In the spring of 2022, Americans checking out at grocery stores and gas pumps across the nation faced a stark reality: Their dollars were rapidly losing value. As inflation surged above 8 percent—a level not seen since the volatile days of the 1980s—all eyes turned to the Federal Reserve, the institution tasked with keeping prices stable, underscoring the importance of possibly rethinking the Fed. But the Fed, still running its aggressive COVID-era stimulus program as late as March of that year despite clear red flags, was caught flat-footed in what would become one of its most challenging crises of confidence in modern history.

The causes behind the inflationary surge were complex, largely attributable to snarled global supply chains, rapid shifts in consumer preferences, and elevated government spending. Yet for millions of Americans watching their savings erode, one question loomed large, demonstrating how people are rethinking the Fed: How did the nation’s central bank miss the warning signs?

The Fed’s problems were only beginning. In the following few years, the Fed’s vice chair for supervision, Michael Barr, campaigned tirelessly to rally support in Washington for a stronger regulatory framework for big banks called “Basel III endgame.” The clock ran out, and Barr stepped down from his role early this year, although he remains a Fed governor.

There have been personnel issues, too. Several of Barr’s colleagues have been involved in trading scandals, raising ethical questions about the trading activity of Fed officials. That has further fueled the anger of progressives, who were already primed to criticize the Fed for enriching the wealthy and exacerbating inequality and financialization.

Meanwhile, President Donald Trump is yet again questioning Fed independence. In his first term, Trump threatened to fire Fed Chair Jay Powell when he didn’t like Powell’s decisions. He resurrected those threats in his most recent campaign, claiming in October that the President should have a say in setting monetary policy. “I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether the interest rates should go up or down,” he said. The newly confirmed chair of his Council of Economic Advisers has proposed giving the President the power to remove board members at will and placing more power in the hands of Reserve Banks. If the Fed under Powell holds rates steady in 2025 or raises them higher, Trump may get serious about making good on his threats.

Read the full article about rethinking the Fed by Chris Hughes at Democracy Journal.