As with individuals, so with institutions. Universities are being threatened with loss of research grants unless they take orders from the White House. Law firms are being threatened with loss of access unless they do pro-bono work on behalf of the administration. Corporations are being threatened with punitive tariffs unless they support administration policies — and, in the case of Intel, hand over part ownership of the company.

This newsletter usually focuses on economics, and I could go on at length about the ways rule by intimidation will hurt the economy. There’s a whole economics literature devoted to the costs when an economy is dominated by “rent-seeking” — when business success depends on political connections rather than producing things people want. I’ve been writing a series of primers on stagflation. One of the way things could go very badly wrong would be politicization of the Federal Reserve, with monetary policy dictated by Trump’s whims, and it would be even worse if Fed policy is driven by officials’ fear of what will happen if they don’t follow Trump’s orders.

It's also important to realize that the Fed does more than set interest rates. It’s also an important regulator of the financial system, a job that will be deeply compromised if Fed governors can be bullied by personal threats.

But there’s much more at stake here than the economy. What we’re witnessing is the authoritarian playbook in action. Tyrannies don’t always get their way by establishing a secret police force that arrests people at will — although we’re getting that too. Much of their power comes not from overt violence but from their ability to threaten people’s careers and livelihoods, up to and including trumped-up accusations of criminal behavior.

Which brings me, finally, to the accusations against Lisa Cook. According to Bill Pulte, the ultra-MAGA director of the Federal Housing Finance Agency, Cook applied for mortgages on two properties, claiming both as her primary residence. This isn’t allowed, because banks offer more favorable mortgage terms on your primary residence than on investment properties.

Borrowers do sometimes commit deliberate fraud, claiming multiple properties as their primary residence when they always intended to rent them out. For example, Ken Paxton, Texas’s Attorney General, claimed three houses as his primary residence, renting out two of them, and has also rented out at least two properties that he listed as vacation homes. Somehow, however, Pulte hasn’t highlighted his case, let alone threatened him with a 30-year prison sentence.

The truth is that even when clear mortgage fraud has taken place, it almost always leads to an out-of-court settlement, with fees paid to the lender, rather than a criminal case. In 2024, only 38 people in America were sentenced for mortgage fraud. No, I’m not missing some zeroes.

So did Cook say something false on her mortgage applications? Pulte says so, but I’d wait for verification. Also, false statements on mortgage applications are only a crime if they’re made knowingly, which is a high bar. And nothing at all about this story is relevant to Cook’s role at the Federal Reserve. If the administration thinks it has enough evidence to bring charges, it should bring charges, not demand that she quit her job.

The important thing to understand is that we are all Lisa Cook. You may imagine that your legal and financial history is so blameless that there’s no way MAGA can come after you. If you believe that, you’re living in a fantasy world. Criticize them or get in their way, and you will become a target.

Paul Krugman is a Nobel Prize-winning economist and former professor at MIT and Princeton who now teaches at the City University of New York's Graduate Center. From 2000 to 2024, he wrote a column for The New York Times. Please consider subscribing to his Substack.