Trump’s Federal Reserve Storm. Dollar Reserve Standard Under Threat.

Baltic Dry Index. 1944 Fri.          Brent Crude 68.48

Spot Gold 3377                 US 2 Year Yield 3.68 +04

US Federal Debt. 37.279 trillion

US GDP 30.225 trillion.

The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.

Milton Friedman

Get gold, a politicised US central bank would call into question the rest of the world’s willingness to continue using the fiat currency, dollar reserve standard for most international trade, and willingness to continue funding the US Treasury market at anything like current low rates.

Yes, we are a long way from a Trump political US central bank. But that “long way” may be as soon as May or June 2026.

In the way of the modern computerised world, June 2026 is the blink of an eye given the multi trillions of fiat dollars involved.

For now, a Trump politicised, Latin American style, US central bank seems unlikely, but given the risks to international trade, President Trump has just put that prospect firmly on the table.

A new fiat dollar risk today exists, with massive consequences for all were it to happen.

Asia markets mostly fall, gold rises after Trump fires Fed Governor Lisa Cook

Published Mon, Aug 25 2025 8:00 PM EDT

Asia-Pacific markets mostly fell Tuesday, as investors weighed U.S. President Donald Trump’s escalatory rhetoric on tariffs and assessed his move to fire Federal Reserve Governor Lisa Cook.

Trump reportedly warned of “200% tariffs or something” on China if it does not export rare-earth magnets to the U.S, while also threatening levies on countries that do not remove digital taxes and related regulations.

After Trump fired Federal Reserve Governor Lisa Cook late Monday stateside, gold strengthened 0.21% to $3,373.12 as of 12:15 p.m. Singapore time (12:15 a.m. ET). The U.S. dollar index, which measures movements of the greenback against six major currencies, pared early losses and was flat.

Yields on 10-year U.S. Treasuries rose around 2.5 basis points to 4.3023%.

Investors also assessed the meeting between South Korean and U.S. presidents over fleshing out the trade deal announced last month that stipulated 15% tariffs on the Asian country’s exports to the U.S.

The Kospi index fell 0.85%, while the small-cap Kosdaq was up 0.31%.

In Japan, the Nikkei 225 declined by 0.85% while the broader Topix index fell 0.83%.

Australia’s S&P/ASX 200 benchmark dropped 0.52%.

Hong Kong’s Hang Seng index fell 0.22%, while mainland China’s CSI 300 moved up 0.14% in choppy trade.

Over in India, the benchmark Nifty 50 declined by 0.77%, while the BSE Sensex index lost 0.65%.

U.S. equity futures were little changed in early Asia hours, as investors await Nvidia’s earnings and reading of the U.S. Federal Reserve’s preferred inflation gauge.

Overnight stateside, all three key benchmarks fell with the tech-heavy Nasdaq down 0.22% at 21,449.29. The broad market S&P 500 traded 0.43% lower to settle at 6,439.32, while the 30-stock Dow Jones Industrial Average closed down 349.27 points, or 0.77%, at 45,282.47.

Asia-Pacific markets mostly fall as Trump fires Fed Governor Lisa Cook

Trump says he's removing Federal Reserve Gov. Lisa Cook, citing his administration’s allegations of mortgage fraud

Cook, the first Black woman to serve on the Federal Reserve Board, responded by saying she has done nothing wrong and Trump cannot fire her.

Aug. 26, 2025, 1:18 AM GMT+1 / Updated Aug. 26, 2025, 4:27 AM GMT+1

President Donald Trump is removing Federal Reserve Governor Lisa Cook effective immediately, according to a letter he posted to Truth Social on Monday night.

In the letter, Trump writes: "Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately."

Trump cites a "criminal referral" from Federal Housing Finance Agency Director William Pulte, in which Pulte accused Cook of mortgage fraud.

In a statement, Cook responded by saying: "President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so. I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022."

Her attorney Abbe Lowell said in an accompanying statement that Trump's "reflex to bully is flawed and his demands lack any proper process, basis or legal authority. We will take whatever actions are needed to prevent his attempted illegal action.”

Under the Federal Reserve Act, the only reason Federal Reserve governors can be removed from their positions is “for cause,” or some kind of wrongdoing.

Cook has not been charged with any crime, and her removal is likely to lead to a court battle between the independent central bank and the executive branch.

The Supreme Court said in May, while granting Trump the ability to remove members of other independent agencies, that the Federal Reserve is a “uniquely structured, quasi-private entity” that has its own distinct historical tradition. That led many to believe the bar would be high for Trump to be able to remove any Fed board members or its chairman.

----Spokespeople for Senate Banking Committee Chairman Tim Scott, R-S.C., did not immediately respond to a request for comment.

Cook said in a statement last week that she had "no intention of being bullied to step down from my position because of some questions raised in a tweet."

“I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts," she said at the time.

Cook is the first Black woman to serve on the board of the Fed, considered the world's most important independent central bank.

Monday's move against Cook came amid an unrelenting pressure campaign by Trump against the central bank, with Trump and his top aides and allies repeatedly attacking the institution and its chair, Jerome Powell, over current interest rate policies.

Trump has attacked Powell almost nonstop, calling him "stupid" and saying he "hates me." Trump has also said the board, which Cook serves on, "should be ashamed of themselves."

After Pulte alleged that Cook committed mortgage fraud, Trump quickly reposted his allegations, saying on Truth Social that she "must resign, now!!!"

Pulte said on X after Trump announced Cook's removal, "Fraud will not be tolerated in President Trump’s housing market."

Pulte's focus on Cook's mortgage documentation is just the latest in a series of similar accusations against high-ranking Democrats, such as Sen. Adam Schiff of California and New York Attorney General Letitia James.

He added in a second post, "If you commit mortgage fraud in America, we will come after you, no matter who you are."

The U.S. Dollar Index, a measure of the dollar's strength against a basket of global currencies, declined sharply on Trump's announcement.

Cook, who has a permanent vote on the central bank’s rate-setting committee, was appointed by President Joe Biden to a term running until 2038.

If she is removed from the Fed's board and its rate-setting committee, Trump would gain another opportunity to put his mark on the central bank.

Trump has nominated his top economist, Stephen Miran, to the Fed's board for a term that would run until January. Trump will also have a chance to name a new chair when Powell's term ends in May.

More

Trump says he's removing Federal Reserve Gov. Lisa Cook, citing his administration’s allegations of mortgage fraud

World's central bankers fear being caught in Fed's storm

August 25, 2025 5:15 AM GMT+1

JACKSON HOLE, Wyoming, Aug 25 (Reuters) - Global central bankers gathered at a U.S. mountain resort over the weekend are starting to fear that the political storm surrounding the Federal Reserve may engulf them too.

U.S. President Donald Trump's efforts to reshape the Fed to his liking and pressure it into interest rate cuts have raised questions about whether the U.S. central bank can preserve its independence and inflation-fighting credentials.

Trump, frustrated by the legal protections given to the Fed's leadership and the long terms for Board of Governors members meant to outlast any given president, has put intense pressure on Chair Jerome Powell to resign and is pushing to oust another board member, Governor Lisa Cook.

If the world's most powerful central bank were to yield to that pressure, or Trump finds a playbook for removing its members, a dangerous precedent would be set from Europe to Japan, where established norms for the independence of monetary policy may then come under new attack from local politicians.

"The politically motivated attacks on the Fed have a spiritual spillover to the rest of the world, including Europe," European Central Bank policymaker Olli Rehn, from Finland, said on the sidelines of the Fed's annual symposium in Jackson Hole, Wyoming.

That's why Rehn and colleagues were enthusiastically backing Powell to stand his ground, even after he signaled a possible rate cut in September. Powell was met by a standing ovation when he took the podium at the conference.

'NOT BE TAKEN FOR GRANTED'

Conversations with a dozen central bankers from across the world on the sidelines of the Fed's getaway in the shadows of the Grand Teton Mountains revealed that a scenario in which the Fed sees its ability to counter inflation jeopardized by a loss of independence was taken as a direct threat to their own standing and to economic stability more broadly.

It would likely entail major turmoil in financial markets, they said, with investors demanding a greater premium to own U.S. bonds and reassessing the status of Treasury securities as the lifeblood of the global financial system.

Central banks around the world have already started preparing for the fallout, telling lenders on their watch to watch their exposure to the U.S. currency.

More fundamentally, a Fed capitulation would end a regime that has brought relative price stability and has lasted at least since late Chair Paul Volcker vanquished high inflation 40 years ago.

Since then, more and more central banks followed the Fed's model of political independence and a single-minded focus on their mandate - for most, keeping inflation near 2%.

"It’s a reminder that independence should not be taken for granted," Bundesbank President Joachim Nagel, also a member of the ECB's Governing Council, said. "We have to deliver on our mandate and make clear that independence is the conditio sine qua non for price stability."

POLITICAL FOOTBALL

Markets so far have not registered deep concerns about the Fed's independence. U.S. equity markets are roaring, and there hasn't been the sort of jump in Treasury yields or inflation expectations that would be emblematic of the Fed's credibility being seen at risk.

World's central bankers fear being caught in Fed's storm | Reuters

In other news, new Trump tariffs threatened.

Donald Trump threatens retaliation over taxes that ‘discriminate’ against US tech

President claims other countries’ digital levies hurt American companies while ignoring China

26 August 2025

President Donald Trump has threatened tariffs and export controls on countries whose taxes, rules or laws on tech companies “discriminate” against the US.

In a post on his Truth Social platform late on Monday, Trump railed against “Digital Taxes, Legislation, Rules, or Regulations” and warned he could impose more levies and institute tighter controls on exports of US technologies.

“As the President of the United States, I will stand up to Countries that attack our incredible American Tech Companies. Digital Taxes, Digital Services Legislation, and Digital Markets Regulations are all designed to harm, or discriminate against, American Technology,” Trump wrote.

 “They also, outrageously, give a complete pass to China’s largest Tech Companies. This must end, and end NOW!”

The broadside risks reigniting trade tensions with the UK and the EU, which both struck recent trade agreements with Washington.

US officials have repeatedly criticised the UK’s digital services tax, although it was kept in place following its deal with the Trump administration.

During recent trade talks, the US has also attacked the EU’s landmark Digital Services Act, which forces big tech companies to police their platforms more aggressively.

Several EU member states, including France, Italy and Spain, also have digital services taxes in place.

During Trump’s first term, both Democratic and Republican lawmakers criticised foreign governments’ efforts to levy additional taxes on tech companies as discriminatory.

In February, Trump ordered the US trade representative to reopen investigations that could lead to tariffs on countries that have imposed a digital services tax.

In June, Canada scrapped its digital services tax, which Trump had described as a “direct and blatant” attack, in an effort to smooth trade negotiations with its neighbour.

UK officials also weighed changes to its tech tax during talks with the US, but were ultimately able to reach a trade deal without amending the levy.

The 2 per cent tax, which hits tech giants including Alphabet, Meta and Amazon, is applied to companies with global revenues of more than £500mn, and is applied on revenues greater than £25mn derived from the UK.

Donald Trump threatens retaliation over taxes that ‘discriminate’ against US tech

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

A third of the U.S. economy is already in a recession or at high risk, and another third is stagnating, Zandi warns

August 25, 2025

·         Moody’s Analytics chief economist Mark Zandi continued to sound the alarm on the risk of a downturn, warning that states accounting for nearly a third of U.S. GDP are already in a recession or at high risk of slipping into one. Meanwhile, another third is treading water, while the last third is still expanding.

After saying that the U.S. is on the precipice of a recession earlier this month, Moody’s Analytics chief economist Mark Zandi continued to add more granularity to his warning.

In social media posts on Sunday, he said his assessments of various datasets indicate that states accounting for nearly a third of U.S. GDP are already in a recession or at high risk of slipping into one. Another third is treading water, while the last third is still expanding.

“States experiencing recessions are spread across the country, but the broader DC area stands out due to government job cuts,” Zandi added. “Southern states are generally the strongest, but their growth is slowing. California and New York, which together account for over a fifth of U.S. GDP, are holding their own, and their stability is crucial for the national economy to avoid a downturn.”

For now, the Atlanta Fed’s GDP tracker points to continued nationwide growth, though it’s expected to decelerate to 2.3% in the third quarter from 3% in the second quarter.

Here’s how the states—and one federal district(*)—break down:

·         Recession/high risk (22): Wyoming, Montana, Minnesota, Mississippi, Kansas, Massachusetts, Washington, Georgia, New Hampshire, Maryland, Rhode Island, Illinois, Delaware, Virginia, Oregon, Connecticut, South Dakota, New Jersey, Maine, lowa, West Virginia, District of Columbia*.

·         Treading water (13): Missouri, Ohio, Hawaii, New Mexico, Alaska, New York, Vermont, Arkansas, California, Tennessee, Nevada, Colorado, Michigan.

·         Expanding (16): South Carolina, Idaho, Texas, Oklahoma, North Carolina, Alabama, Kentucky, Florida, Nebraska, Indiana, Louisiana, North Dakota, Arizona, Pennsylvania, Utah, Wisconsin.

Last week, Zandi also put a finer point on his forecast. He said Moody’s machine-learning-based leading recession indicator put the odds of a downturn in the next 12 months at 49%.

While tax cuts and government spending on defense should help growth, that won’t come until next year. The base case is that the economy avoids a recession, “but not by much,” Zandi said.

“The economy will be most vulnerable to recession toward the end of this year and early next year,” he added. “That is when the inflation fallout of the higher tariffs and restrictive immigration policy will peak, weighing heavily on real household incomes and thus consumer spending.”

With the economy facing many threats, it wouldn’t take much to push it into recession, Zandi said, singling out a selloff in the Treasury bond market that would send long-term yields soaring. 

And before that, he pointed out that more than half of industries are already shedding workers, a sign that’s accompanied past recessions.

More

A third of the U.S. economy is already in a recession or at high risk, and another third is stagnating, Zandi warns

Covid-19 Corner

This section will continue only occasionally when something of interest occurs.

 

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

AI just found 5 powerful materials that could replace lithium batteries

Researchers at NJIT discovered new porous materials capable of revolutionizing multivalent-ion batteries.

Date: August 2, 2025

Source: New Jersey Institute of Technology

Summary: AI is helping scientists crack the code on next-gen batteries that could replace lithium-ion tech. By discovering novel porous materials, researchers may have paved the way for more powerful and sustainable energy storage using abundant elements like magnesium.

Researchers from New Jersey Institute of Technology (NJIT) have used artificial intelligence to tackle a critical problem facing the future of energy storage: finding affordable, sustainable alternatives to lithium-ion batteries.

In research published in Cell Reports Physical Science, the NJIT team led by Professor Dibakar Datta successfully applied generative AI techniques to rapidly discover new porous materials capable of revolutionizing multivalent-ion batteries. These batteries, using abundant elements like magnesium, calcium, aluminum and zinc, offer a promising, cost-effective alternative to lithium-ion batteries, which face global supply challenges and sustainability issues.

Unlike traditional lithium-ion batteries, which rely on lithium ions that carry just a single positive charge, multivalent-ion batteries use elements whose ions carry two or even three positive charges. This means multivalent-ion batteries can potentially store significantly more energy, making them highly attractive for future energy storage solutions.

However, the larger size and greater electrical charge of multivalent ions make them challenging to accommodate efficiently in battery materials -- an obstacle that the NJIT team's new AI-driven research directly addresses.

"One of the biggest hurdles wasn't a lack of promising battery chemistries -- it was the sheer impossibility of testing millions of material combinations," Datta said. "We turned to generative AI as a fast, systematic way to sift through that vast landscape and spot the few structures that could truly make multivalent batteries practical.

"This approach allows us to quickly explore thousands of potential candidates, dramatically speeding up the search for more efficient and sustainable alternatives to lithium-ion technology."

To overcome these hurdles, the NJIT team developed a novel dual-AI approach: a Crystal Diffusion Variational Autoencoder (CDVAE) and a finely tuned Large Language Model (LLM). Together, these AI tools rapidly explored thousands of new crystal structures, something previously impossible using traditional laboratory experiments.

The CDVAE model was trained on vast datasets of known crystal structures, enabling it to propose completely novel materials with diverse structural possibilities. Meanwhile, the LLM was tuned to zero in on materials closest to thermodynamic stability, crucial for practical synthesis.

"Our AI tools dramatically accelerated the discovery process, which uncovered five entirely new porous transition metal oxide structures that show remarkable promise," said Datta. "These materials have large, open channels ideal for moving these bulky multivalent ions quickly and safely, a critical breakthrough for next-generation batteries."

The team validated their AI-generated structures using quantum mechanical simulations and stability tests, confirming that the materials could indeed be synthesized experimentally and hold great potential for real-world applications.

More

AI just found 5 powerful materials that could replace lithium batteries | ScienceDaily

Next, the world global debt clock. Nations debts to GDP compared.

World Debt Clocks (usdebtclock.org)

The Great Depression in the United States was caused - I won't say caused, was enormously intensified and made far worse than it would have been by bad monetary policy.

Milton Friedman