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Just Another Administrative Agency: Preserving Central Bank Discretion Without Illusions -- Notes On The Crisis
https://www.crisesnotes.com/just-another-administrative-agency-preserving-central-bank-discretion-without-illusions/?ref=notes-on-the-crises-newsletter(Introductory information on the background of these pieces and how to contact Nathan Tankus.)
. . .
Being a writer is difficult. One of the most embarrassing things about being a writer is that sometimes you put in 90% of the work on something and then don’t get around to do that last 10%. Today’s piece is a product of that. I wrote it four years ago- in late May/June 2021- for a “roundtable” for the website “Just Money” which was started by Harvard law professor Christine Desan as a place to write about money as a legal subject. By the time I got comments back from law professors Lev Menand and Dan Rohde, I didn’t feel up to going through and processing their detailed feedback. With this kind of writing, the longer you wait the harder it feels to go back to something and make it publishable.
Given recent events and the targeting of Federal Reserve chairman Jay Powell and the Federal Reserve by the Trump administration, I felt it was finally time to come back and publish this piece. Most of my writing- indeed what my book Picking Losers was going to be devoted to- was piercing the ideology of central bank independence so that the Federal Reserve would be treated like an independent administrative agency like any other. I was very aware of the threat of the presidential dominance of the executive branch and, unlike many critics of central banking independence, think administrative agency independence is very important. I just didn’t think the Federal Reserve deserved unique deference to its expert opinion over and above, say, the CDC.
What this means is that I’m now in the strange position of defending the Federal Reserve’s administrative agency independence now that it is under threat from the second Trump administration. I will have more to say about current events in the future. What I will say for now is that the threat the Federal Reserve faces was apparent as soon as the Trump administration made it clear it was going to challenge a 90 year old supreme court ruling laying out that independent agency leadership can only be fired for “good cause” reasons. I discussed this issue at far greater length all the way back in February with a piece entitled “Why Should We Care If the Trump Administration, and Musk’s DOGE, are Acting Unconstitutionally?” It is another sign of the weakness in the stock market’s role as a “conventional wisdom processor” that the threat to the Federal Reserve, which was revealed in the “raids” on a number of independent administrative agencies, has only become apparent to stock market participants now.
In any case, this piece should provide useful context for readers to get their bearings on this subject. I’ve edited it lightly based on their feedback but didn’t change anything substantive. I should also mention that I briefly lay out some proposals for changing monetary policy. Those proposals are discussed at far greater length in my full length monetary policy report that was published in January 2022.
. . .
Being a writer is difficult. One of the most embarrassing things about being a writer is that sometimes you put in 90% of the work on something and then don’t get around to do that last 10%. Today’s piece is a product of that. I wrote it four years ago- in late May/June 2021- for a “roundtable” for the website “Just Money” which was started by Harvard law professor Christine Desan as a place to write about money as a legal subject. By the time I got comments back from law professors Lev Menand and Dan Rohde, I didn’t feel up to going through and processing their detailed feedback. With this kind of writing, the longer you wait the harder it feels to go back to something and make it publishable.
Given recent events and the targeting of Federal Reserve chairman Jay Powell and the Federal Reserve by the Trump administration, I felt it was finally time to come back and publish this piece. Most of my writing- indeed what my book Picking Losers was going to be devoted to- was piercing the ideology of central bank independence so that the Federal Reserve would be treated like an independent administrative agency like any other. I was very aware of the threat of the presidential dominance of the executive branch and, unlike many critics of central banking independence, think administrative agency independence is very important. I just didn’t think the Federal Reserve deserved unique deference to its expert opinion over and above, say, the CDC.
What this means is that I’m now in the strange position of defending the Federal Reserve’s administrative agency independence now that it is under threat from the second Trump administration. I will have more to say about current events in the future. What I will say for now is that the threat the Federal Reserve faces was apparent as soon as the Trump administration made it clear it was going to challenge a 90 year old supreme court ruling laying out that independent agency leadership can only be fired for “good cause” reasons. I discussed this issue at far greater length all the way back in February with a piece entitled “Why Should We Care If the Trump Administration, and Musk’s DOGE, are Acting Unconstitutionally?” It is another sign of the weakness in the stock market’s role as a “conventional wisdom processor” that the threat to the Federal Reserve, which was revealed in the “raids” on a number of independent administrative agencies, has only become apparent to stock market participants now.
In any case, this piece should provide useful context for readers to get their bearings on this subject. I’ve edited it lightly based on their feedback but didn’t change anything substantive. I should also mention that I briefly lay out some proposals for changing monetary policy. Those proposals are discussed at far greater length in my full length monetary policy report that was published in January 2022.
. . .