While the world, and stock markets, went crazy on the modest interest rate cut by the US Federal Reserve Board, most people, including the experts, missed the significance of the decision. It showed why America is great. This is because, like this time, time and again, traditions, legacies and institutions survive the onslaught of powerful personalities, who wish to twist them for their goals and pleasure. This time, despite Trump’s public anger the Board’s chief, Jerome Powell, unsuccessful sacking of a Fed governor, and successful appointment of a new loyal governor, the central bank did not buckle under, or budge from its stance. It reduced the interest rate by 25 basis points, and not 50, as Trump wanted.
Ideologies do matter, but not to the extent to distort realities to fulfill desires. Powell was appointed by Trump during his first term. The central banker was supported by a Democratic successor, Joe Biden. Then Trump hated him during his second term. But as the anchor piece on this page points out, the president does not have the power to sack Powell. He took his anger out on Lisa Cook, a governor, and got his man, Stephen Miran, in, when the Senate cleared the latter’s name in a record time, and by a thin margin. The idea was that with Cook cooked, and Miran hitting the ground running, the composition of the Fed Board would change in Trump’s favour.
It did not, as Powell held his ground. Other Board members, who were supposed to support Miran, backtracked. In fact, at the recent meeting, the Trump loyalist was the only dissenter, as he wanted a higher rate cut. The Fed showed that despite ideologies and beliefs, decisions at the highest level, which impact the citizens and economy, require an honest assessment of the facts. Wishes cannot become the policy-makers’ horses. Personal likes and dislikes need to be subsumed to a collective consensus. In the end, traditions and established institutions trumped Trump, Trumpism (as his ideology is called), and Trumpian (his MAGA supporters). The country won, not an individual, even if he was the most powerful man on Earth.
Over the past eight months, other American institutions showed the same spine and spirit. Like two courts overturned Cook’s sacking, several courts declared Trump’s tariffs to be illegal, and not mandated by the executive powers. More interestingly, in some of orders, the Republican-appointed judges voted against the US president, and Democrat-backed one, favoured him, which indicated that legalese and justice were at play, rather than personal choices and ideologies. Even the Supreme Court, which is stacked with a majority of the judged anointed by the Republican party, has gone against Trump during his second tenure. But the acid test lies in the future, when the appeals against the lower courts on issues like Cook and tariffs land at the footsteps of the Supreme Court.
According to the United Nations, the rule of law is a principle of governance in which all persons, institutions and entities, public and private, including the State itself, are accountable. The World Justice Project dubs it as a durable system of laws, institutions, norms and community development that delivers four universal principles, which include accountability and just law. The idea and ideal is that the laws that stem from a nation’s Constitution make the legislative and executive, despite their overwhelming powers, accountable to the laws of the land. Even when the legislative changes the laws, or decide new ones, and the executive imposes its own rules, the judiciary and other institutions can deem them unfair, if they supersede the Constitution, are unjust or not in public interest.
This explains why during the spat between Trump and the Supreme Court’s Chief Justice, the latter disputed the president’s claim that there were Obama judges, Republican judges, Biden judges, Democrat judges, and Trump judges. The Chief Justice claimed that the judges may be appointed by certain regimes, with their personal ideologies in mind. However, when a judge enters a court, a federal one or the apex one, he or she uses the laws as the guide. Feelings, emotions and beliefs go out the window. What the judges are left with is a bare and naked examination of the laws, and whether they support a specific judgment or not. The system does not work always, but in great and long-lasting nations, the institutions, including the judiciary, deliver in the end. Or else, nations shrivel, empires die.
Personalities matter. Leaders and politicians influence destinies. But this happens for short periods, not more than a few decades. In the modern era, think of Napoleon, Churchill and Hitler. Nations that endure, or empires that survive and thrive, over centuries require robust institutions, which do not waver or tremble due to the whims of the leaders or rulers. Especially during the times, when the personalities assume dictatorial roles, and try to bend the laws, Constitution and institutions to their will. In such times of crises and tragedies, the institutions that stand firm matter. They ensure that nations do not crumble. Yes, for short periods, individuals do manage to impose themselves. But the institutions bounce back. Rather, they twist a little, and come back to their original positions.
The Fed’s decision on rate cut highlights that institutions matter more than personalities. Powell will be gone by early 2026, and the president can appoint his loyal candidate. Trump too will be gone. The Constitution sets a maximum two terms for a president. He can claim that this implies two consecutive terms. Even in the latter case, he will be done as the head of the State in the next seven years or so. What will remain is the Fed, and the judiciary, and other institutions like the Labour Department (the president defiled it too, along with several other institutions). They are the ones, which will carry the nation forward. They will form the main narrative, even as presidents like Trump become mere footnotes. Although some historians revel in individuals, and define nations by personalities, it is the institutions, which protect rule of law that triumph.