Editor's note: Ge Lin is a CGTN economic commentator. The views expressed in this article are the author's own and do not necessarily reflect those of CGTN. 

Recently, the debate over the US Federal Reserve's independence has once again taken center stage. The institution, often portrayed as a neutral guardian of economic stability, has found itself under renewed political scrutiny, particularly in the fraught exchanges with the Trump administration. Statements and counterstatements have flowed, with the Fed projecting an image of responsibility and restraint while the White House seeks to exert its influence on monetary direction.

At first glance, this posture of independence appears reassuring: the Fed stands above politics, committed to the broader health of the economy. Yet beneath the surface lies a more complex reality, one that raises questions about what independence truly means and whom it ultimately serves.

Capital's influence — The "revolving door" and the web of relations

The US Fed often highlights its determination to preserve autonomy from Congress and the White House. Yet independence from elected officials does not mean independence from the Wall Street. In practice, the Fed's position is far more entangled: While it resists political interference, it remains deeply enmeshed in the interests and outlook of powerful capital groups whose fortunes rise and fall with its decisions.

This connection is not incidental but structural. The Fed system itself is a hybrid institution. Its 12 regional reserve banks are formally organized as private corporations, with boards that draw heavily from finance and industry. The very banks that dominate the Wall Street are shareholders of these reserve banks, embedding the voice of capital groups into the institutional DNA of the Fed. Even when governance reforms are touted as a way to dilute private influence, the architecture of the system ensures that these groups remain at the heart of monetary policymaking.

The "revolving door" only deepens this embeddedness. Senior Fed officials—chairs, governors, staff economists — frequently transition into prestigious roles at investment banks, hedge funds, or consulting firms. The flow also runs in reverse: Executives and academics, often supported by capital group funding, are tapped for leadership at the Fed. Over time, this circulation generates not just professional ties but shared assumptions about what counts as risk, what interventions are "necessary," and which institutions are too important to fail. The alignment is less about explicit lobbying than about a convergence of worldview, a tacit consensus that stabilizing markets means protecting the very actors who dominate them.

The 2008 financial crisis revealed the consequences of this alignment with striking clarity. As markets froze, the Fed mobilized trillions in emergency facilities, purchased toxic assets, and guaranteed liquidity. These actions preserved the financial system, but in doing so, disproportionately rescued the largest institutions — many of which had helped cause the collapse — while ordinary households faced foreclosures and layoffs. The crisis became a turning point not only for the economy but for perceptions of the Fed itself: An institution nominally independent of politics but in reality aligned with the survival of the dominant capital groups.

Thus, the Fed's independence is best understood as selective. Independence from government has come to mean autonomy to act on behalf of capital groups, leaving the broader public interest refracted through the priorities of systemic stability — a stability defined above all by the preservation of financial power.

Elections and capital — The Trump dilemma

The second challenge to the Fed's claim of independence comes from the arena of electoral politics. Officially insulated from partisan cycles, the central bank cannot escape the fact that its rate decisions affect mortgage payments, stock prices, and employment — all factors that shape political perception and influence the priorities of elected officials. In this sense, monetary policy is never neutral, no matter how technocratic its presentation.

In 2025, this tension is evident in the ongoing standoff between Donald Trump and the Fed. Trump, insisting that interest rates should be lowered, has repeatedly criticized the institution, threatened to replace board members, and hinted at investigations into its operations. These actions underscore how a president can attempt to steer monetary policy according to personal or political preferences. At the same time, the Fed's responses — its insistence on resisting these pressures — are not motivated by public welfare.

What the Fed ostensibly defends — its institutional reputation and the confidence of markets — is only a surface justification. In reality, it protects and reinforces the power of capital groups, preserving the dominance of financial elites at the apex of global economic influence. Decisions framed as neutral and technocratic are often aligned with the priorities of these groups, ensuring that the structures and flows of capital remain under their control.

This dynamic reveals a troubling symmetry. Trump presses the Fed to align with his own agenda, while the Fed resists to maintain the overarching control of capital elites. Both actors operate from self-interest, cloaked in different rhetoric — one invoking economic concern, the other technocratic neutrality — but the outcome is a negotiation between competing centers of power rather than a commitment to the broader public. Ordinary citizens, who cannot directly influence monetary policy, are left largely outside the bargaining table.

Distributional effects — The global spillovers

A third dimension often in discussions of Fed independence is its distributional impact, both domestically and globally. Central banking is not only about controlling inflation; it reshapes wealth and opportunity across social classes and nations. Policies that appear technocratic can serve as instruments through which financial elites consolidate and extract value.

Domestically, periods of low interest rates inflate asset prices, disproportionately enriching those who hold financial assets. Wealthy investors can realize gains as markets rise, while ordinary workers and borrowers see a peripheral benefit in wages or income. When rates are increased to counter inflation, the immediate burdens fall on borrowers and households: Higher debt service costs, slower investment, and reduced job creation. Meanwhile, elite capital holders, having already re-positioned their portfolios, can benefit from higher interest rates by earning returns on new claims. In this sense, monetary policy oscillates between phases to allow the financial elites to harvest gains, with the broader public bearing the side effects.

Internationally, the Fed's influence extends well beyond US borders. Policy shifts can trigger global capital movements, influencing currency valuations and asset prices in other countries. Emerging economies, in particular, are sensitive to these adjustments. The point is not to catalog specific crises but to emphasize that billions of people worldwide experience the consequences of US monetary decisions without any voice in the policymaking process.

Conclusion: What does "responsibility" mean?

The mythology of Fed independence often conflates autonomy with responsibility. By claiming insulation from politics, the institution implies that its actions are guided solely by expertise and the public good. Yet, as we have seen, the reality is more complicated. Independence, in this sense, is not an escape from politics but a relocation of politics into less visible arenas.

A central bank of the Fed's scale wields enormous power, and power without responsibility risks becoming self-serving. The true test of responsibility lies not in resisting a president's tweets but in demonstrating that its autonomy serves the broader public — domestically and globally. To reclaim legitimacy, the Fed should align independence with more transparency, accountability, and inclusiveness, recognizing that responsibility is not a constraint but the very condition of authority.