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The crisis of central banking is structural - David Oks

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Tyler Cowen wrote a good post yesterday about central bank independence in the United States. As I write, the president is in the midst of a campaign to curtail the independence of the Federal Reserve, another step in our gradual transformation into a dysfunctional state along Latin American lines. It’s worth thinking about just how damaging this will be for the long-term health of the United States. But here I want to focus on an important point that Tyler makes, which is that the current period of tension between the government and the central bank has structural roots beyond the president’s whims. As Tyler writes, “the Fed is most ‘independent’ when the stakes are low and most people are happy with (more or less) two percent inflation. That is also when the independence matters least.” Indeed, with the benefit of hindsight, it is clear that between the early 1980s and the late 2010s central bankers enjoyed a golden age of independence and prestige that was rooted in fundamentally fa

Arthur Burns, Federal Reserve chairman for most of the 1970s Tyler Cowen wrote a good post yesterday about central bank independence in the United States. I want to focus on an important point that Tyler makes, which is that the current period of tension between the federal government and the central bank has structural roots beyond the president’s whims. As Tyler writes, “the Fed is most ‘independent’ when the stakes are low and most people are happy with (more or less) two percent inflation. That is also when the independence matters least.” Indeed, with the benefit of hindsight, it is…

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