The federal funds rate is not some simple light switch. You cannot flip it down and flood the economy with prosperity, nor crank it up and instantly stamp out inflation. Yet, time and again, politicians sell it that way.

The latest example comes from the President’s aggressive campaign to slash interest rates by as much as three percentage points, to around 1%. The adminstration insists this will supercharge growth, lower mortgage costs, and save the government trillions in debt payments. But there’s a catch: no serious Fed official supports it.

The effort has become entangled with an even more troubling move. The White House is attempting to remove Federal Reserve Governor Dr. Cook, an accomplished economist whose scholarship spans international and innovation economics. Removing a sitting governor, would be unprecedented. It would also mark a dangerous intrusion of political bias into an institution deliberately insulated from politics.

To understand why this matters, we need to step back. What is inflation? What drives economic growth? And how does the federal funds rate, the obscure-sounding overnight lending rate between banks, actually connect the two?

The answers resist sound bites. That is precisely why treating the Fed’s rate as an on/off switch is both wrong and dangerous.

In early 2024, a friend of mine (let’s call her Jane) launched a skincare startup with a mission that was equal parts personal and global. Her serums blended botanical oils from Southeast Asia with rare extracts from Latin America, promising customers something fresh, clean, and effective.

By mid-year, boutique retailers had taken notice. Online orders were ticking upward. She was finally seeing the promise of her idea come to life until a spreadsheet of customs estimates landed in her inbox. A critical ingredient, once affordable, now carried a tariff surcharge in excess of 100%. Essentially, Jane’s next shipment would cost more in tariffs than the goods themselves.

When I walked into the TechEx AI & Big Data Expo in Santa Clara last week, I didn’t expect clarity. I expected noise: buzzwords ricocheting off LED screens, startups pitching productivity miracles, enterprise executives nodding sagely to sales demos. And all of that was definitely there. But what stayed with me wasn’t the flash. It was a quieter insight: most professionals aren’t worried that AI will replace them. They’re worried they’re already being measured against it.