The SCOTUS rulings of 29 June 2026 on independent agencies reveal that the American central bank has, in practice, always been an appendage of executive power
On 29 June 2026, the Supreme Court of the United States issued two companion rulings. In Trump v. Slaughter, the Court held – by a vote of 6 to 3 – that laws protecting the heads of “independent” agencies from presidential removal are unconstitutional, as they violate the executive’s supervisory authority. In Trump v. Cook, issued the same day by a vote of 5 to 4, the Court rejected the administration’s request to immediately remove governor Lisa Cook from the Federal Reserve Board, finding that the president had not followed the procedural safeguards required by statute – while explicitly leaving open the underlying constitutional question of the Fed’s independence. As I will argue, that open window does nothing to shield the institution from the broader logic the rulings introduce.
The starting point is historical. The Federal Reserve was established in 1913 under the Federal Reserve Act, passed by Congress and signed by President Wilson on 23 December 1913. From the outset its structure was ambiguous: technically a mixed public-private entity, with twelve regional district banks held by private capital and a Board of Governors appointed by the president and confirmed by the Senate. Operational independence was presented as a technocratic safeguard against political pressure. Yet the mechanism of presidential appointment and Senate confirmation places the Fed exactly where every other federal agency sits: within the perimeter of executive power, connected by an umbilical cord that no statutory language has ever fully severed.
Ludwig von Mises, in his The Theory of Money and Credit (1912), had already identified the structural problem before the Fed even existed: a central bank is an instrument of credit expansion that transfers wealth through inflation, and its management is always political because the consequences of every decision it takes are political. Formal autonomy is a frame; the content remains determined by the incentives of the fiscal sovereign the bank serves. This is a mechanical description of the relationship between fiat money and the state.
The Fed’s own history confirms that reading. Franklin Roosevelt suspended the Gold Standard by executive action in 1933 – through the presidential proclamation of 20 April 1933 and Executive Order 6102 of 5 April 1933, which banned private gold ownership – setting in motion a realignment of monetary policy toward deficit financing that was completed by the Gold Reserve Act of 1934. Richard Nixon closed dollar-gold convertibility for foreign governments in 1971, announcing the measure in a televised address on 15 August without any prior deliberation by the Federal Open Market Committee as a collegial body. As I argued in the piece on Greenspan and the great deception, the independence of the American central bank survived in the public narrative precisely because it was useful to both branches of power: to presidents, who preferred to delegate unpopular decisions; and to Congress, which preferred not to be accountable for monetary expansion.
The 29 June rulings cut into that arrangement of convenience. The logic of Slaughter is constitutionally consistent with the doctrine of the unitary executive: if the president is responsible for executing federal laws, agencies operating within that framework cannot enjoy immunity from removal. The Court’s reasoning dismantles the fiction of the technocratic agency as a zone beyond political oversight. The carve-out constructed in Cook for the Fed is, as a contributor to the Volokh Conspiracy at Reason notes, of uncertain reach: the Court carved out procedural space but explicitly left the underlying constitutional question open, and future litigation is already baked in.
This is the point that mainstream discussion tends to miss. The debate focuses on who controls the Fed – the sitting president, Congress, financial markets – as though the problem were one of command structure. The sovereign debt trap I analysed in the piece on Japan (the sovereign debt trap: Japan explains everything) operates in exactly the same way in Washington: when public debt reaches levels that make a prolonged rate rise unsustainable, the central bank ceases to be a neutral arbiter of monetary policy and becomes a manager of sovereign debt sustainability. At that point, “independent from whom?” becomes a rhetorical question.
The state’s monetary monopoly, embodied by the central bank and the regime of legal tender, structurally creates the very dependency that formal independence claims to correct. Friedrich Hayek, in Denationalisation of Money (1976), argued that competition among private currencies was the only mechanism capable of disciplining the issuer: without any exit option for money holders, every institutional guarantee remains a revocable promise. Changing the chair of the Fed, or redistributing control between the executive and Congress, leaves the structure of the problem intact.
The June 2026 rulings are a textbook case of how institutions reveal their true nature under pressure. For decades the Fed operated under the double protection of a statute limiting the removal of its leadership and a political convention respecting its operational autonomy. The rulings dismantle the first protection – at least on the procedural question addressed in Cook, while the constitutional one remains open – and history has long since eroded the second. What remains is a federal agency with extraordinary powers over money, appointed by the executive, embedded in the state apparatus, without autonomous constitutional footing – and, above all, without competition.
