Darian Woods

As much as politicians might want to control interest rates, they can't. And that's thanks to an accord between the Treasury and the Federal Reserve in 1951. In the US, inflation was running high after World War II and during the Korean War. But the Fed had a problem. It was effectively controlled by the Treasury Department, which was led by the president's treasury secretary.

As much as politicians might want to control interest rates, they can't. And that's thanks to an accord between the Treasury and the Federal Reserve in 1951. In the US, inflation was running high after World War II and during the Korean War. But the Fed had a problem. It was effectively controlled by the Treasury Department, which was led by the president's treasury secretary.

And that got in the way of the Fed doing its main job, influencing the money supply, keeping inflation down, a.k.a. monetary policy.

And that got in the way of the Fed doing its main job, influencing the money supply, keeping inflation down, a.k.a. monetary policy.

And that got in the way of the Fed doing its main job, influencing the money supply, keeping inflation down, a.k.a. monetary policy.

Lyndon Johnson also twisted the screws on his Fed chair at the time. And through the 1970s and 80s, a consensus started to emerge among economists. The job of central banks to bring down inflation was a lot easier without politicians getting in the way, trying to pressure the lever down. And in return for more autonomy, central banks could be more transparent about their decision-making.

Lyndon Johnson also twisted the screws on his Fed chair at the time. And through the 1970s and 80s, a consensus started to emerge among economists. The job of central banks to bring down inflation was a lot easier without politicians getting in the way, trying to pressure the lever down. And in return for more autonomy, central banks could be more transparent about their decision-making.

Lyndon Johnson also twisted the screws on his Fed chair at the time. And through the 1970s and 80s, a consensus started to emerge among economists. The job of central banks to bring down inflation was a lot easier without politicians getting in the way, trying to pressure the lever down. And in return for more autonomy, central banks could be more transparent about their decision-making.

Carolina Garriga is a political science professor at the University of Essex in the UK. Carolina and her co-author's research finds that countries with more independent central banks have lower levels of inflation. But like all good social scientists, she's quick to note that correlation doesn't always equal causation.

Carolina Garriga is a political science professor at the University of Essex in the UK. Carolina and her co-author's research finds that countries with more independent central banks have lower levels of inflation. But like all good social scientists, she's quick to note that correlation doesn't always equal causation.

Carolina Garriga is a political science professor at the University of Essex in the UK. Carolina and her co-author's research finds that countries with more independent central banks have lower levels of inflation. But like all good social scientists, she's quick to note that correlation doesn't always equal causation.

A very strong correlation that is definitely pointing in a direction and winking.

A very strong correlation that is definitely pointing in a direction and winking.

A very strong correlation that is definitely pointing in a direction and winking.

Carol Abinder at UT Austin says, in the US, the consensus grew that central bank independence was a good thing. And this led to a norm. Presidents were letting the central banks do their thing. Until the 2016 election, when Trump started publicly and loudly criticizing the Federal Reserve. that continued into his presidency.

Carol Abinder at UT Austin says, in the US, the consensus grew that central bank independence was a good thing. And this led to a norm. Presidents were letting the central banks do their thing. Until the 2016 election, when Trump started publicly and loudly criticizing the Federal Reserve. that continued into his presidency.

Carol Abinder at UT Austin says, in the US, the consensus grew that central bank independence was a good thing. And this led to a norm. Presidents were letting the central banks do their thing. Until the 2016 election, when Trump started publicly and loudly criticizing the Federal Reserve. that continued into his presidency.

He appointed Fed Chair Jerome Powell, but started making these public swipes against him from 2018. This was a major shift in the president's relationship with the Fed.

He appointed Fed Chair Jerome Powell, but started making these public swipes against him from 2018. This was a major shift in the president's relationship with the Fed.

He appointed Fed Chair Jerome Powell, but started making these public swipes against him from 2018. This was a major shift in the president's relationship with the Fed.