Throughout the presidential campaign Donald Trump repeatedly criticised the US Federal Reserve, accusing it of creating a "big, fat, ugly bubble" through its monetary decisions, among many other things. Trump’s consistent attacks have created worries for the Fed’s independence. These worries intensified after the election, as president-elect Trump will be in a position to make big changes at the Federal Reserve over the next few years. There are two existing vacancies on the seven-member board of governors of the Fed, and the terms of both the current chairwoman, Janet Yellen, and vice chairman, Stanley Fischer, expire in 2018. But there is more to good central bank governance than independence. Why do we care about central bank independence? Among orthodox economists, there is a long-standing belief that central bank independence is a sacred precept for any market economy. Independence gives the central bank some freedom from the politicians who might otherwise print money for poli...
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