By Mario Rizzo
I am not happy at the prospect of the Congress making monetary policy. I am also not happy about the Congress making “countercyclical” fiscal policy. But I am really not happy about the extraordinarily poor quality of the arguments being made by economists so desperate to maintain the “independence” of the Fed. The arguments seem to boil down to mentioning what the Fed has done right (or may be construed to have done right) and ignoring the Fed’s role in creating crises in the past.
Who taught these economists how to make an argument?
I expect to say more later. But for now, please check out Jerry O’Driscoll’s post at the Cato blog.
4 thoughts on “Rule by Bernanke and Friends”
I am a fanatic for the nationalisation (British spelling on purpose) of the Fed.
Given the current monetary system, I favor Federal Reserve independence. By this I mean: I don’t want Congress or the Executive branch determining monetary policy by setting the Federal Funds rate and I don’t wants loan decisions determined by politics. The Fed is not completely independent and some of this probably goes on now, but the degree of independence would be a lot less if Congress or the Executive branch had complete control of the Fed.
I don’t follow the news as much as I should, but why all of the questions of Fed independence now? Is this because of Ron Paul’s bill?
I think the Fed has already lost much of its independence voluntarily starting in September of 2008 when Benanke and the Paulson Treasury were working hand-in-hand on the bailout of the financial industry. Why weren’t questions of Fed independence being asked then? The Fed was and still is being used as a tool of the Treasury.
Now that the Fed has its tentacles through out the economy is it any surprise that the Congress is concerned? If it is correct Ron Paul’s bill is being attacked by its critics based on the argument that the bill will cause a loss in Fed independence, then I wonder where were these same critics back in Sept. 2008?
Not my most eloquent effort as I just dashed this off as I was watching Bernanke, but I raised a concern of my own on this topic here: http://n-k-1.blogspot.com/2009/07/depoliticization-of-politics.html
Let me know what you think if you read it.
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