Incentive conflict between the President and the Fed serves a purpose.

WSJ:

On Monday Mr. Trump demanded again that [the Federal Reserve] make “pre-emptive” interest rate cuts to avoid a slowdown.

The Federal Reserve's ("Fed") performance metrics are inflation and unemployment. Presumably, these incentives make the Fed more cautious than the President about cutting rates, as doing so may worsen inflation. The threat to put The Fed under the control of a President who has different incentives would dramatically change their role by changing their incentives. The resulting "...meltdown in stocks, bonds and the dollar, a trifecta of declining confidence," suggests that the incentive conflict between the President and the Fed serves a useful purpose. BOTTOM LINE: In Chapter one, we talked about how to diagnose incentive conflict when it creates problems within an organization. However, organizations may choose incentive conflicts to serve a useful purpose. For another example, many workers and bosses dislike their HR and Legal departments as they seem to pursue different goals than firm profit maximization. However, the resulting incentive conflict can serve a useful purpose by constraining potentially illegal or unethical behavior. EXTRA CREDIT: Think of an incentive conflict within your organization that serves a purpose.