Central Banks Under Siege: The Quiet Coup Behind Rising Prices

 

Politicians are grabbing central banks by the throat, risking runaway inflation, crushed savings, and public rage—because power hates discipline, and voters always pay when money stops telling the truth.

I have seen this movie before, and it never ends clean. Smoke in the air, politicians shouting from the cheap seats, central bankers pretending they can still hear their own thoughts. We like to tell ourselves this is just about the Federal Reserve, about Jerome Powell and Donald Trump circling each other like tired boxers in the late rounds. That story is comforting because it’s small. It’s familiar. It fits neatly inside America’s borders. But this isn’t just the Fed. This is politics leaning over the shoulder of central banks everywhere, tapping the glass, asking the same dangerous question: how much inflation can the public really stomach before it snaps?

I keep going back to Napoleon Bonaparte in 1806, pacing around the newborn Bank of France, muttering that it should belong to the government, but not too much. Even emperors knew money was fire. Hold it too tight and you burn. Let it roam free and it burns the city down. That balance, fragile and boring, became the core idea of central-bank independence after World War II, when governments were drunk on debt and power. In America, the Treasury-Fed Accord of 1951 cut the cord. The Fed stopped being the government’s errand boy, stopped capping borrowing costs just to make politicians sleep better at night. In Germany, the Bundesbank was given teeth because no one there had forgotten the Weimar Republic, when wheelbarrows of cash couldn’t buy a loaf of bread and democracy collapsed under the weight of worthless money. Those memories were written in ash.

Although I grew up in Nigeria, I did read about and know the triumph story. Independence worked. Inflation fell. The so-called great moderation arrived like a long, calm stretch of highway. From the 1980s onward, prices stopped exploding, recessions became shorter, and economists congratulated themselves with charts and papers. Even emerging markets cleaned up their act. In the 1990s, inflation in poorer countries routinely ran six points hotter than in rich ones. By the 2020s, that gap shrank to barely more than a rounding error. The message was simple and seductive: keep politicians away from the printing press and everyone sleeps better.

Now the bills are due, and nobody wants to pay.

Donald Trump’s pressure campaign against the Fed isn’t subtle. It’s loud, personal, and theatrical. When Powell revealed that the Justice Department had served subpoenas over a renovation dispute, it felt less like oversight and more like a warning shot. The Fed isn’t just another agency. It’s the nerve center of global finance. When its chair starts talking about criminal exposure, the signal travels fast. And yet this isn’t some American oddity. It’s part of a global drift where governments, buried under debt, are suddenly allergic to high interest rates and impatient with independence.

Japan is a case study in polite menace. For years, politicians begged the Bank of Japan to do more, to kill deflation by any means necessary. Under Abe Shinzo, the bank obliged, flooding the system with money. It made sense then. Prices were falling, wages were stuck, and nobody feared inflation. Today, that script has flipped. Inflation forced the central bank to raise rates to levels not seen in three decades, while Japan’s debt sits at roughly 139 percent of GDP. Every rate hike tightens the noose around the government’s budget. The math doesn’t care about speeches. When politicians complain now, markets listen, because the stakes are real.

Britain’s argument is uglier. Years of bond buying left the Bank of England with a swollen balance sheet, and now higher rates mean the government pays more interest through the central bank itself. Populists on both the right and the left see an opportunity. Stop paying interest on reserves, they say. Turn the central bank into a cash cow. It sounds clever until you realize it’s just another tax, another way to raid the system without calling it what it is. Once that door opens, independence becomes a punchline.

The euro zone pretends it’s immune. Treaties protect the European Central Bank like a medieval wall. But walls crack when pressure builds. Debt across the bloc is rising, driven by defense spending, aging populations, and voters who revolt at the word “austerity.” France, with debt north of one hundred and fifteen percent of GDP and deficits running hot, isn’t some fringe case. It’s the core. When politicians there talk openly about forcing a discussion with the ECB, it’s not bluster. It’s leverage. In a standoff between a massive economy and a central bank trying to hold the line, nobody walks away unscathed.

In the developing world, the mask is already off. Indonesia has openly leaned on its central bank to help fund government priorities, buying bonds and sweetening deals in the name of burden sharing. Turkey and Nigeria have gone further, turning legal pressure into a weapon against central bankers who refused to play along. Ghana flirted with the same fire. These aren’t accidents. They’re previews.

What rattles me most is how familiar this is starting to feel in America. Powell’s defiance, his public pushback, bought time, not safety. His term ends soon, and everyone knows the next chair will feel the shadow. Even the possibility that a president could remove a Fed governor sends a message that doesn’t need words. Independence survives on norms, and norms die quietly.

You’d expect bond markets to panic. They haven’t. Ten-year Treasury yields barely flinched. Some read this as confidence. I read it as cynicism. Markets know the real politics of inflation. Inflation is electoral poison. Jimmy Carter learned that in 1980 when soaring prices helped end his presidency. Kamala Harris felt it in 2024, when voters still angry about grocery bills and rent punished the incumbent party. Inflation hits everyone, every day, and voters don’t need a degree to feel it. A weaker currency, pricier imports, shrinking paychecks. That pain disciplines politicians, at least for a while.

But trusting that restraint is a gamble with loaded dice. Politicians are wired for the next election, not the next decade. When debt is high and growth is fragile, the temptation to lean on central banks is overwhelming. It’s the oldest trick in the book: promise stability tomorrow by cheating a little today. When the house is on fire, even the lockbox looks like kindling.

So I come back to the ugly question. Can the public stomach higher inflation? History says no. People riot over bread, not balance sheets. That’s precisely why independent central banks exist, why they were built to be boring, stubborn, and hated when necessary. They’ve done the job before, through oil shocks, financial crises, and pandemics. Letting politics creep back in doesn’t make inflation more humane. It makes it more permanent.

We’re standing at a familiar cliff, pretending it’s new. The safer bet isn’t trusting politicians to behave. It never was. The safer bet is keeping the fire where it belongs, even when the heat gets uncomfortable.

 

 

This article is part of a larger idea I explore in “Boom, Bust, Repeat: How Financial Disasters ShapedModern Finance”, one of my short books on Google Play. Read it here on Google Play: Boom,Bust, Repeat.