Trump is threatening the independence of the Federal Reserve through a series of tweets, and the last time a U.S. president exerted such pressure on the Fed was in 1971, on the eve of the Great Inflation era in the United States.

In 1971, the U.S. economy was facing a "stagflation" dilemma, with an unemployment rate of 6.1%, inflation rate exceeding 5.8%, and continuous expansion of international payment deficits. To seek re-election, President Nixon exerted unprecedented pressure on Federal Reserve Chairman Burns.

White House records show that in 1971, Nixon's interactions with Burns significantly increased, especially in the third and fourth quarters, with 17 formal meetings per quarter, far exceeding the usual communication frequency.

This intervention manifested in policy operations: that year, the U.S. federal funds rate dropped from 5% at the beginning of the year to 3.5% by year-end, with M1 money supply growth reaching a post-World War II peak of 8.4%. In this year of Bretton Woods system collapse and global monetary system transformation, Burns' political compromise laid the groundwork for the subsequent "Great Inflation" until Paul Volcker's significant interest rate hikes in 1979.

Burns thus bore the historical condemnation. Today's Powell absolutely does not want to replay Burns' fate.

Burns' Compromise: Political Interests Overriding Price Stability

In 1970, Nixon personally nominated Arthur Burns as Federal Reserve Chairman. Burns was an economist from Columbia University and had been Nixon's economic advisor during the campaign, and the two were close. Nixon had high hopes for Burns - not as a monetary policy gatekeeper, but as a "collaborator" in political strategy.

At the time, Nixon faced enormous pressure to seek re-election in the 1972 election, and the U.S. economy had not yet fully recovered from the 1969 recession, with high unemployment. He urgently needed an economic growth wave, even if it was a false prosperity created by "flooding the market".

Thus, he continuously pressured Burns, hoping the Federal Reserve would lower interest rates and increase money supply to stimulate growth. White House internal recordings documented multiple conversations between Nixon and Burns.