Analysis of: Supreme court to hear arguments on Lisa Cook as Trump continues campaign for control over Federal Reserve – US politics live
The Guardian | January 21, 2026
The Trump administration's unprecedented campaign against the Federal Reserve represents a significant intensification of intra-capitalist conflict over control of monetary policy—the central mechanism through which the state manages capitalist crisis. The attempt to fire Fed Governor Lisa Cook, the criminal investigation into Chair Jerome Powell, and Treasury Secretary Bessent's accusation that Powell is 'politicizing' the institution by defending its independence all reveal a fundamental contradiction: the capitalist state requires both democratic legitimacy and insulation from democratic pressure to serve capital accumulation effectively. This conflict unfolds against the backdrop of Trump's aggressive assertion of executive power across multiple fronts—from firing tens of thousands of federal workers through the 'Department of Government Efficiency' to dismissing Denmark as 'irrelevant' in pursuit of Greenland annexation, to the claimed capture of Venezuela's Maduro using 'secret sonic weapons.' These actions represent a faction of capital seeking to consolidate state power more directly, bypassing the institutional buffers that traditionally mediate between different capitalist interests. The Fed's independence has historically served to depoliticize monetary policy, allowing interest rate decisions that favor finance capital to appear as neutral technocratic management rather than class warfare. The racialized targeting of Lisa Cook—the first Black woman on the Fed board—through mortgage fraud allegations mirrors similar investigations against other officials of color like Letitia James, revealing how white supremacist ideology serves as a tool for consolidating power. Meanwhile, the VA's data collection on 'non-citizen' workers demonstrates how immigration enforcement serves to discipline and divide the working class, particularly in sectors like healthcare where immigrant labor is essential. These domestic dynamics interconnect with imperialist expansion: the contempt proceedings against the Clintons over Epstein, the Greenland annexation push, and the Venezuela intervention all serve to legitimate an increasingly authoritarian state apparatus while redirecting working-class attention toward external enemies and elite scandals.
Class Dynamics
Actors: Finance capital (represented by Fed leadership), Industrial/extractive capital faction (aligned with Trump administration), State managers (Fed governors, Treasury officials, DOJ), Working class (federal workers, VA employees, immigrant workers), Political establishment (Clintons representing older neoliberal order)
Beneficiaries: Capital seeking lower interest rates for cheaper borrowing, Executive branch consolidating power over independent agencies, Immigration enforcement apparatus expanding surveillance, Defense contractors and military-industrial complex (via territorial expansion)
Harmed Parties: Federal workers facing mass layoffs, Immigrant workers under surveillance at VA, Working class facing inflation from potential rate cuts, Democratic institutions and their legitimacy, Populations of targeted nations (Greenland/Denmark, Venezuela)
The conflict reveals tensions between different fractions of capital over state management. Finance capital traditionally controlled monetary policy through Fed independence, insulating interest rate decisions from electoral pressure. The Trump faction represents a more aggressive, nationalist capital seeking direct executive control over all state functions. The working class appears only as objects of policy—workers to be fired, immigrants to be surveilled—rather than as political actors.
Material Conditions
Economic Factors: Interest rate policy affecting cost of capital across economy, Government debt management ($100m+ Danish Treasury holdings mentioned), Labor costs in federal sector (450,000 VA employees), Resource extraction interests (Greenland's strategic minerals), Venezuelan oil reserves
The Fed manages the fundamental contradiction between capital's need for cheap credit and the threat of inflation that erodes workers' wages and destabilizes accumulation. The VA's massive healthcare system depends on immigrant labor—data collection on 'non-citizens' represents an attempt to discipline this workforce through fear while maintaining essential services. The 'Department of Government Efficiency' mass firings aim to reduce the cost of state reproduction while weakening public sector unions.
Resources at Stake: Control over monetary policy (interest rates, money supply), Arctic resources in Greenland, Venezuelan petroleum reserves, Public sector jobs and union power, Institutional independence of regulatory bodies
Historical Context
Precedents: Nixon's pressure on Fed Chair Arthur Burns (1970s), Reagan's assault on federal unions (PATCO strike 1981), Bush v. Gore establishing executive-judicial alliance, Monroe Doctrine and hemispheric domination ideology, Historical targeting of first Black officials in institutions
This represents an acceleration of neoliberalism's internal contradictions. The post-2008 regime of near-zero interest rates and quantitative easing created dependencies that now produce conflict when rates rise. The institutional independence of central banks—a key neoliberal innovation to insulate monetary policy from democratic pressure—now faces attack from a faction of capital that finds these same institutions insufficiently responsive to its immediate interests. This mirrors historical patterns where capitalist crises produce authoritarian responses that seek to resolve contradictions through force rather than consent.
Contradictions
Primary: Capital requires both state autonomy from democratic pressure (to implement unpopular policies) and state responsiveness to capital's immediate demands (lower interest rates). The Fed's independence served the first function but now conflicts with the second, producing this unprecedented executive assault on central bank autonomy.
Secondary: The state depends on immigrant labor (especially in healthcare) while pursuing immigration enforcement that undermines workforce stability, Accusations of 'politicizing' the Fed come from officials themselves engaged in political attacks on Fed independence, Claims of defending rule of law accompany unprecedented executive overreach and contempt for institutional norms, Anti-corruption rhetoric (Epstein investigation, mortgage fraud allegations) deployed by administration facing its own corruption allegations
If the Supreme Court rules for executive power to fire Fed governors, it would fundamentally transform the relationship between elected officials and monetary policy, potentially subjecting interest rates to electoral cycles. This could trigger capital flight or inflation as markets lose confidence in policy stability. Alternatively, if courts protect Fed independence, the administration may escalate through other means—expanded DOJ investigations, budget cuts, or appointment of compliant officials when terms expire. The underlying contradiction between democratic legitimacy and capital's need for insulated technocratic management cannot be resolved within the current system.
Global Interconnections
These domestic power struggles connect directly to imperialist expansion. The dismissal of Denmark as 'irrelevant' while pursuing Greenland annexation, the claimed capture of Venezuela's leader, and references to 'hemispheric domination' reveal how domestic consolidation of power enables external aggression. Access to Greenland's rare earth minerals and Arctic shipping routes, Venezuelan oil reserves, and the reassertion of Monroe Doctrine hegemony all serve material interests of extractive and energy capital. The 'secret sonic weapon' claim—whether real or psychological warfare—demonstrates the militarization of U.S. foreign policy. The World Economic Forum setting for these announcements is significant: Davos represents the coordination mechanism for transnational capital, yet Trump's treasury secretary uses this platform to attack traditional allies and dismiss international investors' concerns. This suggests a shift from multilateral neoliberal management toward unilateral nationalist accumulation, reflecting deeper changes in the global capitalist order as U.S. hegemony faces challenges from rising powers.
Conclusion
This moment reveals the capitalist state in crisis—unable to manage competing demands from different capital fractions while maintaining democratic legitimacy. The attack on Fed independence, mass federal layoffs, immigrant worker surveillance, and imperial expansion represent a coherent project to resolve these contradictions through authoritarian consolidation rather than institutional mediation. For working-class politics, this presents both danger and opportunity: the danger of fascist-adjacent state capture, but also the opportunity presented by ruling-class divisions and the delegitimization of institutions that have long served capital while claiming neutrality. The key question is whether working-class organizations can articulate an independent political program that neither defends the old neoliberal order nor acquiesces to authoritarian nationalism, but instead advances demands for democratic control over monetary policy, workplace rights, and international solidarity against imperialist expansion.
Editorial Note: This analysis applies a dialectical materialist framework to news events. It represents one interpretive perspective and should not be considered objective reporting.
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