The Federal Reserve - Its Time to Put an End to Central Bank Independence :: Economics Monetary Policy Feds Restraint

The Federal take for - Its Time to gift an End to Central Bank Independence If taxation without representation could nark the colonists against the British Crown in 1776, tight money and ruinous have-to doe with rates might be cause for populist revolt in our own day. Federal Reserve monetary insurance policy also has stern social burdens, measured by huge changes in aggregate output, income, and employment. The haughty Fed, much like the English Crown two centuries ago, formulates and carries out its policy directives without democratic input, accountability, or redress. Not only has the Feds monetary restraint at times deliberately pushed the economy into deep recession, with the attendant loss of millions of jobs, hardly also its impact on the structure of interest rates and clam exchange rates powerfully alters the U.S. distribution of peopleal income and wealth. Federal Reserve shifts in policy have generated economic consequences that at least fitting in size and scope the impact of major tax lawmaking that Congress and the White House must belabor in existence debate for months. Popularized studies of Federal Reserve performance in recent decades persuade the image of the Fed seated in its Greek temple on Constitution Avenue, with Chairmen Volcker and Greenspan elevated to the realm of the gods. From centers of economic power around the nation - Wall Street, Capitol Hill, the White House, and corporate boardrooms - the classical Greek chorus intones its defence mechanism of Federal Reserve independence. On the surface, central bank independence seems an eminently reasonable, appealingly impartial solution for an agonizingly complex and muddled work at of making economic policy in this postindustrial, electronically linked, and computerized global economy. The self-employed person central bank is an institutional concept that complements well the counterrevolution now current in U.S. budget policy. Washingtons fiscal p olicy is locked into a deficit-cutting mode for the scraggy future, while Congress is determined to retreat from all discretionary spending, regulatory intervention, or measures to improve equity in the distribution of national income and wealth. With the federal official fiscal policy on automatic pilot, the Feds monetary policy could be removed entirely from the inefficiencies and confusion of the democratic process. But this deceptively simple conception poses profound questions for the process of democratic representative government in the United States as it pertains to managing the nations economy.