Zaid

This was huge because it formally gave the Fed its dual mandate, which we talked about before, which is maximum employment and price stability.

This law also required the Fed to report regularly to Congress on how it was meeting those goals.

On top of that, it made structural changes.

For the first time, the Fed chair and vice chair had to be confirmed by the Senate and their terms were limited to four years.

So this created more accountability at the Fed while still preserving the independents.

So then in 1979, Paul Volcker became the Fed chair and Volcker did what needed to be done.

He jacked up interest rates to nearly 20% to break the back of inflation.

Now look, this move was very unpopular.

It led to economic pain, massive job losses, and a recession.

But it worked.

By the mid-1980s, inflation was under control.

And that is a great example of why an independent Fed is so important.

Because they have to make difficult choices that a lot of times might not be politically popular.

So after Paul Volcker tamed inflation in the 1980s, the US entered what economists called the Great Moderation, which was 20 years of low and stable inflation.

And during this period, the Fed also became way more transparent.

For most of its history, the Federal Reserve was notoriously secretive, but that started to change in the 1990s.

In 1994, the Fed started issuing public statements after every meeting, explaining their decisions.

Then in 2007, the Fed began releasing quarterly economic projections so everyone can see where Fed officials thought the economy was headed.

And then in 2011 was the big one.

The Fed chair started holding regular press conferences after meetings to explain the Fed's thinking.