Yes, the Federal Reserve has enormous power over who is president

The arc of the political universe is long, but it bends towards monetary policy.

That's the boring truth that nobody wants to hear. Forget about the gaffes, the horserace, and even the personalities. Elections are about the economy, stupid, and the economy is mostly controlled by monetary policy. That's why every big ideological turning point—1896, 1920, 1932, 1980, and maybe 2008—has come after a big monetary shock.

Think about it this way: Bad monetary policy means a bad economy, which gives power back to the party that didn't have it before. And so long as the monetary problem gets fixed, the economy will too, and the new government's policies will, whatever their merits, get the credit. That's how ideology changes.

In 1896, for example, Republicans completed their transformation from being the anti-slavery party to the anti-inflation one. Back then, the U.S. was on the gold standard, but there wasn't enough gold. Miners had found so little of it that overall prices were falling, which was particularly bad news for anyone who'd borrowed money. That's because wages fall if prices do, so debts that don't become harder to pay back. The result was two decades of slower-than-it-should-have-been growth where the economy was in recession more often than not.

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