Federal Reserve

1
Federal Reserve

• Independence

2
Federal Reserve Independence

• Should the Fed be independent?
• Yes political pressures impart an inflationary
  bias to monetary policy.
• Yes if the Fed was under the control of the
  President, it could be more easily influenced by
  the Treasury, resulting in debt monetization.
• Yes monetary policy is too important and
  difficult to be left to politicians.
• An independent Fed can pursue necessary but
  unpopular policies.

3
Federal Reserve Independence

• Should the Fed be independent?
• No it is undemocratic to have monetary policy
  controlled by an elite group responsible to no
  one.
• No the public holds the President and Congress
  responsible for the economic well-being of the
  country. Therefore, they should control the Fed
• No the Feds independence may encourage it to
  pursue a course of narrow self interest rather
  than the public interest.
• Political factors suggest the Fed should be more
  accountable.