The Fed Fights Back
When your central bank chair starts releasing evening video addresses, you know things have gotten serious. Economist Justin Wolfers isn't mincing words about what's happening between the Federal Reserve and the White House: this is war.
In a series of sharp statements on Monday, Wolfers characterized Fed Chair Jerome Powell's recent public messaging as something entirely new in central banking—a direct counter-offensive against political pressure. The weapon of choice? An evening video that Wolfers says represents an unprecedented move.
"Don't doubt that Jay Powell is going to war," Wolfers stated. "I've never seen a central bank release an evening video so directly taking on a head of state. In this case, the medium is the message: Powell is taking his case to the people."
It's a fascinating tactical shift. Central bankers typically prefer the language of careful monetary policy statements and academic prose. When they start going direct to the public with video addresses, something fundamental has changed.
Criminalizing Independence
Wolfers saved his harshest criticism for what he sees as an attempt to weaponize the Justice Department against Powell. He's rebranded it the "Department of Recriminations" and warned that caving to this pressure would transform the Federal Reserve into the "Federal Subserve."
"Attempting to criminalize the actions of an independent public servant… for the sin of acting independently… is an outrage," Wolfers wrote.
The economist laid out exactly what's at stake here, ticking through the damage: "It's bad economics, bad politics, bad for the rule of law, bad for the public sector, bad for American credibility and bad for Americans."
That's a lot of "bads." Wolfers is arguing this isn't just about monetary policy disagreements or typical Washington turf battles. It's about whether threatening criminal action against officials for doing their jobs independently becomes an acceptable political tool.