Central bank independence abused & lost? The Fed is now in trouble? Other central banks alerted.
Article's purpose and background This short article sheds some lights how the present management of the Fed (the US central bank) has failed in the maintenance of so-called its independence, given its highly theoretical and arbitrary approach of the monetary policy framework. This failure has been revealed by the current conflict between the Fed and the President Donald Trump which questions the reality of the central bank independence. The central bank independence is nothing but a hypothesis built by monetary economists who fail to understand that central banks and underlying monetary systems have been built and operate on money created on fiscal operations and debt. Therefore, the background of the article is summarized as follows. The origin of the present paper currency-based monetary systems operating in the world is the private bank notes and lending business. However, in early 20th century, governments nationalized such monetary systems with the creation of fi...