by James Rickards
Daily Reckoning
When you say “Independence Day” to most Americans, they think of the Fourth of July. That’s not true for the Federal Reserve. At the Fed, “Independence Day” is today, the fourth of March.
Unfortunately, this may be the Fed’s last “Independence Day” for a long time!
Why the fourth of March? On March 4, 1951, the Federal Reserve reached an agreement with the U.S. Treasury that restored policy independence to the Fed after nine years of domination by the Treasury.
Beginning in April 1942, shortly after the U.S. entered World War II, the Fed agreed to cap interest rates on Treasury bonds to help finance the war effort. The cap meant that the Fed gave up its control of interest rate policy.