'Line of fire': Nobel Prize-winning economist drops bombshell worry about Trump probe

President Donald Trump is not only trying to remove Lisa Cook as a U.S. Federal Reserve governor — he also wants her investigated for mortgage fraud allegations, although she hasn't been charged with anything.

Liberal economist and former New York Times columnist Paul Krugman discussed Trump's campaign against Cook during a Saturday, August 30 appearance on MSNBC. Krugman warned that a range of Trump economic policies — from steep new tariffs to efforts to destroy the Fed's independence — risk getting the United States into a major economic crisis. And he pointed to the mortgage fraud claims about Cook as a glaring example of Trump's willingness to use the U.S. Department of Justice (DOJ) as a weapon against political opponents regardless of a case's merit.

Trump, Krugman warned, is risking an "inflation crisis" and a "financial crisis" with his "completely insane" policies.

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The economist told host Ali Velshi, "We have Donald Trump saying, at a time when inflation is rising, that he wants the Federal Reserve to cut interest rates by 300 basis points — three full percentage points, which is completely insane. We have him insisting that there is no inflation, which is false…. He gets a bad jobs report, he fires the head of the Bureau of Labor Statistics….. We already know that we have somebody who shouldn't be allowed within a mile of setting monetary policy…. So this is not a hypothetical disaster. This is something where we know that things will go very, very badly if he gets away with this."

Krugman noted that friends are wondering if he could be targeted for some type of bogus investigation by the Trump Administration given how critical of the president he has been.

"You know, once you have the principle that we can rummage through your records and try to find something that can be considered dirt, anybody could be in the line of fire," Krugman told Velshi. "I mean, I've been getting a bunch of e-mails from friends saying: I bet the FHA is rummaging through your mortgage records right now. Me personally, which seems quite likely. And, you know, I think it was (Josef) Stalin's chief of secret police who said, 'Show me the man, and I'll find you the crime.' And that's kind of the America that we're becoming."

Attorney Lauren Libby examined the Trump Administration's use of mortgage fraud allegations as a weapon in an article published by Slate on August 30.

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Libby observed, "It's a new twist on a long, ugly tradition. Trump's use of mortgage fraud is relatively novel, but he's far from the first president to use the federal government's vast trove of financial data as a political cudgel. Just this Monday, Trump fired Federal Reserve Board Governor Lisa Cook after accusing her of falsifying records on past mortgage applications. In recent weeks, Sen. Adam Schiff and New York Attorney General Letitia James have faced the same allegation. Mortgage fraud, for the uninitiated, typically means intentionally misstating something on a loan application, such as income, assets, or even whether you intend to live in the house."

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Watch the full MSNBC video with Paul Krugman below or at this link.