In the spring of 2022, Americans checking out at grocery stores and gas pumps across the nation faced a stark reality: Their dollars were rapidly losing value. As inflation surged above 8 percent—a level not seen since the volatile days of the 1980s—all eyes turned to the Federal Reserve, the institution tasked with keeping prices stable. But the Fed, still running its aggressive COVID-era stimulus program as late as March of that year despite clear red flags, was caught flat-footed in what would become one of its most challenging crises of confidence in modern history.

The causes behind the inflationary surge were complex, largely attributable to snarled global supply chains, rapid shifts in consumer preferences, and elevated government spending. Yet for millions of Americans watching their savings erode, one question loomed large: How did the nation’s central bank miss the warning signs?

The Fed’s problems were only beginning. In the following few years, the Fed’s vice chair for supervision, Michael Barr, campaigned tirelessly to rally support in Washington for a stronger regulatory framework for big banks called “Basel III endgame.” The clock ran out, and Barr stepped down from his role early this year, although he remains a Fed governor.

There have been personnel issues, too. Several of Barr’s colleagues have been involved in trading scandals, raising ethical questions about the trading activity of Fed officials. That has further fueled the anger of progressives, who were already primed to criticize the Fed for enriching the wealthy and exacerbating inequality and financialization.

Meanwhile, President Donald Trump is yet again questioning Fed independence. In his first term, Trump threatened to fire Fed Chair Jay Powell when he didn’t like Powell’s decisions. He resurrected those threats in his most recent campaign, claiming in October that the President should have a say in setting monetary policy. “I don’t think I should be allowed to order it, but I think I have the right to put in comments as to whether the interest rates should go up or down,” he said. The newly confirmed chair of his Council of Economic Advisers has proposed giving the President the power to remove board members at will and placing more power in the hands of Reserve Banks. If the Fed under Powell holds rates steady in 2025 or raises them higher, Trump may get serious about making good on his threats.

It seems reasonable, then, to ask if the time is ripe to rethink the nation’s central bank. Can making the Fed more democratic resolve some of its shortcomings?

Leah Downey, a junior research fellow at the University of Cambridge, thinks it can. In her new book, Our Money: Monetary Policy as if Democracy Matters, Downey asks us to consider how Congress might channel the will of the people to make the Fed more responsive to the American polity.

The turn of phrase in the book’s subtitle—“as if democracy matters”—begs a fundamental question: Does democracy not matter today, at least when it comes to central banking? Not really, Downey says. In her view, Congress’s hands-off relationship with the Fed illustrates a fundamental failure of democratic governance. Downey allows that the Fed’s existence and operations may be legally legitimate, but real democracy would require the legislature to constantly employ its power to shape and reshape how monetary policy works. “To know its power the legislature must adopt a sense of interrogative curiosity, the sort of curiosity that would come along with the disposition towards policymaking one might have if the legislature conceived of itself as continuously managing policymakers, thereby retaining constant responsibility,” she writes.

This is a vision of legislative engagement dreamed up in a Cambridge seminar room, far from the realities of Washington. Traditionally, economists and policymakers argue that the central bank needs insulation from the legislature, because politicians often push for monetary policy helpful to them in the short term. When it is removed from the day-to-day scrum of legislating, the Fed can have the autonomy to pursue the right policy, regardless of its popularity. Trump’s threats might be Exhibit A.

Downey challenges the consensus view that an independent central bank engenders stability and prosperity. She impressively displays a deep familiarity with the methods of central banking, documenting how the Fed uses its discretion to set the course of monetary policy and adjust the methods of its implementation. But for Downey, unrestrained technical decision-making at the Fed is a problem. She argues that the idea that the Fed needs operational space to make unpopular decisions causes Congress to be less engaged in the Fed’s work than it should be. Downey imagines today’s legislature as a kind of passive bystander, bearing witness to the Fed’s independence and doing little to set its course.

That’s not in line with the history. The Fed’s ultimate boss is Congress, and the legislature often adjusts its power, as historians of the institution have chronicled. Just since 1980, Congress has weighed in on a range of Fed policy areas, adjusting interest rate ceilings, which banks are subject to Fed regulations, the structure of Fed-led bank supervision, the methods of monetary policy implementation, and the Fed’s authority to monitor systemic risk. Congress has also required the Fed to administer stress tests and enabled the Fed to lend to medium-sized businesses and purchase corporate debt. Those are just the highlights.

Not only is Congress constantly updating how the Fed works, but the Fed’s leaders are often engaged in political dialogue. Alan Greenspan set the standard for a politically engaged central banker. Early in Bill Clinton’s Administration, he made the case to the President for a budget to cut the deficit. Clinton followed the advice, and Greenspan appeared in the first lady’s box at her husband’s first congressional address. At other times in his tenure, Greenspan weighed in publicly in favor of tax cuts, which are not part of the Fed’s purview; advocated for the privatization of Social Security; and questioned the expansion of Medicare to cover prescription drugs. Greenspan’s biographer, Sebastian Mallaby, chronicles his unending engagement with Congress and the executive branch, evidence of a bidirectional dialogue between the central bank and democratic institutions. Jay Powell may be less likely to show up at a presidential address to Congress, but the current Fed chair’s frequent conversations, in private and public, with congressional leaders attest to his own political acumen.

All these actions on the part of Congress and Fed leadership do not add up to democracy in action for Downey. The only way to have a democratic monetary policy would be for the legislature to define what monetary policy should be at a given moment in time. “‘[G]ood’ monetary policy is far from clear,” she writes. Lacking clarity, we must turn over its implementation to elected representatives. And elected officials should not just choose a North Star for monetary policy and set guardrails. Instead, they must engage in an “iterative” process of determining how monetary policy should function, Downey argues. Congress might create a taxonomy for differential credit pricing—making mortgages cheaper and private equity credit more expensive—or conduct ongoing rechartering of the Fed. She suggests Congress could use the Fed’s power to make it cheaper to build a border wall, fund a military campaign, or support green technologies. For Downey, only if Congress is pointing the central bank in the direction of its legislative intent is monetary policy actually democratic.

That is a false choice. It’s possible to recognize that the central bank is accountable to Congress, making its position eminently political, and resist the desire to have Congress iteratively telling it how to conduct monetary policy.

Underpinning this debate is the question of what makes for the most effective and accountable administrative state. Last year’s Supreme Court ruling in Loper Bright Enterprises v. Raimondo reversed decades of precedent that invested wide latitude in administrative agencies to interpret their mandates from Congress. The implications of the ruling will play out in the coming years, but it seems certain to reduce administrative autonomy and place more responsibility on Congress to define how agencies should go about their work. For Downey, that might be a virtue: A more active legislature makes for a more democratic administrative state.

That view overlooks the cost in time and effectiveness of endless meddling. Writing in 1938, James Landis, one of the early scholars of the administrative state, wrote, “It is easier to plot a way through a labyrinth of detail when it is done in the comparative quiet of a conference room than when it is attempted amid the turmoil of a legislative chamber or committee room.” By definition, legislators have a multitude of problems to address. We want them to set a goal and create institutional structures to attract the smartest minds in the country to address those problems. Congress, the courts, and the press must hold these institutions accountable, but that cannot mean overly restricting their authority or constantly meddling in the details of policy implementation.

It’s difficult to even imagine how Congress and the administrative state would interact if the requirement for true democracy were ongoing, iterative congressional administration of agencies. Would Congress decide which antitrust suits the Federal Trade Commission would bring? Change the investigative protocols at the FBI? The methods to determine food safety at the Food and Drug Administration? The appropriate size of the swap lines to foreign central banks at the Fed? Perhaps Congress might decide to delegate to the experts a bit.

To be successful and democratically accountable, the central bank needs a clear mission and the power and discretion to develop and implement a plan to achieve it. Ironically, that institutional arrangement is truer of today’s Fed than it is of many of the other institutions of government. Congress has charged the Fed with ensuring price stability, supporting maximum employment, and, through its role as the nation’s primary financial regulator, safeguarding financial stability. It employs thousands of the country’s brightest minds to do it. The Fed is a clear example of how a democratic legislature can effectively charter an empowered institution.

To be clear, the Fed makes many bad decisions and mistakes. It should have ended its COVID-era quantitative easing program earlier, and its supervisors should have been much more aggressive in their oversight of the Silicon Valley Bank and other financial institutions as interest rates rose precipitously in 2022 and early 2023. Downey has her own criticisms, many of which are broadly shared. She believes, for instance, that the central bank’s focus on price stability—driven by many central bankers’ assumption that the best way to maximize employment and ensure financial stability is to keep the price level stable—is too narrow.

But the people at the Fed are not hijacking the will of the Congress and maliciously doing something different than what they’ve been charged with. Central bankers wanted to ensure their COVID-era stimulus was powerful, given the historic job losses. They focus on price stability because they believe it is critical for supporting strong labor markets in the long term. These policies deserve robust debate and critique. But it is not undemocratic for the institution to form a perspective and act on it in fulfilling the mission entrusted to it by Congress.

Downey’s book is full of eyebrow-raising claims, like the idea that private bankers decide “who will go to school” in America by choosing who can take out student loans. The mandates of the European Central Bank (ECB) led Silvio Berlusconi to resign as Italy’s prime minister, and ten years later, former ECB Chair Mario Draghi ascended to that office—supposed evidence of how the ECB “circumscribed the democratic political process.” Downey claims the Fed “decides what it is reasonable for the government to spend,” leaving Congress with little power to determine the appropriate level of its own budget. And she declares that the Fed makes “discriminatory” decisions about which foreign central banks to lend to, suggesting that it uses arbitrary or irrelevant criteria to determine which financial systems are the most important to support, rather than researched consideration.

The facts fortunately suggest something more prosaic. A broad coalition of policymakers from both the left and right believe that the Fed should be operationally insulated from the political cycle, while being accountable to Congress in the long run. That prevents an impulsive President like Trump from firing a Fed chair and creating chaos in markets. They agree that the central bank should keep prices stable and labor markets as tight as possible. It has made many mistakes in these endeavors, but those mistakes are not a result of insufficient engagement from Congress.

Congress could improve the Fed in a number of ways. Republican Senator Rick Scott and Democratic Senator Elizabeth Warren have called for the creation of a presidentially appointed and Senate-confirmed inspector general on the Board of Governors to increase accountability. Congress could pass legislation that aligns with the spirit of the recent Basel deliberations, requiring banks to hold higher levels of capital to help them weather the next financial crisis. It could reimagine the Fed’s relationship to the so-called “shadow banking” system that exists on the perimeter of Fed oversight.

These are worthwhile and important changes to consider. They are the debates we must have, because the democracy we have today already matters. It may be imperfect, but we should use its tools to make sure our central bank has the right mission, and the ability and discretion to make good on it.