Yesterday, Donald Trump posted a letter to Truth Social announcing that he had fired the economist Lisa Cook from her position as a member of the Federal Reserve Board of Governors. Whether this is true—whether Trump has, in fact, successfully fired Cook—is an unsettled question of enormous consequence. Under the law, a president can fire a Fed governor only “for cause.” To clear that bar, Trump has accused Cook of having made false statements on a mortgage application.Cook, who has not been charged with any crime, has promised to sue to keep her job. Her lawyers will likely argue, among other things, that the “for cause” standard requires proof that Cook has engaged in misconduct or poor performance related to her job as a Fed governor, and that it does not permit the president’s lackeys to go digging through her personal history to gin up a pretext for termination. But because no president before Trump has crossed this particular line, the vague standard has never been litigated. Ultimately, the Supreme Court will have to weigh in. Much more than Cook’s employment status hinges on its decision. If Trump succeeds at firing her and replacing her with a loyalist, he could be just months away from a full-blown takeover of the Federal Reserve.Trump has not been coy about his interest in the makeup of the Fed. He complains that the central bank is hurting the U.S. economy (which, confusingly, he otherwise insists is better than ever) by keeping interest rates too high. Rates are set by a 12-member body known as the Federal Open Market Committee (FOMC). Seven of those members come from the Board of Governors, a group appointed by the president that includes Fed Chair Jerome Powell as well as Cook. Trump appointed two of its other members, Michelle Bowman and Christopher Waller, during his first term, and has nominated the head of his Council of Economic Advisers, Stephen Miran, to replace a member who recently stepped down. If Trump successfully replaces Cook with a loyalist, he will have appointed four out of the seven board members, enough for a majority. (Trump elevated Powell, who was appointed to the Fed by Barack Obama, to the position of chair in 2018.)[Jonathan Chait: What Trump’s feud with Jerome Powell is really about]Normally, that wouldn’t be enough to dictate how the FOMC sets rates. The remaining five votes come from the presidents of the Federal Reserve’s 12 regional banks, who take turns serving as voting members on the FOMC. The president has no direct power in choosing these individuals. Instead, the board of each regional bank picks its president, a structure designed to insulate the regional presidents from Washington politics. The five regional Fed presidents on the committee could band together with the three non–Trump appointees on the Board of Governors to prevent Trump’s appointees from exerting their will.But there’s a catch: Every five years, the Fed’s regional presidents must be reconfirmed by a majority of the members of the Board of Governors. And the current five-year period just so happens to expire next February. If four Trump appointees decided to vote together, they could block the reappointment of any regional president who didn’t agree to cut rates.What would happen next isn’t entirely clear. In the Fed’s 112-year history, a governor has never voted against the appointment of a regional president. In past cases when a governor had to step down voluntarily, they were replaced by an interim president, usually the vice president of the regional bank. But that interim president also needs to be confirmed by the Board of Governors. Moreover, the regional-bank presidents are technically “at will” employees of the Federal Reserve board who can be voted out for any reason by the Board of Governors. Ultimately, then, if Trump’s appointees hold a majority on the Board of Governors, they hold the power to decide who the rest of the voting members are.Trump’s first-term appointees, Waller and Bowman, might not go along with such a dramatic power play. Like Powell, they are veteran central bankers with mainstream credentials, not Trumpian sycophants chosen explicitly for their personal loyalty to the president. But the pair have shown a willingness to break with norms before. In 2023, they became the first ever Fed Board governors to abstain from voting to confirm the appointment of a regional president—in this case, Chicago Fed President Austan Goolsbee, who had served as an economist in the Obama administration. (They also dissented from the Fed’s most recent decision not to cut rates—the first dual dissent since 1993.)This time, they would face even more pressure. Trump could threaten to fire them if they don’t go along with his plan to cut the federal-funds rate to 1 percent. Or he could use carrots, not sticks. Trump has already announced his intent not to reappoint Powell next May, meaning both Waller and Bowman are in the running to be the next Fed chair. Winning that appointment will require gaining Trump’s favor.In short, if the Supreme Court upholds Cook’s firing, then Trump’s path to completely taking over the Fed, and dramatically lowering interest rates, is extremely plausible.[Rogé Karma: Meddling with the Fed could backfire on Trump]The consequences of such a move are hard to predict, but history is not encouraging. In 1970, Richard Nixon, who wanted a rate cut to juice the economy ahead of his 1972 reelection campaign, tapped Arthur Burns, one of his top economic aides, as Fed chair. Under Burns, the Fed delivered. That move is now widely seen as contributing to the double-digit inflation spike that roiled the country during the 1970s and ended only after a new Fed chair came in and raised interest rates enough to trigger a recession.More recently, from 2019 to 2022, Turkish President Recep Tayyip Erdoğan replaced three central-bank governors with loyalists who were willing to slash interest rates even as prices were rising. This caused inflation to spiral even higher (peaking at 85 percent), prompted a fire sale of Turkish-government bonds, and caused the Turkish lira to crash in value. The crisis began to abate only when Erdoğan changed course in 2023 and brought in new central-bank leadership who raised rates to more than 45 percent.The temptation for presidents to meddle with the central bank to further their political aims is precisely why Congress designed the Federal Reserve to be independent. We might soon find out what happens when that independence is lost.