The Last Honest Number

There was a time, not so long ago, when Americans believed that a number meant a thing — that a price was a fact about the world and not the polished opinion of a committee, that a dollar earned in the morning was a dollar still in the evening, that the savings of a working life would meet a working man at the other end of it without having been hollowed out by the hand of an economist. That belief — and let us call it what it was, a belief, half-religion and half-republican faith — has been quietly evacuated, room by room, until what remains is only the building: the marble columns, the sober press conferences, the carefully chosen verbs.

I have been thinking, this past week, about the spectacle of the Federal Reserve and what it has now become. On the twenty-ninth of April, four members of the Federal Open Market Committee dissented from the chairman's decision to hold rates steady — Stephen Miran, who wanted a quarter-point cut to please a President who has demanded that rates be brought to one percent or lower, and Neel Kashkari, Lorie Logan, and Beth Hammack, who refused to lend their names to the language of easing. It was the first such fracture since 1992. And Jerome Powell, whose term as chairman ends in seven days — replaced, the Senate Banking Committee has voted, by Kevin Warsh — has announced that he will remain on the Board of Governors until the criminal investigation into a building renovation, which he has called a "pretext," is concluded. He has, in his own careful phrase, been left no choice.

We are told this is a crisis of independence. I do not believe in the crisis, exactly, because I do not believe the independence was ever quite what we were told it was. A committee of twelve, vested with the power to set the price of money in a nation of three hundred forty million, has always been a political body — it could not be otherwise — and the polite fiction of its insulation has only ever been the courtesy a great empire pays to its own embarrassments. What we are watching is not the death of independence. It is the moment the costume slips.

But do not, for that reason, mistake my meaning. The demand of President Donald Trump for one-percent rates is not the cure for a rigged regime; it is the same regime in louder clothing. To debase the dollar by political decree is to debase it more swiftly, more openly, more cruelly to the saver and to the small business owner who cannot move their wealth into hard assets at the speed of a hedge fund. The Federal Reserve has long been picking winners; the question now is only whether it will pick them quietly or by megaphone.

The harder, older answer is the one no one in this argument wishes to give. It is that the price of money should not be set by Stephen Miran or Kevin Warsh or any other appointed seer in a marble room — it should be discovered, painfully and honestly, by lenders and borrowers in a market the state has at last agreed to leave alone. Until we are willing to say that out loud, the inflation that is coming is not a misfortune but a verdict. And the children inheriting our debt will read it.