Trump’s “Infinite Deal” and the Fight for Fed Independence

January 22, 2025

A Victory Without Substance

On Wednesday, as global elites gathered in the Swiss Alps for the World Economic Forum in Davos, President Trump executed what has become a familiar pattern in his approach to governance: threaten, escalate, then claim victory while walking back the threat. This time, the target was Greenland and America’s European allies, and the retreat came with all the pageantry of a major diplomatic breakthrough—even as the substance remained deliberately vague.

The president announced on Truth Social that he had reached “the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region” following what he described as a “very productive meeting” with NATO Secretary General Mark Rutte. Based on this understanding, Trump declared he would not impose the 10 percent tariffs on Denmark and other European nations that he had threatened to implement on February 1st. When reporters pressed him for details, Trump characterized the agreement as “infinite” and “the ultimate long-term deal,” language that suggested grand ambition while revealing precisely nothing about what had actually been agreed upon.

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The Greenland Gambit

The announcement capped a remarkable escalation over Greenland, the autonomous Danish territory that Trump has fixated on acquiring for the United States. Just hours earlier, he had told reporters that America “probably won’t get anything unless I decide to use excessive strength and force where we would be frankly unstoppable. But, I won’t do that.” It was a statement that simultaneously threatened military action and ruled it out, leaving allies to parse which version of the president’s position represented actual policy. Trump went on to claim that Rutte was “more important” than Danish Foreign Minister Lars Løkke Rasmussen, effectively dismissing Denmark’s sovereign authority over its own territory while elevating NATO’s role in what he framed as a security matter.

Europe’s response was swift and pointed. On Wednesday, European officials suspended approval of a trade deal that had been reached with Trump just last July, a clear signal that the continent would not simply acquiesce to threats and pressure tactics, even when temporarily withdrawn. The entire episode revealed the fragility of international agreements in an era when presidential whims can override diplomatic norms, and when allies must constantly calculate whether American commitments will survive the news cycle.

The Supreme Court Pushes Back

But while Trump’s Greenland gambit played out on the world stage, a quieter but potentially more consequential drama unfolded inside the marble halls of the Supreme Court, where justices heard arguments that could determine the extent of presidential power over the Federal Reserve—and with it, the independence of the institution that manages the world’s most important economy.

The case centers on Lisa D. Cook, whom Trump announced last August he would remove from the Federal Reserve board based on allegations of mortgage fraud. The accusations—which Cook vigorously disputes and for which she has neither been charged nor convicted—involve loan documents she signed before joining the Fed in 2022. The Trump administration argues that these unproven allegations constitute sufficient “cause” under the 1913 law establishing the Fed to allow the president to fire her immediately.

What became clear during two hours of oral arguments, however, was that a majority of justices appeared deeply skeptical of the administration’s position. The concern transcended ideology: both conservative and liberal justices questioned whether accepting Trump’s arguments would fundamentally undermine the Fed’s independence and open the door to future presidents firing central bank officials at will.

“Once These Tools Are Unleashed”

Justice Brett Kavanaugh, a Trump appointee often aligned with the conservative majority, warned bluntly that the president’s position could “weaken, if not shatter, the independence of the Federal Reserve.” He noted that former Fed chairs and Treasury secretaries had cautioned against allowing Cook’s immediate removal. “Once these tools are unleashed, they are used by both sides,” Kavanaugh observed. “We have to be aware of what we’re doing and the consequences of your position for the structure of the government.”

Chief Justice John Roberts pressed the administration’s lawyer, Solicitor General D. John Sauer, on the substance of the allegations themselves. Cook’s attorneys have acknowledged that she improperly indicated a Georgia apartment would be her primary residence on a 2021 mortgage application, but they insist it was an inadvertent error contradicted by other documentation. When Roberts characterized this as potentially “an inadvertent mistake,” Sauer countered that it was “the kind of inadvertent notation that people could be indicted for”—a striking claim given that Cook has faced no such charges.

The Larger War on the Fed

The larger context makes the stakes even clearer. The administration has dramatically escalated its attacks on the Federal Reserve in recent weeks, with the Justice Department opening a criminal investigation into Fed Chair Jerome Powell over cost overruns related to headquarters renovations—an inquiry that Powell himself suggested was politically motivated because the Fed sets interest rates “based on our best assessment of what will serve the public, rather than following the preferences of the president.”

Both Cook and Powell attended Wednesday’s arguments, with Cook seated prominently in the public gallery. In a statement afterward, she framed the case as being “about whether the Federal Reserve will set key interest rates guided by evidence and independent judgment or will succumb to political pressure.”

Congress established the Federal Reserve with 14-year terms for its governors precisely to insulate monetary policy from short-term political pressures. The ability to remove officials only “for cause” was meant to ensure that presidents couldn’t simply fire Fed members who refused to lower interest rates before an election or pursue policies designed to generate favorable headlines rather than sound economic outcomes.

A Pattern of Power Testing

The pattern connecting these two Wednesday stories is unmistakable: an administration testing the boundaries of presidential power, claiming vast authority while offering thin justifications, and facing pushback from institutions—whether allied governments or the judicial branch—designed to check executive overreach. In Davos, Trump could declare victory and move on. At the Supreme Court, the justices seemed poised to insist that some boundaries still matter, even for presidents who view them as inconvenient obstacles to their will.

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