term effects could be harmful.
“In the short term, investors could say that lower interest rates for growth are good for profits,” she wrote in a special email to CNBC. “Over time, sustainable higher inflation will affect consumption, which is reflected in the profit expectations.”
If Trump obtained more control over the Fed Yield curveIncrease the inflation expectations, weaken the Dollar, and trigger higher Gold Prices.
The question in Patterson's head is not whether the politicization of the Fed will have consequences – it is when.
“Our moment may not be so fast or easy,” she said during the interview. “But if you look at other countries that have gone this street [it] Tell us where we go when we don't be careful. “