Name: Jeffrey Tucker: Everything You Need to Know About the Fed
Uploaded: 2025-11-25T12:56:12.000Z
Description: In this episode, Jeffrey Tucker unpacks President Donald Trump’s growing dispute with the Federal Reserve and his efforts to remove Federal Reserve Governor Lisa Cook for alleged mortgage fraud.

Jan Jekielek is a senior editor with The Epoch Times, host of the show “American Thought Leaders” and co-host of “FALLOUT” with Dr. Robert Malone and “Kash’s Corner” with Kash Patel. Jan’s career has spanned academia, international human rights work, and now for almost two decades, media. He has interviewed nearly a thousand thought leaders on camera, and specializes in long-form discussions challenging the grand narratives of our time. He’s also an award-winning documentary filmmaker, producing “The Unseen Crisis: Vaccine Stories You Were Never Told,” “DeSantis: Florida vs. Lockdowns,” and “Finding Manny.”

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[RUSH TRANSCRIPT BELOW] In this episode, Jeffrey Tucker unpacks President Donald Trump’s growing dispute with the Federal Reserve and his efforts to remove Federal Reserve Governor Lisa Cook for alleged mortgage fraud.

“There’s a lot more at stake than just this one regulation about residences and mortgages. It has to do with whether and to what extent the Fed is actually accountable to the President of the United States,” says Tucker.

He’s the founder and president of the Brownstone Institute and senior economics columnist for The Epoch Times.

How did the creation of the Federal Reserve fundamentally change America? Does Trump have the authority to fire a Federal Reserve Governor? And what does it really mean to be an independent federal agency?

“What’s striking to me about this is that the Fed has been around since 1913. This question has never really been asked at this level—much less answered—for all these years in this country,” Tucker says.

Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of NTD.
RUSH TRANSCRIPT
Jan Jekielek:

Jeffrey Tucker, so good to have you back on American Thought Leaders.

My pleasure. Good to be here, Jan.

Let’s start with this recent firing of Federal Reserve Governor Lisa Cook. This has been contentious, and people are coming in on both sides. What’s your take?

She refuses to resign, believing that it can’t happen, that she’s untouchable in some sense, and that the president cannot do this. The problem is that the law, as written by Congress, the implementation legislation of the Fed, says that the president can fire a Federal Reserve Board governor with cause. Right? That’s what it says. Which implies that the president is in charge.The president is what keeps the Fed accountable.

Now, Trump believes this, and so he found somebody on the board that he can fire with cause. Now, the allegation—I have to say allegation because that’s the way we talk—but actually, it’s true. She named two separate primary residences in her mortgage applications. You can’t have two primary residences. The advantage of doing that is that you get favorable interest rates because, on your primary residence, there’s less risk. So you get a more favorable loan rate.

So she got two favorable loan rates. And then you’ve got really interesting problems concerning the deductibility of interest. You can only deduct the interest that you pay on a loan from your primary residence. If you buy the second, third, and fourth house, that’s on you. So actually, this is a federal crime to do this. And maybe it’s common. Maybe it goes on all the time. We don’t really know. Maybe there’s a certain class of borrowers who just do this routinely.

Lisa Cook treats it like it’s no big deal, like a parking ticket or something like that. But it’s actually a federal crime. So if you’re looking for some reason to go after a Fed Board governor with cause, this is a good cause. So I think Trump will prevail in this particular case, but it will have to be decided most likely by the Supreme Court. What’s important here, Jan, is there’s a lot more at stake than just this one regulation about residences and mortgages. It has to do with whether and to what extent the Fed is actually accountable to the president of the United States. That’s what’s at issue.

What’s striking to me about this is that the Fed has been around since 1913. This question has never really been asked at this level, much less answered. For all these years, this country has pretended as if there’s such a thing as an independent central bank, and everybody knows what that is. Well, there’s another word for independence—that is unaccountable. Independence sounds great. Unaccountable sounds bad.

Actually, the Fed is unaccountable. They have not been held to account for any outside audits in its entire history. Any political intervention is widely seen by financial markets as something like a catastrophe. You’re risking the nation’s financial stability, and so on and so on. But you know, in the end, we are governed by this document called the Constitution, and we’re a nation of laws. And the Constitution has three buckets.

It has the judiciary, it has a legislative branch, and an executive branch. In the org chart of the federal government, printed by the federal government that everybody agrees is true, the Federal Reserve is under the executive branch and reports to the president. You can see it. The org chart is very clear about that. You can say it’s independent. Well, is that just sort of a norm that we just have a hands-off policy?

In the judiciary, precedent is hugely important. Is that the case here? Because clearly, as you’ve outlined, the precedent has been independence.

We don’t really know, in a constitutional sense, what that means. And you’d think that we would know, but we don’t actually know what it means for there to be an independent agency under the executive department. So what’s exciting about the times in which we live is that we’re finally getting answers to these questions. The Supreme Court has been very clear that the president is in charge of the agencies, executive agencies.

So let’s just say the Department of Labor, USAID [United States Agency for International Development], the Department of Energy, the Department of Agriculture, or HHS [U.S. Dept. of Health & Human Services], can, in fact, fire employees. Now, five years ago we didn’t know the answer to this question, right? I mean, I think we’ve had these discussions for a while. We didn’t actually know whether the president was really in charge of executive agencies. The Supreme Court, in a series of cases, has been very clear the president is in charge of executive agencies.

But now Trump is taking on the great question of American life, which is the status of the Federal Reserve under the law. That is an unanswered question. So this is a taboo topic. We’ve never been here before. No president since 1913 has taken on the Fed the way Trump is taking it on now. And the Supreme Court, I think, is going to have to decide that this is an executive agency.

For those who are uninitiated, why would the president take on the Fed right now?

President Trump is annoyed with the Fed because he thinks that they’re keeping interest rates too high. Now, you can agree or disagree with that. I happen to not really agree with that. But I do agree that you need some accountability for the central bank. You can’t just have this floating financial institution, arguably the most important institution in the United States, the most impactful institution in the United States.

And by extension, the world.

Yes, that’s right. The globe, because we’re on a world dollar standard. So the Federal Reserve is the most powerful institution, arguably, in the world. And it’s just this free-floating agent out there that nobody knows to whom it reports, if it reports to anybody. But under the Constitution, the founding fathers were not idiots. They knew the monetary issue was an important issue for any country. But they addressed a lot of things in specifics in the Constitution. They addressed copyrights and patents. They even addressed the post office. They addressed all sorts of specific issues. Trade, for example, is there.

But one of the issues they address in Article I, Section 8 is money power. And they specifically grant to Congress the job of managing currency and coining money. So that belonged to Congress, and that’s for a reason. Because they understood that monetary power is quite frequently abused by the executive. Kings, coin clipping. There’s hundreds and thousands of years of abuse of the monetary financial system by big-shot executives, whether it’s pharaohs or kings or princes or whatever.

They wanted it to belong to the Congress, which is to say the people. That was a specific decision made for a specific reason. It’s very wise. And they also even restricted the states from making anything other than gold and silver as money because they wanted to mitigate against the problems of inflation, depreciating currency, because they knew this had led to upheavals in the past. You can read the Founding Fathers on money. They had a lot of views on this topic.

Thomas Paine is most famous for having written Common Sense and railing against the ermine robes of King George, whatever, but actually, he has a lot of writing on the monetary question, too. He hated paper money. He said paper money was the source of great evil that leads to inflation and business cycles, trade cycles of booms and busts. He had a very sophisticated economic understanding. I’m not saying that Tom Paine was some sort of unique figure. This whole generation understood that bad money can ruin a country and a society and send the entire culture into upheaval.

They wanted sound money, and they wanted hard money, and they wanted the money to belong to the people, guarded by the people for the people. That’s why they had, in Article I, Section 8, they granted to Congress the power to coin money and restricted even the states. Now, we had a Tenth Amendment, so states have a lot of rights, but they did not have the right to create paper money. That’s in the Constitution. So that’s how serious they were about this topic.

Now, soon after the founding, there was an effort to create a national bank, and it didn’t last long. We had the first national bank and the second national bank throughout the 19th century, in the first half of the 19th century. Keep in mind, a national bank is different from a central bank in important respects. A national bank is really a bank for the government. It’s like Congress makes debt, the National Bank buys it and holds it, maybe prints money to buy the debt. And so they have this relationship between the bank for the government and the government has its own bank. That’s the National Bank.

Now, it’s famously subject to all sorts of corruption, as even from my description. Bond rackets, debt scams, profligate spending—there’s bad stuff associated with national banks, so it was inconsistent with the American ethos. This was not a central bank. It was just a bank for the government. That’s what it was. It went away, then it came back, then it went away again.

Andrew Jackson famously railed against it. That’s a monster. A lot of the debates about money in the first half of the 19th century surrounded this issue of the national bank. Then we had a long period of what’s called free banking. It lasted for many years, and there were changes in the regime regarding the relationship of the Treasury to money. Were we going to have money? Were we going to have a gold standard, a silver standard, or bimetallism? There were all sorts of acts coming out from Congress regulating this stuff.

But during the 1870s, 1880s, and 1890s, we had a growing outrage against what was called wildcat banking. We had railroads going through the country, and everywhere the railroads went, property values would rise and businesses would start popping up. Of course, banks popped up in that area too. They started lending money to everybody. If the railroad failed or didn’t actually show up at all, the banks would go belly up, take everybody’s deposits, and people would get angry.

That was called wildcat banking. There were lots of booms and busts. Banks were regarded as normal institutions, like grocery stores or newspapers—just another market institution. They could fail or succeed, but it was determined by the markets. Now that’s a little fraught from the depositors’ point of view. You can’t know for sure. You’ve got to pick well.

But there was competition between banks, and bad bankers went out of business. Good bankers thrived. I mean, it’s kind of a decent system overall, but maybe not, you know, incredibly popular for people who lost their deposits and that sort of thing. But there was a lot of pressure during this period to stabilize the institutions.

In our society today which is very focused on safety and prioritizes safety, this wouldn’t work.

Yes. Even in the world, it was an unusual situation. America had a uniquely free system. There were other examples of free banking in this period of history, but America had a pretty darn free system. It was imperfect, but it was pretty good. There were no real guarantees, at least not from the center. So it was a pretty good system. You can complain about the system, but it actually was a kind of handmaiden or shepherd of the greatest period of growth in industrial history.

What happened to the American economic structures between 1860 and, say, 1910, was a marvel for the whole world. It was during this period that we got the commercialization of steel. We created new cities with skyscrapers. We had sound recording and photography and flight and electricity, lighting up homes and cities and communication, telephones. The most marvelous period of invention and expansion of incomes, democratization of prosperity that we saw in America made America famous all over the world. In the second half of the 19th century, there was a growing sense across the entire planet that whatever America was doing, they were doing it the right way.

Democratization of prosperity. I love that term.

All the incomes were rising across all classes. It’s not like the tales that you hear from the Gilded Age, which is that the rich got richer and the poor got poorer. All the data shows that everybody was growing wealthier systematically. Yes, some more than others, but everybody was better off. The monetary system we had was free banking at first, and then we had a codified gold standard after the Civil War. That was a government imposition.

The beautiful thing about the gold standard is that it restrained congressional spending. There was no ability to print. The existence of physical gold restrained credit expansion. It puts money in the hands of the people. Gold and silver circulated among the people. So this was a hard money country, with gold coins dangling in your pockets.

And banks, if they were issuing notes, which they did, would keep gold in their vaults. It was a good system. It was a brilliant system. Remarkably, during this period, after the gold standard and then all the way up to, say, 1910 or so, what happened to prices?

The value of money gradually grew, imagine that. You save money, and then after five years, you go back to that money that’s in your mattress, and you find that it’s more valuable than it was when you put it in. That’s a remarkable thing. We call that deflation now. But at least under the gold standard, it meant that the propensity to save was, even apart from the interest you earn, you would be rewarded for your prudence and frugality.

So America became a country of frugality and saving. Saving was always rewarded by prosperity, invention, and creation. It was glorious. It’s no wonder that by the 1890s, almost all of European politics said, we’ve tried the aristocracies, we’ve tried our monarchies, we’ve tried our kings and queens and multinational big shots running everything in our empires, but let’s face it, we’re all going to eventually be Americans. Look at what they’re doing over there. This experience really did inspire the entire planet.

America was never more confident than it was under the gold standard in those years. It was also during those years that we developed all of our civic pride, stories of the founding fathers, our national holidays, the music that we associate with America, the marches, and the flags and signs and symbols. American pride, and you could say even patriotism, was born during this period, and for good reason.

My point is that this is all very interesting, but the monetary regime being hard money, money belonging to and controlled by the people and by independent enterprises was a major reason for that. So now we have to fast forward to the Fed because that’s where things really began to change.

Why did all this happen in1913?

A lot of it had to do with the panic of 1907. But like in all politics, sometimes the crisis is exaggerated for a reason. There was something like a frenzy after 1907. We can’t stand this system anymore—ups and downs and bank failures and panics, and oh, we don’t know if the money is there. This is a problem. We don’t know if the debt holders are even going to be paid. We need to bring science to monetary policy.

One of the things that was part of the ethos of the time, you could look at the prosperity that unfolded over those 30 or 40 years and say, that’s a miracle of entrepreneurship, enterprise, and freedom. Or you could look at that and say, wow, this is a consequence of good managers, excellent engineers, excellent science, the primacy of rationality over randomness.

There are two interpretations you could give. As time went on, that second interpretation prevailed. So there was a growing sort of valorization of expertise and management. They said, look, we should bring the spirit that’s given us all these great inventions in the private sector to government itself; let’s put the experts to work on banking and money. The experts did come together, famously at Jekyll Island, and put together this new institution. It’s a funny institution with a funny name, because it’s actually not a national bank.

Yes, it is a national bank, but it was more than that. It became a kind of regulatory cartel owner of all banks in the country. You could not be a bank unless you were a member of the Federal Reserve. The Federal Reserve was going to be responsible for all clearing systems—how we got paid, when you finally get the thing that you’re going for, when the money arrives at the institution that it’s intended for. That’s called clearing. And that was going to be entirely charged by the Fed.That was entirely managed by the Fed.

So there was going to be no more wildcat banking, no more independent banking. Banks were not going to be these free enterprise operations where they pop up and go away. No, it was all going to be controlled by the Fed. So it was both a national bank and a private banking cartel granted special rights by the federal government. It exists in this strange place. And that was in 1913.

How is it private?

It’s entirely privately owned. These are privately owned banks. They’re privately owned banks with a federal charter from the government.

The banks being the members?

Yes, all the banks are privately owned, so it’s a private cartel. It’s like the banks—the biggest banks leaned on Congress to codify a centralized system that would retain their private status while forbidding competition from outsiders, from wildcat banks and random people. So the system itself is privately owned, or you could say it’s quasi-public-private. I don’t know what to compare it to. I’m sure there’s a good comparison there.

Clearly the Board of Governors is not private.

That’s right. So this is where we get into a lot of ambiguity. This is where it gets really interesting. Is it public or is it private? And if it is public, who controls it? The voters? Congress? The Supreme Court? The president? Who? What does it mean to be an independent agency? We know from the Supreme Court that these don’t really exist in other areas of the federal bureaucracy. We know now that the president’s in charge of them.

Well, what about the Fed? That was always ambiguous in the law. So what happened was, this is the way it’s normally described. Congress decided, in its wisdom, to take its powers over monetary matters, Article I, Section 8, and delegate those to this new institution called the Federal Reserve. Now, you should just reflect for just two seconds, because you and I are both interested in words. The word Federal Reserve is, by itself, funny, because it doesn’t say central bank. Americans hated the idea of a central bank because that was more like Germany and Bismarck or whatever.

They didn’t want that. A central bank is not an American institution, so they called it something completely different. It’s actually kind of genius. They called it first the word federal, federal meaning decentralized, consistent with the 10th Amendment, these United States, we don’t have a central government. We have a federal system.

So to accomplish that federal piece, the new central bank had branches. It had the Minneapolis Fed, Atlanta Fed, Dallas Fed, Chicago Fed, San Francisco Fed. So there are many Federal Reserve banks around the country, for no apparent reason really, except to create the illusion of decentralization. So there was that. And even now, they’re gigantic and they employ all these researchers, and they say interesting things.

But really, there’s no reason for all these feds around the country. The second part, this word reserve is funny when you think about it, because it implies that they have something. They’re in possession. We have the reserves. Just in case we need them, we have the reserves. If there’s a crisis, we’re going to be there to help you. You can have confidence in the system because we have reserves, whatever. In those days, it was gold. You don’t need to worry.

Finally, we have a system that’s stable and functioning and scientific. Now, the science part of this thing is also high employment, or at least low unemployment, and some sort of economic stability. So they had this sort of mission, a big, broad mission, managerial mission over the whole country. The original Fed, keep in mind, the founders of the Fed and the ethos of the time were tired of the chaos.

They were tired of the chaos of the markets. They were tired of the bank failures. We’re going to stop that. But we’re also going to guarantee low inflation. This was widely believed. Now, there are plenty of people out there that think the Fed is just a big demonic conspiracy, and racketeers. Maybe there’s an element of that or whatever.

But what I see in the founding of the Fed is a sincere and authentic desire to stabilize the system, bring intelligence, rationality, managerial prowess, and expertise to a sector of society that had long been subject to waves of chaos. I think they had every intention of doing good work. The founders of the Fed weren’t bad guys. Many of them wanted sound money.

In fact, some of them wanted to stop the credit expansion. They didn’t like the way these wildcat banks were created. You have a bank pop up, Bob’s Bank. It says, oh, the railroad’s coming along. Here’s your money. They will lend you the money, and they will collect your deposits. Then the bank goes belly up and people lose their deposits. And then the bandits would be on the run.

They didn’t like that. They were kind of stodgy old-timers in a way. Let’s have gold and a frugal, drifty middle class and stop with all this nonsense, right? So this was sort of the ethos of the first Federal Reserve. But the problem is that in the end, despite its name, despite the intentions of the founders, it was a central bank.

I did not know that federal meant decentralized. I thought that federal meant centralized,which is a function of the federal government.

Yes, this traces back to ambiguity about the word in American history.

Maybe this reflects a shift in how society thinks we should be governed.

Yes, even in the founding period before the Constitution, there was a lot of mix-up about these words because they were the federalists, you know. And a lot of people looked at the federalists and said, you’re not federalists; you don’t believe in a federation of states; you’re centralists. You want a central government. The people who objected to the Constitution came to be called the anti-federalists.

Now, that’s funny because, of course, they were the real federalists. I mean, if you believe the anti-federalists, they believed themselves to be the real federalists, and what was called the federalists were really centralists. So this is where the ambiguity comes from. But I think generally we use the word federalism to mean a decentralized system. And in American history, that means granting rights to states. And we still have many, many states’ rights. We still have a federalist style system.

100 percent

And Lord Acton said that federalism was the only true great innovation of American political life. The idea that you would have an overseeing kind of structure that was severely restricted in its power, but most of the powers belonged to the historical political units called the states. Lord Acton said that was the great achievement of American history.

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