Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Sarah Grillo/Axios

Donald Trump wants to politicize the Fed. One White House source explained his thinking to the WSJ:

"Mr. Trump has selected candidates like Messrs. [Stephen] Moore and [Herman] Cain in recent weeks because he believes they have the interests of his presidency in mind, the person said.
Describing Mr. Trump’s views, the person said, 'I want people who care about me and my presidency and economic growth…because that’s important to the health of the country and his re-election chances.'”

The big picture: Ken Rogoff, one of the most respected technocrats in the economics profession, warned this week that Trump is effectively pushing at an open door. Giving a lecture at the IMF this week under the auspices of the G30, Rogoff warned that the world might be facing "the beginning of the end of central bank independence." None of his four main reasons had anything to do with Trump.

  1. Central banks have become victims of their own success. Historically, the main argument for central banks to be independent has been that without independence, inflation will return. But inflation is below target in nearly every major economy, and long-term inflation expectations have never been lower. No one is worried about inflation anymore, and without that worry, there's little need to keep central banks independent.
  2. Central banks also exist to stabilize the broad economy by cutting rates when it looks like we might be heading into a recession. But they can't effectively do that today, since rates are already so close to zero.
  3. Central banks have often been needed in a crisis, partly because they're home to a lot of institutional knowledge and expertise. But with rates very close to zero, that knowledge and expertise can just as well reside in the executive branch. In the next crisis, fiscal policy, rather than monetary policy, is going to be the first line of defense.
  4. An increasing consensus that national indebtedness can and should be greatly expanded has taken a lot of macroeconomic work away from central bankers and given it instead to finance ministries.

Rogoff's proposed solution to all these problems is for central banks to embrace negative interest rates as a policy tool, with a system of subsidies that prevents regular depositors losing money in their checking accounts. "The countries that do it first will be glad they did it," he said. The central banks that don't? They risk losing their independence entirely.

The bottom line: Central bank independence is almost never enshrined in a country's constitution; it can be lost easily and needs to be fought for. Politicians now have the wind at their back if they want to take back control of their central banks. But, says Rogoff, "countries that do that, including the U.S., if it chooses to go down that path, will live to regret it."

Go deeper

Michigan board certifies Biden's win

Poll workers count absentee ballots in Detroit, Michigan on Nov. 4. Photo: Salwan Georges/The Washington Post via Getty Images

The Michigan Board of State Canvassers certified the state's election results on Monday, making President-elect Joe Biden's win there official and granting him the state's 16 electoral votes.

Why it matters: Republican Party leaders had unsuccessfully appealed to delay the official certification, amid the Trump campaign's failed legal challenges in key swing states.

Biden to nominate Janet Yellen as Treasury secretary

Photo: Photo by Alex Wong/Getty Images

President-elect Joe Biden is preparing to nominate former Fed Chair Janet Yellen as his Treasury Secretary, four people familiar with the matter tell Axios.

Why it matters: Yellen, 74, will bring instant economic celebrity to Biden’s team and, if confirmed, she will not only be the first female Treasury Secretary but also the first person to have held all three economic power positions in the federal government: the chair of Council of Economic Advisers, the chair of Federal Reserve and the Treasury Secretary.

2 hours ago - Podcasts

Bob Nelsen on AstraZeneca and his plan to revolutionize biotech

AstraZeneca and the University of Oxford on Monday reported promising efficacy data for their COVID-19 vaccine, which has less stringent storage requirements than the Pfizer and Moderna vaccines and may be distributed earlier in developing countries.

Axios Re:Cap digs into the state of vaccine and therapeutics manufacturing with Bob Nelsen, a successful biotech investor who on Monday launched Resilience, a giant new pharma production platform that he believes will prepare America for its next major health challenges.