Within the years earlier than 1951, the Federal Reserve took orders from the Treasury, and by extension, from the President. The President would request that rates of interest stay low, and the Fed would oblige.
However this grew to become an issue. Low rates of interest are nice for individuals to borrow cash to purchase stuff, and for companies to develop and rent individuals. However low rates of interest additionally drive up inflation. And an enormous a part of the Federal Reserve’s job is to maintain inflation low.
So the Fed determined it wanted to reclaim its energy. And on March 4, 1951 it lastly did. The Fed was formally free. Form of. On at this time’s present, how the Fed gained its independence after which fought to defend it.