So the Supreme Court has blocked President Trump’s attempt to fire a Federal Reserve governor. British investors, we are told, are cheering. They should be. But let us not mistake this for a mere procedural victory. What we are witnessing is a clash between two competing visions of governance: the rule of law versus the whim of a Caesar. And for once, the law appears to be winning.
The details are almost banal. A president tries to sack a central banker. The courts say no. Yet the implications are anything but banal. The Federal Reserve, that peculiar American invention, has long been a bulwark against the sort of economic populism that has undone empires from Rome to the Third Reich. Its independence is not a technocratic nicety; it is the very sinew of modern finance. Without it, currencies become playthings of politicians, inflation becomes a tool of state, and savings evaporate like morning dew.
Now, I am no fan of the inflationist policies the Fed has pursued in recent years. Printing money to buy bonds is a vice disguised as a virtue. But a central bank that can be fired at a president’s pleasure is not a central bank at all. It is a Treasury puppet. And that is a recipe for the sort of monetary chaos that has historically preceded dictatorship. Think Weimar. Think Zimbabwe. Think of any society where the printing press replaced the ballot box.
The British investors cheering this ruling understand something that many of their American counterparts have forgotten: stability is not a commodity. It is a fragile construct, built on norms, laws, and the uncomfortable fact that someone must sometimes say no to power. The Supreme Court has said no. It may be a temporary no. It may be a partial no. But for now, it is a no that holds.
What is truly alarming, however, is that such a ruling was even necessary. That a president of the United States felt emboldened to fire a Fed governor tells us more about the decay of American institutions than a hundred think-tank reports. We are living in what the historian Edward Gibbon might have called the age of the ‘Antonines’ were it not for the distinct whiff of decline. The constitutional norms that once seemed as solid as granite are now as mutable as clay.
And yet, here is the paradox: the very ruling that British investors celebrate is a symptom of the disease it seeks to cure. The fact that the judiciary must intervene to protect the central bank is proof that the executive has already crossed a Rubicon. In a healthy republic, such a firing would be unthinkable. In a decadent one, it is merely a court case.
What of the Bank of England, you ask? Do not be smug. The same populist currents that threaten the Fed are lapping at our own shores. Our own politicians have whispered about ‘monetary financing’ and ‘people’s QE’. The difference is that our institutions have not yet been tested as severely. But the test will come. It always does.
For now, the Supreme Court has thrown a lifeline to the dollar system. British investors are right to cheer. But let them not forget: the tide of history is against them. Empires fall from within. And when the central bank becomes a political football, the game is already lost.
Arthur Penhaligon
