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

The federal Reserve - Its conviction to Put an End to Central Bank Independence If evaluateation with come out example could rally the colonists against the British Crown in 1776, tight money and blaring interest rate might be cause for populist anarchy in our own day. Federal Reserve monetary policy excessively has severe social burdens, measured by huge changes in substance output, income, and employment. The imperious 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 restriction at times deliberately pushed the economy into deep recession, with the attendant leaving of millions of jobs, but also its impact on the structure of interest rates and dollar exchange rates powerfully alters the U.S. distribution of national income and wealth. Federal Reserve shifts in policy have generated economic consequences that at least equal in size and scope the impact of major tax legislation that Congress and the White House must belabor in public debate for months. Popularized studies of Federal Reserve performance in young decades convey 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 virtually the nation - Wall Street, Capitol Hill, the White House, and corporate boardrooms - the classical Greek let loose intones its defense of Federal Reserve independence. On the surface, central bank independence seems an eminently reasonable, appealingly simple solution for an agonizingly complex and bleary process of making economic policy in this postindustrial, electronically linked, and computerized spherical economy. The independent central bank is an institutional concept that complements well the counterrevolution right off underway in U.S. budget policy. Washingtons fiscal policy i s locked into a deficit-cutting means for the near future, while Congress is determined to retreat from all arbitrary spending, regulatory intervention, or measures to improve equity in the distribution of national income and wealth. With the federal 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 activity in the United States as it pertains to managing the nations economy.