By Jon Faust

For the last several months, many analysts (including me) have warned about the growing threat to Fed independence.  But some people that I respect have pushed back. Bond market vigilantes, they assert, will protect us–these vigilantes are market players who cause sufficient turmoil in financial markets in the face of bad monetary and fiscal policy to cause their reversal.  The market reactions around Liz Truss’s policies and around the liberation day tariff announcements are cited as two prime vigilante successes.

As we all get inured to the steady drumbeat of formerly unthinkable news about threats to the Fed, however, my mind has turned to the boiling frog problem.  Some quick googling tempered my concern a bit: the “boiling the frog” legend, it turns out, is fake news.   Scientific study reveals that as

…the temperature of the water is gradually increased, the frog will eventually become more and more active in attempts to escape the heated water. If the container size and opening allow the frog to jump out, it will do so.

But can we be confident that bond market vigilantes are like frogs? As the heat around Fed independence rises, can we rest easy in the knowledge that before it is too late, the bond vigilantes will jump into action and work their magic?

The market’s blasé response to the attempted firing of Fed Governor Cook does not inspire confidence…