The Rundown: Deep Dive – A Brief History of the Federal Reserve (And the Threat It Faces Today)

Host: Zaid Admani
Release Date: January 17, 2026
Podcast by: Public.com

Episode Overview

In this weekend deep dive, Zaid Admani explores the structure, history, and essential function of the U.S. Federal Reserve ("the Fed"), tracing its evolution from a crisis-ridden 19th-century banking system to its current status as a powerful, controversial institution. The episode aims to help listeners understand the importance of the Fed's independence and the contemporary conflict between President Trump and Fed Chair Jerome Powell—a showdown with significant implications for markets and the economy.

Key Discussion Points & Insights

1. Why Was the Federal Reserve Created? (00:45–03:05)

• Pre-Fed American banking was extremely unstable, with recurring financial panics and bank runs.
• Major crisis: The Panic of 1907, which saw a 50% market drop in three weeks and forced J.P. Morgan to personally orchestrate a bailout.
• Congress passed the Federal Reserve Act in 1913 to create a safer, more stable banking system.
• The Fed’s Unusual Structure: Not fully governmental, not entirely private—a "quasi government institution" operating independently from direct political control.

  "Think of them like a quasi government institution... the Fed operates independently. They don’t take orders from the President or Congress when it comes to setting monetary policy. And that independence is key." — Zaid Admani (03:17)

2. The Fed’s Mandate and Powers (03:50–04:38)

• Dual mandate (from the 1970s):
  1. Keep prices stable (control inflation)
  2. Maximize employment
• Primary tool: setting interest rates, with the power to accelerate or slow the economy.

3. Historical Moments — The Fed’s Successes and Failures

The Great Depression – The Fed’s Biggest "L" (04:38–05:37)

• The Fed failed to act decisively during the 1929 crash, letting thousands of banks fail.
• Historians (referencing Andrew Ross Sorkin) agree this non-intervention worsened the Depression.

  “One of the reasons the Fed didn’t do more than it did in 1929... they were worried about the politics in the moment.... It had just been born in 1913. They thought Congress could shut down the whole thing.” — Andrew Ross Sorkin (04:43)

WWII and the Birth of Modern Fed Independence (06:08–07:12)

• During WWII, the Fed kept rates low to fund the war, but post-war pushed back against Treasury pressure to avoid runaway inflation.
• The 1951 "Accord" established true Fed independence from the executive branch.

  “Before this, the Fed was basically taking orders from the Treasury Department. But the accord finally separated them, establishing the Fed’s independence.” — Zaid Admani (07:01)

The Political Pressure of the 1970s (07:19–08:17)

• President Nixon pressured Fed Chair Arthur Burns to keep rates low for electoral reasons, which fueled severe inflation.
• The resulting Federal Reserve Reform Act (1977) increased Fed accountability, created structure, and formalized the dual mandate.

Volcker’s Inflation Battle & Aftermath (08:22–09:10)

• Paul Volcker, as Fed Chair, raised rates near 20% to curb inflation—deeply unpopular but ultimately effective.
• Marked the importance of an independent Fed to resist political interference.

Transparency and The Great Moderation (09:14–10:09)

• 1990s onward: Fed becomes more transparent—public statements, projections, and press conferences enhance effectiveness.

Financial Crises: 2008 & COVID-19 (10:10–11:10, 11:10–12:05)

• 2008: Aggressive measures (rate cuts, QE) staved off collapse.
• COVID-19: Even faster intervention, which successfully prevented economic disaster but contributed to high inflation.

4. The Trump–Powell Conflict: A Threat to Fed Independence (12:06–15:10)

Current Events and Tensions

• President Trump wants lower Fed rates to boost the economy ahead of November’s election; Powell resists due to above-target inflation (2.7% vs target 2%).

• Trump’s attacks on Powell have escalated; called him "clueless," "enemy of the people," and "a jerk."

• Critical Event: DOJ opens criminal investigation into Powell apparently tied to headquarters spending, but widely viewed as politically motivated because Powell will not lower rates further.

  “A threat of a criminal investigation against a sitting Fed chair is uncharted territory.” — Zaid Admani (14:09)

• Bipartisan and Wall Street backlash has erupted.

  “Anything that undermines the Fed’s independence is probably not a great idea.” — Jamie Dimon, CEO of JPMorgan Chase (14:40)

• Notable support comes from Republican Senator Thom Tillis, who promises to block any replacement nominee until investigation resolves.

The Underlying Stakes

• Powell’s term ends in May; Trump will likely replace him with a more compliant candidate (front-runners: Kevin Warsh, Kevin Hassett).

  “If the market sees the new Fed chair taking orders from the President, that’s going to shake the market’s confidence that the Fed is independent.” — Zaid Admani (15:10)

• Politicizing the Fed could push market rates higher (as risk premiums rise) and damage long-term economic stability.

Notable Quotes & Memorable Moments

• On the 1907 Panic:

  “J.P. Morgan... locked the doors and refused to let [bankers] leave until they agreed to pool their money together and bail out the banking system.” — Zaid Admani (01:42)

• On the repeated pattern of presidents pressuring the Fed:

  “Lyndon B. Johnson did it. Richard Nixon also did it. They wanted lower rates to help their poll numbers. But a threat of a criminal investigation against a sitting Fed chair is uncharted territory.” — Zaid Admani (14:06)

• On the dangers of a politicized Fed:

  “Having a politicized Federal Reserve that makes decisions based on election cycles instead of economic conditions could lead to a terrible economic situation.” — Zaid Admani (15:26)

Timestamps for Major Segments

• 00:45 – U.S. banking before the Fed, Panic of 1907, J.P. Morgan’s intervention
• 02:19 – Creation of the Fed, unique structure, mandate
• 03:50 – Dual mandate explained, monetary policy tools
• 04:38 – The Fed's role in the Great Depression (Andrew Ross Sorkin excerpt at 04:43)
• 06:08 – WWII, postwar dynamics, 1951 Accord and independence
• 07:19 – Nixon, political pressure, and inflation in the 1970s
• 08:22 – Paul Volcker, painful but effective rate hikes
• 09:14 – The Great Moderation, increasing transparency
• 10:10 – The 2008 financial crisis
• 11:10 – COVID-19 and Fed response
• 12:06 – Trump–Fed conflict: rate pressure, investigation, public spat
• 13:50 – DOJ criminal investigation and backlash
• 14:30 – Bipartisan support for Powell, potential consequences for Fed independence
• 15:10 – What’s at stake: Powell’s term, Trump’s coming appointment, market trust

Tone, Language, and Host’s Perspective

Zaid Admani maintains a conversational, engaging, and slightly irreverent tone ("the biggest L in the Fed’s history"), making complex economic history accessible and relevant. He is critical of politicization and emphasizes the crucial need for Fed independence, recognizing past mistakes but warning against current threats.

Summary Takeaways

• The Fed was created to stabilize a chaotic banking system, evolved greatly in power and transparency over time, and has played pivotal roles in crises.
• Independence from political pressure has been essential to the Fed’s ability to make hard, necessary decisions, even if unpopular.
• The Trump–Powell conflict, particularly the DOJ criminal investigation, represents the most significant threat to that independence in decades.
• Eroding Fed independence could seriously destabilize financial markets and the broader economy.
• All eyes are on the coming months as Powell’s term ends and the future of the Fed—and its credibility—is on the line.