Commentary
“A million workers working for nothing. You better give them what they really own,” sang John Lennon in “Power To the People.” With a level of inflation not seen in 40 years ravaging workers’ wages today, they resent being robbed of the money they earn. That’s why in a free country that understands and appreciates the free market, we insulate the central bank from political passions by making it independent and enforcing that independence, so it can fight inflation hard when the need arises.
But legal independence can never shield a government’s central bankers imperviously. As Milton Friedman noted in 1962 in perhaps the most influential essay promoting central bank independence, “Even when central banks have supposedly been fully independent, they have exercised their independence only so long as there has been no real conflict between them and the rest of the government.”…