Week Six. Morning, six weeks to the day. The bread truck is late and light; the driver shrugs and says the mill wants cash up front. A fresh invoice pings—FLOUR SURCHARGE EFFECTIVE NOW. Dan walks to the endcap, rips off $6.99, tries $9.49, then stops kidding himself and prints it clean: $14.00.
He carries the tape to the register. Tammy’s fingers brush his as he smooths the corners.
Outside, the Sunoco sign hesitates, then flips. $19.49 becomes $20.09. A man at pump three swears once, softly, like he’s praying backward. Someone takes a photo. Someone else does the math out loud, as if the numbers might blink back.
The cold air spills from the cases. The price gun clicks. The glue tacks his fingers. The bread reads $14.00. The sign across the street reads $20. The stickers don’t move.
Bibliography
1. Alesina, Alberto, and Lawrence H. Summers. “Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence.” Journal of Money, Credit and Banking 25, no.2 (1993): 151–162. Classic cross-country evidence linking stronger central-bank independence to lower, more stable inflation.
2. Sargent, Thomas J., and Neil Wallace. “Some Unpleasant Monetarist Arithmetic.” Federal Reserve Bank of Minneapolis Quarterly Review 5, no.3 (1981): 1–17. Foundational theory on fiscal dominance explaining how politicized money fuels inflation.
3. Federal Reserve Bank of Richmond. “Treasury–Federal Reserve Accord (1951).” FederalReserveHistory.org. Accessed August 26, 2025. Authoritative overview of the 1951 Accord that reset Fed independence after wartime debt pegs.
4. Congressional Research Service. “Federal Reserve: Governance and Oversight.” Updated 2023. Summary of Board structure, FOMC design, and governors’ 14-year, for-cause tenure protections.
5. U.S. Code.12 U.S.C. §242. Cornell Legal Information Institute. Accessed August 26, 2025. Statutory basis for governors’ terms and “for cause” removal standard.
6. Adrian, Tobias, Richard K. Crump, and Emanuel Moench. “Treasury Term Premia: 1961–Present.” Federal Reserve Bank of New York (ACM Model) Data and Notes. Accessed August 26, 2025. Benchmark decomposition used to show how credibility shocks raise term premia.
7. Fleming, Michael J., Frank M. Keane, Antoine Martin, and William Riordan. “The Treasury Market Flash Event of February 25, 2021.” FEDS Notes, Board of Governors of the Federal Reserve System, March 4, 2021. Explained how a weak 7-year auction and liquidity strains spiked yields within minutes.
8. Bank of England. “Bank of England Announces Gilt Market Operations.” Press Release, September 28, 2022. Primary record of emergency long-bond purchases during the LDI crisis as 30-year yields surged.
9. Bank for International Settlements. “Triennial Central Bank Survey: Foreign Exchange Turnover in 2022.” BIS, 2023. Places the U.S. dollar on one side of ~88% of global FX trades, illuminating network effects.
10. International Monetary Fund. “Currency Composition of Official Foreign Exchange Reserves (COFER).” IMF Data, 2024–2025. Shows the dollar near 57–59% of allocated reserves despite gradual diversification.
11. International Monetary Fund. “Why Central Bank Independence Still Matters.” IMF Blog, 2024. Synthesizes empirical work showing weaker independence amplifies inflation and financial-conditions shocks.
12. Garbade, Kenneth D. “The U.S. Treasury Market: A Cornerstone of the Global Financial System.” Federal Reserve Bank of New York Economic Policy Review, 2021. Explains why Treasuries’ depth/liquidity make them the world’s benchmark safe asset.
13. Standard & Poor’s. “United States of America Long-Term Rating Lowered to ‘AA+’ from ‘AAA’; Outlook Negative.” Ratings Release, August 5, 2011. Documents the policy-credibility shock that coincided with a 1-day equity air-pocket.
14. U.S. Department of the Treasury. “Auction Theory and Practice: Bid-to-Cover, Tails, and Market Functioning.” Treasury Reference Materials, 2021–2024. Defines auction metrics used to read stress in primary issuance.
15. European Commission. “Infringement Procedure: Independence of the Magyar Nemzeti Bank.” Press Materials, 2012–2014. Details EU actions over laws threatening Hungary’s central-bank autonomy.
16. Reuters. “Turkey’s Lira Plunges as Central Bank Leadership Is Fired; Markets Reel.” November 2021. On the rapid currency selloff and lived effects after political interference in monetary policy.