There's something I don't understand at all. Relations between Trump, the Fed, and Powell should have improved. Why? Because Powell surrendered at the latest Jackson Hall meeting and said, "America's real problem is no longer inflation, it's employment. That's why we'll focus on that." He signaled that an interest rate cut would occur in September. Markets were already buzzing. But Trump's fight with the Fed wasn't over. On the contrary, it intensified. In fact, after Powell's speech, Trump tweeted his thanks. We thought things would calm down, but things are turning in the opposite direction. What's happening? Trump announced that he fired one of the Fed governors, saying he terminated her. Lisa Cook's name is Lisa Cook. According to Trump, Lisa Cook committed fraud on a mortgage application. Let's not go into that detail. That's why he's saying, "I have the right. I can hire you as the Federal Reserve." There's an interesting situation there, actually. Trump doesn't have the power to fire the governors or the chair of the Federal Reserve. On what issue doesn't he? Not because of their economic decisions. They can make whatever interest rate decisions they want. But they're portraying this woman as being involved in corruption. This, again, arguably, gives Trump some authority. At least, Trump thinks so. But why? That's the question. Powell did what he wanted, and interest rates are going down. Why are you doing this? Furthermore, if we take a step back, there's another interesting, dark story.

Kugler, another Fed governor, resigned. This resignation took effect on August 8th. Frankly, we don't know why she resigned. She left suddenly. No explanation was offered. The conspiracy theory running through my mind is that, like Lisa, they found a void and put pressure on her. Trump has all the intelligence. He can find such voids if he wants. That's why this woman resigned, and what happened? A Trump supporter was appointed. So, there are seven governors at the Fed. Three of them have become Trump supporters. If they can get Lisa, the number of governors will increase to four. So, four of the seven governors will implement Trump's policies.

Now, you might say, isn't it obvious that he's doing this to lower interest rates? Not really. Not at all. Why? Because interest rate decisions are made by a committee of 12. The FOMC committee. Seven of those 12 come from there. You only get four of those seven. That leaves eight more members. What's the big deal? Seven of the 12 members are governors. The remaining five are the heads of different local central banks, and these five members rotate. If I'm not mistaken, they rotate every year. Other Fed chairs replace them. Trump can't replace them. So, at least looking at September or the Fed interest rate committees in the near future, the pressure on all these governors won't have any impact.

On the other hand, it could have an impact in the long run, of course. These Fed governors have veto power over which central bank presidents can and can't join the monetary committee. But this is a somewhat long-term issue. So, we understand this. Yes, they're creating some pressure to cut interest rates, but it's unlikely they'll achieve tangible results. We also know this now: The Fed's interest rate decisions are focused on short-term interest rates. Markets determine long-term interest rates. Remember, the Fed lowered interest rates in September and October, but long-term yields, like 10-year bonds, have risen. Therefore, even if they pressure the Fed and lower short-term interest rates, America's massive debt and interest rate problem may not be solved.

I found a solution to this confusion today. I watched an interesting video from the Heresy Financial channel, "The Real Reason Trump is Replacing Everyone at the Fed." By the way, I recommend you follow this gentleman. He's very knowledgeable about the Federal Reserve and macroeconomics in America. Heresy Financial answered my question quite well in this video. America's debt is so massive that they need to be very creative in how to manage it. One solution is stablecoins. They give banks the right to issue stablecoins. Because banks have approximately $3.3 trillion in cash deposited with the Federal Reserve. This is called reserve money, and they should unwind this money and release it to the market. As you know, stablecoins are backed by American treasury securities. As I mentioned in a previous article, they aim to create demand for these securities. The gentleman I just mentioned adds another dimension to this. It's truly an interesting one. Please continue watching that video until the end. This is because if you're an investor, whether it's crypto or American stocks, you'll be deeply affected by this.

Before delving into the details of this issue, what is this $3.3 trillion in reserve money? It's important to mention that. You can find it on the Fed's website. $3.356 trillion is deposited with the Federal Reserve. Whose money is this? American banks' money. They consider it a reserve. They deposit it here, and the Fed pays them interest. Why would they deposit their money in such a place? Banks always have some excess cash on hand. What will they do with that excess cash? This is a very secure place. It offers interest rates, and the interest rates are comparable to those of US Treasury bonds. They avoid the risks of Treasury bonds and earn a market-level interest rate. Why does the Fed offer this interest rate?

The Fed actually uses this to manage market interest rates. Because if a bank has too much cash and tries to lend it to a neighboring bank, and the neighboring bank offers a lower interest rate on it, the Fed's interest rates become irrelevant to the market and begin to fall. This is what the Fed is doing here: telling the bank, "Don't give it to me, give me the money." I'll give you an interest rate between 4.25 and 4.50. This way, they manage to keep daily short-term interest rates high, or rather, at their desired levels. So how did they do this before? Until 2008, there was no money in this reserve. Before 2008, there wasn't this much money in the market at all. This is one of the reasons for the change: the 2008 great financial crisis and 2020 Covid. During this period, a lot of money is being poured into the market. Banks are gushing money. They can't even lend. Where will they use this money? That's why there's a surplus. The Fed wants to absorb some of that extra money. Because that extra money can create inflation.

Secondly, the law is being amended here, giving the Fed the authority to pay this interest. Now, this is the interesting part; there's a new bill currently being debated in the US Congress. This bill seeks to prohibit the US Federal Reserve from paying interest. They cite the loss incurred by the US Federal Reserve as the justification. Imagine, there's $3.3 trillion in funds entrusted to its care. It's paying around 4.5% annual interest on it. This, of course, puts the Federal Reserve into debt. But the real reason behind it is more subtle. The Trump administration wants this money to flow into the market. In other words, the Fed shouldn't pay interest on them. What will banks do if the Fed doesn't pay interest? They'll be forced to pour it into the market. Banks won't use this money to buy stocks or lend to high-risk individuals. Because it's their reserves. Money they want to feel safe with. So what will they do? They'll likely buy US Treasury securities. This will create a huge demand for US Treasury securities. This will permanently lower interest rates. That's all well and good, but there's a problem. Such legislation requires approval from both the Senate and the House. And it seems very difficult, because neither party already has an overwhelming majority.

Plus, there are some Republicans who might oppose such legislation. So, they're taking another precaution in case there's a problem in the House and the Senate, and this situation drags on. This is the basis of the Fed's strategy of replacing governors. Lowering short-term interest rates. That's another outcome, but a less significant one. The main point is that if we change the governors, the Fed can reduce the interest it pays on reserves without needing a legal amendment. This is because it's the governors' authority. In other words, if Trump can seize control of four of the governors, he will ensure this money enters the market. Because the Fed governors have the power to lower interest rates without waiting for a legal amendment. The Monetary Committee is irrelevant here. Seven governors can do this.

The Monetary Committee influences short-term interest rates. These seven governors, in turn, influence the interest paid on this currency. In this case, $3.3 trillion will enter the market. They're creating the mechanism behind this with stablecoins. They're authorizing banks to issue stablecoins. When issuing these stablecoins, banks will use this money as collateral, thus influencing the market. Since stablecoins are indexed to treasury securities, money will flood into treasury securities. This will push interest rates down. That's the point. You might say, what do we care about any of this? These are of great concern to us. This essentially means $3.3 trillion of money entering the market.

If some of this comes from stablecoins, it will stimulate the crypto market. Because they need to create demand for those stablecoins. One way to achieve this is by increasing the value of crypto assets, which in turn will inject a lot of money into the market. What happens when a lot of money enters the market? Demand for all risky assets increases. That's their plan. At least, this gentleman thinks that's the plan, and it makes sense to me, and in my mind, many of the missing pieces are being completed.

To summarize, they will do whatever it takes to seize control of the Fed governors in the coming days. These short-term interest rate decisions will have some impact, but not significantly. This is because the monetary committee is a larger committee. It takes longer for them to take control. Moreover, even if they lower short-term interest rates, the market determines long-term interest rates. A more permanent solution is needed. A more permanent solution involves injecting new money into the market. America needs to recycle around $1 trillion in debt annually. Demand for these debts from abroad has decreased. In recent auctions, the Treasury has been buying back its own debt. But that money is finite. We'll talk about that later.

America has another reserve called reverse repos. The money there is depleted. We need money from somewhere new. That money is $3.3 trillion here. If Trump succeeds and injects this money into the market, it will be beneficial for our cryptocurrencies. It will also be beneficial for our American stocks. What will the long-term impact be on the American economy? That's beyond me at the moment. It's not important. The growth impact of this money entering the market is significant. The market is already reading this, and even in a rather difficult month like August, it continued to trend upwards.