Tyler Schipper, associate professor of economics at the University of St. Thomas, was quoted in a Minnesota Star Tribune column examining Federal Reserve Chair Jerome Powell’s response to political pressure and a Justice Department investigation. Schipper warned that political interference in central banking often leads to inflation, instability and capital flight, pointing to historical examples where weakened institutional independence eroded economic stability and widened inequality.
From the article:
With characteristic caution, Federal Reserve Chair Jerome Powell long ignored the ignoble insults from a petulant President Donald Trump, who viciously criticized the Fed chair professionally and personally for not immediately heeding his demand to lower interest rates. So it was all the more powerful when Powell effectively defended his individual and institutional honor in a video statement reacting to a criminal investigation over his congressional testimony about the renovation of the Fed’s headquarters. ...
History is replete with ruinous political interference in central-bank matters. Most infamously in interwar Germany, whose hyperinflation gave rise to radicalization, as well as Turkey, Argentina and Venezuela in the postwar era, said Art Rolnick, former director of research at the Minneapolis Fed. ...
That includes economists like Tyler Schipper, an associate professor at the University of St. Thomas, who concurs with Rolnick and Stern on the need for Fed independence. In countries where a central bank answers to politicians, Schipper said, the result is often “economic failure, inflation, instability and capital flight.” The U.S., he said, “has kind of been this shining light in terms of the importance of the Federal Reserve in keeping stability.”
