The Federal Reserve’s era of independent, data-driven monetary policy is over. Driven by unsustainable public debt and political necessity, the Fed is now being steered explicitly by fiscal demands — cutting interest rates, accepting higher inflation, and using its balance sheet to support government financing. What looks like a political attack on the Fed is really the culmination of months of quiet institutional surrender to the mathematics of debt and the timeline of elections. The new regime is one of guided monetary policy, where inflation becomes a deliberate tool of fiscal stabilization, not an accident or a failure.
Major Points :
The Fed is no longer independent — It has been systematically overpowered by fiscal and political constraints, moving from inflation-targeting to debt sustainability as its primary goal.
Debt is now the binding constraint — With debt at extreme levels, the Fed is mathematically compelled to cut rates and tolerate inflation as a tool to manage public debt, not as a policy failure.
A clear, documented sequence led here — The author traces the shift step-by-step: from Powell’s delayed rate cuts in mid-2025, through internal Fed fractures, to overt fiscal dominance and political pressure ahead of the 2026 elections.
Policy is now “guided” — not by data, but by politics — Monetary decisions are driven by electoral timelines, deficit financing needs, and institutional maneuvering rather than traditional economic indicators.
Financial repression is the new regime — Low rates, yield curve control, and balance sheet expansion are becoming permanent tools to keep government borrowing costs down, even at the expense of higher inflation.
Legal and procedural moves are just formalities — Recent subpoenas and political pressures are acknowledgments that Fed independence had already been eroded behind the scenes by Treasury actions, Board politics, and fiscal arithmetic.
