Happy Money Independence Day!
A very Happy Independence Day to the United States Federal Reserve!
Let’s celebrate three major — yet often unpublicized — achievements that have kept our economy in its great shape all these years. But first, how on Earth a branch of government led a coup and successfully defected from a bunch of political nonsense happening at the time.
On March 4, 1951, President LBJ (a Texan) got into an actual fist fight with the head of the Fed over interest rates. The President wanted to keep rates low to look like he was crushing it in his first months on the job. The Fed needed to tighten money supply to protect Americans from increasing inflation.
What happened next?
Well, it didn’t end WWF style, but the Fed won. A one sentence decree declaring the Federal Reserve’s independence. Long-term thinking won out over short-term politics.
Why does this matter?
Think' Venezuela’s inflation (projected to hit ten million percent by next year). Now compare this to our country. A million Trump tweets can (and do) get blasted at the Fed and it still does whatever the heck it wants.
Don’t you wish more branches of our government were so lucky? To be fair, Congress can defect as well by 2/3 majority vote on pretty much anything, but that’s a different project I’m working through.
Why should we commemorate today?
Reasonableness won. There was once a time in our history where reasonableness won out over the personal motivations of politicians, even over brute force. And that is awesome.
Long-term thinking prevails. A branch of our government hires experts and allows them to do their best from a long-term approach. This sounds pretty reasonable, but most of our electeds are running election cycle to election cycle, and making decisions on short-term benefits alone can be a dangerous approach.
Popularity failed. This whole Fed independence win was unpopular at the time because LBJ did had launched a political smear campaign, claiming that the Fed was failing America. Sound familiar? Well, despite popular opinions believing whatever they were being told, and getting all upset about it, the Fed still won. America won.
We made it through that dip. We can make it through many more. And our president cannot control the supply of our money. Yay.
*Today also marks the beginning of March Madness, whereby I have taken a creative hiatus and am dedicating more time to the things I love. Included among those, writing my daily random thoughts for you. If you like a post, share it with your friends.