For many Kentuckians, the American dream feels harder to reach than ever. Homeownership, once a reasonable goal for young families in Bowling Green or Lexington, now feels like a fantasy. Farmers in Western Kentucky see the cost of new equipment loans edging out of reach. Rising grocery prices leave families in Louisville and Lancaster alike wondering how much further their paychecks can stretch.
Kentuckians may not see the inner maneuverings of Washington every day, but when political leaders bend economic levers to reward allies or punish critics, it is our wallets, our homes and our farms that will feel the impact first.
Friedrich Hayek, the Nobel Prize-winning economist whose “The Road to Serfdom” remains a libertarian benchmark, warned nearly 80 years ago about exactly this danger: When political leaders turn economic life into a tool of power, ordinary citizens pay the price. The point of his book was not simply about socialism, as it is often miscast, but about the concentration of power where calculating and capricious rulers bend economic institutions to their own ends.
That is what we are seeing today. President Donald Trump’s attempted firing of Federal Reserve Governor Lisa Cook has little to do with mortgage paperwork and everything to do with Trump’s ongoing campaign to weaponize the federal government against anyone deemed insufficiently loyal.
In this case, it happens to be the first Black woman to serve in one of the most powerful economic institutions in the world.
Should Kentuckians care? Absolutely. Because when the independence of the Federal Reserve is compromised, it’s not Wall Street bankers who suffer first; the first to suffer are the families at the local Kroger, the borrowers at the local credit union and the farmers depending on affordable credit to plant next year’s crop.
The authoritarian playbook
This is not an isolated event. Sen. Adam Schiff, Attorney General Letitia James, Federal Reserve Chair Jerome Powell and national security adviser John Bolton have all faced Trump’s ire for the same reason: they dared to dissent. Nobel laureate Paul Krugman recently summed up the lesson of these attacks succinctly: “If you get in our way, we will ruin your lives.”
Hayek, who witnessed authoritarian regimes consolidate power in pre-WWII Europe before immigrating to England and then the United States, would instantly recognize the pattern. Authoritarians don’t necessarily just jail their opponents in remote prisons using secret police; they make professional life, business opportunity and financial security contingent on political loyalty. They turn independent institutions like the Federal Reserve, the Federal Trade Commission and the Federal Communications Commission into instruments of fear. And fear, once entrenched, corrodes faith in the institutional independence of these vital institutions that help sustain both democracy and prosperity.
Why the Federal Reserve matters to Kentucky
The Federal Reserve is not some distant, abstract body. It sets interest rates that shape mortgage costs in Pikeville, farm loans in Murray and small business credit in Louisa. It regulates banks throughout our commonwealth and works to keep the financial system sound. If its independence collapses under political pressure, Kentuckians will feel the impact long before anyone on Wall Street.
Trump has already said he wants interest rates kept low to bolster the stock market. If Fed governors fear that defying him could lead to public smears, firings or investigations, they won’t act on sound judgment — they’ll act out of fear. That turns monetary policy from a tool of stability into a tool of political convenience.
Look no further than Turkey under Erdoğan or Venezuela under Maduro today for examples of economic chaos following politicians who strong-armed central banks. Imagine banks judged not by their solvency but by their willingness to please the White House. Imagine monetary policy dictated not by data but by fear of retribution. That’s not free enterprise. That is Hayek’s warning realized: a road to serfdom paved with crony capitalism and authoritarian intimidation.
Freedom through fear is no freedom
We should be clear about what’s at stake. This is not just about Lisa Cook, the Federal Reserve or any other independent institutions on the president’s “nasty list:” It’s about whether ordinary Kentuckians can rely on a financial system that operates fairly and independently, or whether mortgages, loans and credit become rewards or punishments in the hands of political leaders.
If political power can reach into your mortgage application, your student loans, your tax filings or your professional record to punish you for speaking your mind, then freedom becomes a front, nothing but a weak façade to mask authoritarianism. This is how authoritarianism works — not always with gulags and barbed wire, but with threats, ruined reputations and the constant fear of being next.
Hayek ended “The Road to Serfdom” with a plea: Resist the temptation to let leaders amass unchecked power over economic life.
That plea is ours to hear again. The independence of the Federal Reserve may seem like an abstract battle in Washington, but it directly affects the mortgages Kentuckians pay, the farm loans that keep fields planted and the small-business credit that keeps Main Street stores across Kentucky open. Protecting that independence is nothing less than protecting the economic freedom of every family and entrepreneur in the commonwealth.
If Trump succeeds in strongly bending the Fed to his will, Kentuckians should expect not prosperity but instability with an economy ruled by favoritism, fear, and the hollow promise that what serves the loyal and the powerful will somehow trickle down to the rest of us.
This commentary was originally published by the Kentucky Lantern and is republished here with permission.