Annie Lowrey: “The markets are not going to end the White House’s assault on this vaunted American institution. The courts, Congress, and voters are going to need to do it.”

“Federal Reserve governor Lisa Cook sued President Trump on Thursday, seeking to block his move to fire her from the central bank,” the Wall Street Journal reports.

“The lawsuit filed in Washington, D.C., federal district court alleges Trump violated the law by attempting to remove Cook from her post without a valid reason.”

“The case sets up an unprecedented legal battle testing Trump’s power over the independent central bank’s seven-member board.”

Politico: Fired Fed board member sues Trump to try to keep her job.

“Donald Trump did exactly what he said he’d do,” CNN reports.

“There was no weekslong debate in the West Wing, no careful coordination with congressional allies, no intensive staff presentations detailing arcane legal authorities. There was just a social media post from the president suggesting a Federal Reserve governor should resign and then, a few days later, another one announcing she’d been fired.”

“In interviews with more than a dozen Trump administration officials across Washington and Republican lawmakers back home in the final days of their August recess, they all shared a similar refrain in the hours after Trump moved to terminate a Federal Reserve governor for the first time in history: They had no idea it was coming.”

Paul Krugman: “Nations in which central banks lose their independence sooner or later suffer high inflation, especially when they are taken over by autocrats who buy into crackpot economic doctrines. And Trump, who has been demanding large rate cuts because, he claims, the economy is running hot — which almost every economist would say is a reason to raise rates, not cut them — certainly fits that pattern. Yet although there have been small tremors in the bond and currency markets, there have been no significant upheavals in financial markets that reflect the severity of the situation we are in. Throughout this episode, the stock market has remained fairly flat and bond yields haven’t spiked.”

“Why not? Do financial markets doubt that Trump will get his way? Or do they reject mainstream economics and the clear examples of countries like Turkey and Argentina?”

“Neither. My read of economic and financial history is that market pricing almost never takes into account the possibility of huge, disruptive events, even when the strong possibility of such events should be obvious. The usual pattern, instead, is one of market complacency until the last possible moment. That is, markets act as if everything is normal until it’s blindingly obvious that it isn’t.”