{"id":11883,"date":"2026-01-13T09:33:24","date_gmt":"2026-01-13T09:33:24","guid":{"rendered":"https:\/\/microvibenews.com\/?p=11883"},"modified":"2026-01-13T09:33:24","modified_gmt":"2026-01-13T09:33:24","slug":"the-importance-of-federal-reserve-independence","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=11883","title":{"rendered":"The importance of Federal Reserve independence"},"content":{"rendered":"<p><\/p>\n<div>\n<p><iframe loading=\"lazy\" src=\"https:\/\/iframe.iono.fm\/e\/1634385?layout=modern\" width=\"100%\" height=\"170\" frameborder=\"0\"><\/iframe><\/p>\n<p>You can also listen to this podcast on iono.fm\u00a0here.<\/p>\n<p><strong>SIMON BROWN: <\/strong>I\u2019m chatting with Harry Scherzer, CEO of Future Forex. Harry, appreciate the time. Over the weekend the US Justice Department announced that they are investigating Jerome Powell. He put a statement out \u2013 a fairly punchy one \u2013 early our time Monday morning. The crux here really is around central bank independence. I was going to say there\u2019s not much precedent for this, but actually there is. Nixon put pressure on his central banker in the 1970s. We\u2019ve had Erdogan in Turkey do it. We know how it ends. Not well.<\/p>\n<p><strong>HARRY SHERZER: <\/strong>Absolutely, Simon. Thanks for having me on. This is a really fascinating headline, because you have a situation where one of the constitutional reasons that America works is because of independence between government and the central bank. This was infringed upon in Nixon\u2019s days.<\/p>\n<blockquote>\n<p>Trump is potentially doing something similar and that creates a huge amount of distrust within the market as a whole.<\/p>\n<\/blockquote>\n<p>Read:<br \/>Fed served with DOJ subpoenas, Powell vows to stand firm<br \/>Dollar drops most in nearly three weeks as Fed gets subpoenas<br \/>Gold hits record high with focus on Fed independence and Iran<\/p>\n<p><strong>HARRY SHERZER: <\/strong>If the market can\u2019t trust that monetary policy is set without the president\u2019s interference, then it\u2019s very difficult to invest in an economy where there\u2019s intermingling between different departments \u2013 and ultimately a conflict of interest.<\/p>\n<p><strong>SIMON BROWN: <\/strong>Central banks\u2019 independence is so that they can make those hard decisions, which oftentimes politicians \u2013 and truthfully the consumer on the street \u2013 might not like. But it is the central bank\u2019s ability to make it, kind of regardless. And it\u2019s the setup, the way they stagger terms, the duration of terms and the Federal Reserve to give that independence.<\/p>\n<p><strong>HARRY SHERZER: <\/strong>Yes. If we take a step back, Simon, what it really comes down to is that a president will want results now. They want the current results to be incredible. In order to get that, they would want interest rates to be cut because then borrowing becomes cheaper, businesses grow quicker. Everything looks great on the surface.<\/p>\n<blockquote>\n<p>The problem is that years in the future we might find that inflation spirals out of control as a result, and naturally \u2013 call it five, four or five years later \u2013 the next presidency is stuck with a complete mess.<\/p>\n<\/blockquote>\n<p>For that reason, the central bank governors have to be looking at long-term projections rather than short-term projections, whereas presidents tend more to look at the short-term valuation of the country \u2013 and effectively that is what\u2019s going to shape how they look as a president. That\u2019s the reason underpinning the necessity for independence. It has always been that way until, I guess, recently \u2013 apart from Nixon back in the day. So it really is a scary thought that there might be interference here.<\/p>\n<p>Listen\/read:<br \/>Local banks offering great value into 2026<br \/>The clarity of hindsight<br \/>Trump\u2019s attack on the Fed fires up gold bulls betting on crisis<\/p>\n<p><strong>SIMON BROWN: <\/strong>You make a great point there because it\u2019s also going to play out slowly. We\u2019ve seen some of the risk pricing already happening. Gold, the US10-year, the equity market. But this is not a January and February; it\u2019s not even necessarily a 2026 implication. This happens down the line in years to come.<\/p>\n<p><strong>HARRY SHERZER: <\/strong>Exactly. In fact, in the short term what we might see is the market delighted, or rather the people delighted with lower interest rates. Everyone\u2019s super happy, everyone says \u2018Yes Trump, well done\u2019.<\/p>\n<p>The problem is that you\u2019re really doing the opposite of investing in your future. You\u2019re investing in \u2018now\u2019 at the expense of the future, which is exactly what the central bank is supposed <em>not <\/em>to do. It is supposed to be looking into the future and saying, \u2018I\u2019m sorry, you can\u2019t have XYZ because in the future we\u2019ll be in trouble if we give that\u2019.<\/p>\n<p>And so that can\u2019t be undermined as we saw, as you mentioned, in Turkey with Erdogan. He effectively did manipulate the central bank, and it looked good \u2013 temporarily. But then it looked absolutely awful when they hit 85% inflation and effectively the poor people of Turkey just became poorer.<\/p>\n<p>Read:<br \/>Turkey\u2019s economy is paying the price for years of policy mistakes<br \/>Fed, Erdogan explain 90% of the Turkish lira\u2019s meltdown [Nov 2021]<\/p>\n<p><strong>SIMON BROWN: <\/strong>Yes. And to your point it absolutely went out of control. Is the big hit here going to potentially be the sort of long-dated US debt? I\u2019m thinking of the 10-year, because you buy a 10-year debt and you\u2019re not sure about what inflation is going to be. You want a better yield for protection.<\/p>\n<p><strong>HARRY SHERZER: <\/strong>Absolutely. The price of US Treasury bonds is going to have to go up. This is back to inflation going up if you can\u2019t trust the underlying economy, if you can\u2019t trust, who you\u2019re learning to trust.<\/p>\n<p>So, it might be something which is basically shooting yourself in the foot in the long run and it really is a scary thought because I\u2019ll say \u2013 just to just to sort of temper expectations here \u2013 that the market hasn\u2019t reacted particularly badly yet and the reason is that this is the very start of something happening.<\/p>\n<blockquote>\n<p>I think the market kind of expects that, much like with a lot of what happens with Trump, basically just nothing will come of it and it\u2019s a lot of talk about nothing. But the fact that this is even a topic of discussion is scary.<\/p>\n<\/blockquote>\n<p>We would hope that this would never be a topic of discussion.<\/p>\n<p><strong>SIMON BROWN: <\/strong>Yes<strong>. <\/strong>This also is not something you and I should be chatting about on a random Tuesday morning. The one response has been gold trading up to all-time highs because of course gold is your classic safe haven put-it-under-your-bed type of investment.<\/p>\n<p><strong>HARRY SHERZER: <\/strong>Yes. You\u2019d think that being in South Africa we\u2019d be able to say: \u2018Fantastic. If America does poorly, that reflects well on the rand\/dollar.\u2019<\/p>\n<blockquote>\n<p>But unfortunately, when America coughs, South Africa gets a cold. So really what ends up happening is we will feel it as well.<\/p>\n<\/blockquote>\n<p>And if you want to be safe, if you really want to be safe from all of this and you are scared about this, gold is the place to go because that\u2019s the safe-haven asset. That\u2019s why it\u2019s trading at all-time highs.<\/p>\n<p><strong>SIMON BROWN: <\/strong>Absolutely. The story for gold has been strong for the last many years. This just adds another tick to it.<\/p>\n<p>We\u2019ll leave it there. Harry Scherzer, CEO of Future Forex, I appreciate the insights.<\/p>\n<p>Read:<br \/>Gold steadies after surging on worries over Fed independence<br \/>Kganyago roots for Sarb independence [Feb 2024]<br \/>Kganyago: The Sarb also \u2018came under attack\u2019 from state capture<\/p>\n<\/p><\/div>\n<p><script data-cfasync=\"false\">\n            !function(f,b,e,v,n,t,s)\n            {if(f.fbq)return;n=f.fbq=function(){n.callMethod?\n                n.callMethod.apply(n,arguments):n.queue.push(arguments)};\n                if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\n                n.queue=[];t=b.createElement(e);t.async=!0;\n                t.src=v;s=b.getElementsByTagName(e)[0];\n                s.parentNode.insertBefore(t,s)}(window, document,'script',\n                'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n            fbq('init', '779812924991616');\n            fbq('track', 'PageView');\n        <\/script>#importance #Federal #Reserve #independence<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You can also listen to this po&hellip; <\/p>\n","protected":false},"author":1,"featured_media":11884,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[2241,8594,8367,4536],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/11883"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11883"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/11883\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/11884"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}