The Great Deformation: The Corruption of Capitalism in America

In “Examining the Origin of Federal Reserve Independence” Evan Schnidman evaluates the political autonomy of the Fed prior to the 1951 Fed-Treasury Accord calling into question Fed independence and ability of the central bank to substantively intervene to mitigate economic crises before achieving policy independence from the Executive and Legislative branches. This work highlights the political steps that took place between 1946 and 1953 for the Fed to achieve policy autonomy and suggests that prior to 1953 the Fed may have only been able to increase or decrease the severity of an economic crisis on the margins. Schnidman’s “Centralization and Technocracy at the Federal Reserve” suggests that despite independence after 1953, it was not until the end of Bretton Woods and leaving the gold standard that the Fed was potentially capable of having a significant direct impact on the economy. This is precisely why the Nixon administration attempted to pressure the Fed in the 1970s and why the Fed needed to rebuild its reputation in the 1980s. Since the 1980s the Fed has maintained it reputation and independence by increasing transparency through communication. In “How the Fed Moves Markets” Schnidman evaluates these communications for credibility and market response only to find that although Fed personnel have increasingly noted that communication is a huge part of modern Fed policy, market actors may not be interpreting these communications correctly or efficiently.