Image: watson/keystone
analysis
The US President is becoming increasingly involved in the economy and is striving for state capitalism.
Jan 12, 2026, 12:53 p.mJan 12, 2026, 12:53 p.m
The US Justice Department has opened criminal proceedings against Jerome Powell because the Federal Reserve President is said to have provided false information about the costs of renovating the Fed buildings in Washington. The proceedings are a clumsy excuse to punish Powell for not allowing himself to be pressured by the president to massively lower interest rates.
The procedure is also dangerous because it calls into question the independence of the central bank – and thus the foundation of the modern market economy. Powell immediately addressed the public via video message: “The issue is whether the Fed will continue to be able to determine the level of the key interest rate depending on the facts and economic conditions – or whether monetary policy will be determined in the future by political attempts at pressure and intimidation,” Powell clarifies.
Fed Chairman Jerome Powell.Image: keystone
Ultimately, the process is ridiculous, and not just because it is led by former Fox News presenter Jeanine Pirro, a Trump confidante. But also because the president himself once again didn’t want to know anything about it. “I wouldn’t even think of doing something like that,” Trump said hypocritically. “The only pressure he (Powell) should feel is the fact that interest rates are way too high.”
It is no coincidence that the president wants to destroy the most important bastion of the market economy. In doing so, he signals that the neoliberal policy initiated by Ronald Reagan in the 1980s has abdicated. Just as the Chinese embellish their state-capitalist economic system with the attribute “socialism with Chinese characteristics,” Trump is heading toward “capitalism with American characteristics.”
The model he has in mind is what economists call mercantilism, an economic policy that does not rely on the freest possible world trade, but primarily wants to protect the interests of its own country. At the same time, this also means a throwback to the 19th century. Daniel Yergin, today’s leading energy historian, states in the Financial Times:
«Suddenly the echoes of the 19th century and the period before it become louder again. The world is losing faith in globalization, open borders and relatively free trade. We have left the era in which there was fundamental trust in the market economy. Now the visible hand of the government is becoming more and more visible.”
Trump has already set a bad-smelling mark with his tariff policy. However, he doesn’t want to stop there. He is increasingly intervening directly in the economic process, be it by partially nationalizing the chip manufacturer Intel or forcing Nvidia, the superstar of the tech industry, to transfer part of its profits to the state.
Various SMEs, mainly in the military sector, have now also been nationalized. The president has put shackles on the rest. By presidential decree, he has just set upper limits for the salaries of the CEOs of the most important defense companies, prohibited the buyback of own shares and limited the amount of dividends to shareholders.
What he has in mind with Venezuela is something that was actually considered outdated: it is imperialism and gunboat diplomacy in its purest form. The fight against the drug mafia turns out to be a pretext to gain access to the country’s huge oil reserves. This is not only morally reprehensible, but also economically nonsensical.
Mural in Caracas: The infrastructure of the Venezuelan oil industry is dilapidated. Image: keystone
Although Venezuela has the largest oil reserves in the world, this oil is difficult to mine and process. For this to be economically viable, the price per barrel must be at least $80. It’s currently under $60 a barrel.
In order to bring the ailing infrastructure of the oil industry in Venezuela back into shape, investments worth hundreds of billions are necessary, which will take years and will only pay off after decades. The oil multinationals are only prepared to embark on this adventure if security and political stability are guaranteed.
Venezuela is still a long way from that, even after the fall of Nicolás Maduro. That’s why Darren Woods, CEO of the largest multinational ExxonMobil, waves it off and explains flatly: “If we look at the legal and commercial construction, then we come to the conclusion that it is currently impossible to invest in Venezuela.” Other CEOs of oil multinationals are less apodictic, but their enthusiasm remains manageable.
Darren Woods, CEO of ExxonMobile.Image: keystone
Trump is returning to the 19th century, and not just in terms of economic policy. His Donroe Doctrine also goes back to a speech from 1823 in which the then American President James Monroe warned Europeans against further colonial adventures in Latin America.
Today, the US President is striving to have undivided control over the West on the one hand and at the same time to build up competition to the Chinese “Belt and Road Initiative”. He wants to catch up with Beijing in the fight for raw materials, especially in Africa. “When it comes to minerals, the US government wants to gain a lot more muscle around the world,” notes Yergin. “Until now, efficiency has been crucial in supply chains. Today it’s much more about politics and security.”
In order to secure his “capitalism with American characteristics,” Trump is prepared to dig deep into the state treasury. In 2027 he wants to increase the defense budget by 50 percent to $1.5 trillion. Tariff revenue is intended to finance this additional $500 billion in additional spending. However, this calculation does not add up. Last year, customs revenue was less than $300 billion.
This also means that Trump is not prepared, as promised, to pay off the enormous mountain of debt in the USA, especially since he has also promised trillions in tax gifts to the super-rich with his “big and beautiful bill”. No wonder, then, that the US President is urgently dependent on cheap money, that is, low interest rates.