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On Monday, Donald Trump announced that he had fired Lisa Cook, a member of the Federal Reserve’s board, accusing her of “deceitful and potentially criminal conduct in a financial manner.” The Trump administration alleges that the economist lied to mortgage lenders when purchasing two properties in 2021, naming both as her primary residence.

The allegations against Cook are unproven, and she has not been charged with a crime; even if the claims are true, it is not clear that they would justify her removal. But the president has spent years harassing and denigrating Fed officials, and appears to be trying to replace Cook in order to sway the course of monetary policy—and not subtly either. If he succeeds, in the short term, he risks letting inflation get out of control, driving up prices for American families. In the long term, he risks raising borrowing costs for individuals, businesses, and the government permanently.

The country has a system of checks and balances to prevent this kind of executive overreach and its perilous financial consequences. The Supreme Court and Congress could prevent the White House from canning vetted officials and replacing them with unqualified, politically motivated appointees. But so far, the judicial branch has given the administration wide latitude, and the Senate has rubber-stamped candidate after candidate. Trump tends to pay attention to the markets, pulling back when asset prices crash. Maybe they will send him a message this time too. But there’s not much hope for traders to defend democracy if judges and senators will not.

For years, Trump has harangued the country’s central bankers, calling Jerome Powell, whom Trump himself appointed as Fed chair, a “stupid person,” and arguing that the Fed’s governors should be “ashamed” for holding interest rates where they are. But most experts agree that borrowing costs are sitting at an appropriate-enough level: The economy is growing, and inflation is ticking up thanks to the White House’s trade war.

Virtually nobody except for Trump thinks the federal funds rate should be 1 percent—a rate suited for markets in panic and an economy in recession. More important, the White House is not supposed to have any direct control over monetary policy. The president can name appointees to the Fed and fire them “for cause.” That’s it. The fact that the Fed operates without political influence is one reason the American economy is as strong as it is.

Still, unhappy with borrowing costs and eager to replace Cook with someone willing to lower them, the administration seems to have gone searching for cause. Loyalist officials at the Federal Housing Finance Agency ostensibly pulled Cook’s lending documents, scoured them for potential errors and misrepresentations, and referred the matter to the Justice Department. They seem to have done the same to other Democrats, including California Senator Adam Schiff and Letitia James, the attorney general of New York.

The Trump administration charges that Cook might have committed fraud when she purchased a house in Michigan and a condo in Atlanta in quick succession four years ago, by designating both properties as her primary residence in lending documents. (Banks give preferred terms to borrowers seeking a mortgage for a home they will live in.) Most instances of occupancy fraud have to do with people purposefully lying to get sweetheart lending rates on vacation or rental properties, and many are uncovered only if the borrower goes into default. The crime is rarely prosecuted: The federal government sentenced just 58 people for mortgage fraud in the 2021 fiscal year.

The Trump administration appears to be engaging in what has come to be called lawfare. Adam Levitin, a scholar of financial regulation, describes the director of the Federal Housing Finance Agency’s actions as “terrifyingly inappropriate,” arguing that he is using his authority to “pursue a political enemies list,” which constitutes “an incredibly dangerous abuse of office.” Even if Cook did err on her mortgage documents, it is not clear that the charge would be serious enough to qualify her for removal. (The White House has never fired a Fed governor before, so there is no standard for misconduct.)

For now, Cook remains in her position. If she challenges her removal, as her lawyer has said she will, the case will likely end up in front of the Supreme Court. Congress designed the central bank to be independent of political influence. But the Roberts court has acted as a weak check on the executive branch, and interpreted the president’s powers broadly. If Cook loses her position, the Senate could refuse to confirm anyone Trump appoints to fill it. But given Republicans’ fealty to the White House, that seems unlikely. The legislative body could also refuse to finance the government’s continuing operations unless the Trump administration backs off. That seems even less likely.

What about the markets? In the past, investors have sold off American assets when Trump has made cavalier announcements, rebounding when he has backed off. The effect has been consistent enough to get a name: the TACO trade, for “Trump always chickens out.” (“I chicken out? I’ve never heard that,” the president told a reporter earlier this year. “To me, that’s the nastiest question.”) Yet this week, the market had a muted reaction to Trump’s announcement about removing Cook. Stocks were flat; bonds were flat. There is no slump that might force Trump to reconsider.

Why aren’t the markets moving? Perhaps because the course of interest-rate policy and the Fed’s independent status aren’t immediately changing. Trump has been threatening Fed officials since his first term. He might not be able to fire Cook. He might end up removing her only after a months-long legal battle. And if he does end up removing her, interest-rate decisions would still be made by committee. Borrowing costs would not suddenly drop down to 1 percent, as Trump wants.

Still, Trump’s actions will have an effect on the financial system and the real economy, in time. If the White House manages to install lackeys at the Fed and push interest rates lower, Washington risks creating bubbles and allowing inflation to get out of control, with American consumers footing the bill. And if investors lose confidence in the quality of Fed officials and the independence of the central bank, interest rates will rise, if imperceptibly, meaning every credit-card bill, mortgage payment, small-business and farm loan, and stimulus package will cost more than it would have otherwise. The economy will be more sluggish. Ultimately, foreign investors might elect to invest in Europe or Japan rather than the United States, eroding the dollar’s primacy.

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.