The dangers of politicising ‘independent’ central banks

Financial Times/Patrick Jenkins/12-19-2021

“Today, close to 90 percent of the world’s central banks are classed as independent. But, as finance ministers wrestle with record debt burdens, the Covid-19 crisis and fast-rising inflation, worries are growing that central banks will become increasingly instrumentalised by governments.”

USAGOLD note 1: Last week, when Senator Joe Manchin stuck a fork in Democrat spending plans citing inflation concerns, a progressive Congresswoman was quoted as saying “The Build Better Act combats inflation and invests in what we need for a strong, stable, globally competitive economy.” The president himself went public in full inflation denial the same day, blaming the recent dip in the stock market on Manchin’s decision to vote against his $1.75 trillion spending program.

USAGOLD note 2: So, to what degree does pressure from the political sector affect central bank policy? Need we worry about too close a connection between the White House and the Fed? Jenkins quotes a former central banker now fund manager as saying, “The idea of independent central banks these days is a fiction.”