Quite a battle is shaping up over the outsized role played by central banks in America’s and other countries’ economic, and political, affairs. The failure to control inflation — witness today’s news that consumer prices rose again at a pace not seen in 40 years — comes at a time of rising concern, as Judy Shelton writes in the Wall Street Journal, that “central banks have become too powerful, too prominent and too political.” 

Our own view is that what we need is a true monetary commission to review the question of the performance of the Federal Reserve in its first century, and the related monetary questions — including whether our experiment with fiat money has been successful. That inquiry is likely to shed light on Ms. Shelton’s question. “When,” she asks, “did unelected monetary officials gain the authority to tell political leaders what to do?”

Ms. Shelton says the central banks’ mission creep shows the danger of taking monetary power away from elected politicians. Our Constitution grants to the Congress between 99 percent and 101 percent of America’s monetary powers. The legislators delegated to the Fed what Ms. Shelton calls “breathtaking powers to determine financial conditions.” She warns, “it magnifies their clout — and elevates their status.” In short, it’s gone to their head.

She is astute to zero in on how central bankers have gotten an inflated idea of their abilities to manipulate economies to align with their Keynesian policy dreams. The Fed has taken the lead in this regard, racking up an unprecedented $9 trillion balance sheet as part of its program of Quantitative Easing. The inflation that ensued has left the unelected PhDs of the Fed unbowed. The International Monetary Fund, for its part, has waded into politics.

When Great Britain’s new prime minister, Elizabeth “Liz” Truss, put forward a pro-growth supply-side cut to the top income tax rate there, the IMF swooped in to say “we do not recommend large and untargeted fiscal packages at this juncture,” and warn that “the UK measures will likely increase inequality.” Abetted by what the Journal sees as a politicized Bank of England, the IMF démarche forced Ms. Truss to walk back her tax cut plan.

Such power grabs are enabled, in part, by the abandonment of the gold exchange standard, which imposed a tight discipline on central banks. The convertibility of currency into gold or silver placed a natural limit on how much money the banks could pump into circulation. In the decades of our experiment with fiat currency, Ms. Shelton explains, “central banks can create money with no questions asked” and thus “manipulate the cost of capital, or counteract movements in financial markets.”

Central banks created trillions under Quantitative Easing, James Grant writes, calling the dollars “into existence as a sorcerer might summon the spirits.” He explains neither wand nor printing press was needed: “Taps on a keyboard did the heavy lifting.” Yet like the hapless sorcerer’s apprentice, the bankers are now unable to control the forces they summoned. All the more reason for the creation of a commission to investigate the monetary system itself.

After all, a monetary commission led to the creation of the Fed in the first place. A new commission’s challenge is not only to learn from the Fed’s mistakes. The goal, as 2012’s Republican platform says, is to set course for a return of constitutional money. Modeled on a Reagan-era panel that probed “the feasibility of a metallic basis for U.S. currency,” the platform called for a panel “to investigate possible ways to set a fixed value for the dollar.” 

The proposal was repeated in the 2016 platform, which was carried over for 2020. Yet the modesty of the proposal — lacking any reference to the gold standard — is a reminder that neither party has embraced the full potential of the monetary issue. The current inflation, though, puts the issue into sharp relief. “The central bankers are in charge,” Ms. Shelton writes, “and perhaps that should change.” It could prove to be a winning issue for 2024.