Who actually controls the American economy and how do they get the job?

Ideas & Philosophy · Published 3 October 2026 Swipe more like this →

In short: The Chair of the Federal Reserve is the most powerful economic figure in the United States, yet their role has evolved significantly since 1913. Nominated by the president and confirmed by the Senate, this official balances complex regulatory duties with the critical task of setting the nation's monetary policy.

The position of Federal Reserve Chair was not always an independent role. When the Federal Reserve Act was signed in 1913, the Secretary of the Treasury served as the ex officio chair of the Federal Reserve Board. It was not until the Banking Act of 1935, which became effective in 1936, that the structure changed. This legislation removed the Treasury Secretary from the board and redesignated the chief executive as the Chairman of the Board of Governors, creating the modern office.

Today, the Chair is the active executive officer of the Board of Governors, appointed to four-year terms. They preside over board meetings and, by custom, lead the Federal Open Market Committee, which directs short-term monetary policy. Their responsibilities are vast, ranging from supervising Federal Reserve Banks and managing the payments system to administering consumer credit protection laws. To ensure independence, the law strictly prohibits any board member from holding stock or serving as an officer in any banking institution.

While the role has historically been filled by economists—Arthur Burns was the first to hold a PhD in economics, and most successors since 1987 have followed suit—there is no formal requirement for this academic background. Jerome Powell, for instance, brought a background in law and investment banking to the position. Regardless of their professional pedigree, the Chair remains accountable to Congress, testifying on policy objectives twice a year. They earn a salary consistent with a Level I position in the Executive Schedule, currently set at US$246,400 as of April 2024.

The influence of the Chair is cemented by their ability to serve multiple terms, provided they are re-nominated and confirmed. Figures like William McChesney Martin, who served from 1951 to 1970, and Alan Greenspan, who served from 1987 to 2006, demonstrate the potential for long-term impact. As the central bank’s public face, the Chair navigates a complex intersection of political appointment and technical economic management, shaping the financial landscape of the United States.

General information, not professional advice. Spotted an error? Flag the card or see corrections and complaints.

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