In the run-up to that nomination there was the nasty fight against Powell that Trump had launched to unseat him. For months, Trump had used foul language against Jerome Powell, unbefitting a high political functionary.

Trump called Powell a “numbskull,” a “moron” and a “jerk” for not lowering interest rates faster. And then, the administration launched a criminal investigation of Powell and the Fed. Powell’s only fault, he refused to bow down to the presidential authority to lower interest rate against the wisdom of professional economic analysis and the data on US economy.

Trump had asked Powell repeatedly to lower interest rate to give further boost to the US economy that Trump thought would go to add to his credit as deft economic manager. However, Powell had maintained he would act on the basis of data and figures and not presidential dictates. That had infuriated Trump.

But Trump’s efforts to unseat Powell and discredit him with even a criminal investigation has now united a band of eminent people — former Federal chairmen and other financial world experts. However, even in this fight against authoritarianism, the Americans have struck to their hubris.

Trump had sought to undermine the Federal Reserve chairman and finding no no other fault, Trump trumped up criminal charges against Powell on the count of his proposal for an extensive repair of Federal Reserve’s old office building in Washington, DC. The administration is holding a criminal inquiry against Powell on that allegation.

Trump nomination of a replacement, and more so, his starting a criminal case against Jerome Powell, who had served Fed for 19 long years, has brought a united front against the administration’s attempt to browbeat Powell.

In a letter of support for Powell and indictment of the criminal proceedings against him, people like Ben Bernanke, Janet Yellen and Alan Greenspan, all living Federal Reserve chair persons, as well as former treasury secretaries like Robert Rubin and Henry Paulson have written the probe against Powell “is an unprecedented attempt to use prosecutorial attacks to undermine that (Fed’s) independence.”

And then added, “This is how monetary policy is made in emerging markets with weak institutions, with highly negative consequences for inflation and the functioning of their economies more broadly,”.

They added with explicit pride: “It (political coercion) has no place in the United States whose greatest strength is the rule of law, which is at the foundation of our economic success.”

In fact, America today is far worse than emerging market economies. Trump has trampled all norms of a rules-based society, both in his homeland as well as abroad, as everybody is seeing it every single day.

As matter of fact, a confrontation between the central and the political authorities is not that rare. There are occasions when the central bankers are arm twisted to take decisions which might not be warranted by the fact of logic and data. Most frequently, the government wants the central bank to lower interest rates to suit political motives of incumbent authorities.

In at least one country, the finance minister of a country had almost come to blows with the central bank government over differences in their perceptions. In Turkey, the present president, Recep Erdogan, had asked his central bank governor to follow his prescription than what was warranted by economic logic and data.

Close home, finance minister Chidambaram had clashed with the then governor of Reserve Bank of India, D. Subbarao…. Over setting of interest rates.

Exasperated with the refusal of the RBI governor to cut interest rates, as Chidambaram thought would suit his strategy, the finance minister Chidambaram stated publicly: “If the central bank refuses to walk in step with the government of the day, then the government would take a lonely walk”.

Prompt came the central bank governor’s reply: “In some of his lonely walks, the finance minister would feel grateful that there was an independent RBI”. During Prime Minister Narendra Modi’s tenure, PMO wanted to pit on pressure on the then RBI Governor Raghuram Rajan, but Rajan defied. He left soon after. (IPA Service)