The Building on Constitution Avenue

There is, in this country, a building on Constitution Avenue that has come to mean what we will not say aloud. Its renovation cost a billion dollars more than promised — asbestos and sinkholes, we were told, the price of fixing what no one had thought to repair — and last week, on a Friday, the Department of Justice quietly closed its investigation into the man who signed the contracts. By Sunday, Senator Thom Tillis of North Carolina had withdrawn his objection to Kevin Warsh. By Wednesday, the Senate Banking Committee will vote. By the middle of May, Jerome Powell will be a private citizen, and the most consequential institution in American economic life will have a new steward — installed through a sequence that began with a federal investigation and ended only when the investigation was no longer needed.

I do not write this to mourn Mr. Powell. He was, for years, the patient steward of an inflation he insisted was transitory — a word that became, in time, a kind of doctrine, and then a kind of joke. Under his hand the central bank purchased trillions of dollars in bonds and called it accommodation, and the dollar in your pocket is worth what it is worth today because of what was done in that building on his watch. His departure is no tragedy.

What troubles me is the procedure. Because if the price of removing a Federal Reserve chairman is a criminal probe that can be opened on Monday and closed on Friday, then the man who comes next has been told — and the men who come after him have been told — that the building they govern is no longer their building. It belongs to whoever holds the leverage. And the leverage was held, in this case, by an executive branch that wanted a different chairman and got one.

Now Mr. Warsh, by every account, is a more sober monetarist than the man he replaces. He has spent a decade warning about debasement, about asset bubbles, about the moral hazard of a central bank that prints first and explains later. There is, in him, the possibility of a return to something resembling sound money. I would welcome it. Conservatives have argued for two generations that the dollar must mean something, that savings must be honored, that the man who works fifty years and puts his money in the bank should not find that the bank has been quietly emptied by people he never elected.

But sound money cannot be installed by intimidation. The integrity of a currency rests, in the end, on the integrity of the institutions that govern it — and an institution governed by leverage is no institution at all. It is a department of the executive, dressed in the costume of independence.

So the dollar this week is steadier than it ought to be. The market believes Mr. Warsh will be confirmed; the market believes the new chairman will be friendlier to the President; the market does not yet believe what it should — that we have just been shown, in plain daylight, how the next chairman, and the chairman after that, will be chosen. Not by argument. Not by record. By the file that sits on someone's desk, waiting.

The building on Constitution Avenue still stands. The question is whose building it is.