That would be independence from accountability to voters. Should congress be able to spin off any number institutions insulated from democracy? Isn't SCOTUS enough?
mitchbob · 3h ago
The Fed was created by an act of Congress, our elected officials. Some background:
Fed governors are subject to democratic accountability (nomination by the president and confirmation by the Senate), but their term is 14 years instead of 4. The Chairman is subject to the same accountability, but on a 4 year term.
There are good reasons why the board of governors is designed to turn over slowly -- it keeps the board focused on long term performance of monetary policy instead of focusing on the next election.
delichon · 3h ago
> it keeps the board focused on long term performance of monetary policy instead of focusing on the next election.
The neutral dispassionate bureaucrat is a unicorn. One might exist but I won't bet on Diogenes ever finding them. It would be a strange alchemy for political appointees to transmutate into unbiased technicians. As with SCOTUS, a longer term is mostly a longer period to apply partisan values.
jljljl · 58m ago
You probably can't eliminate any sort of political bias, but a single 14 year term puts you pretty much outside of any electoral cycle considerations, which is important for maintaining long term stability in monetary. Making them have to stand for election or make the president happy every 4 years would completely eliminate any ability for the board to focus on the actual technical issues. There's a reason why countries that eliminate CRB independence tend to see hyper inflation
It also isn't a lifetime appointment, and tenures are staggered so the board isn't fixed in place for generation like the Supreme Court
nerpderp82 · 3h ago
Maybe the Fed should run tariffs as well, at least something with a wavelength longer than 6 weeks.
delichon · 3h ago
I blame Congress. It was an abdication of their direct Article I responsibilities to create the ambiguity of "emergency economic powers" in IEEPA in 1977. It is an abdication now to fail to repeal it. Trump is the teenager proving that you shouldn't leave your car keys in the ignition.
SCOTUS abdicated its responsibility to shut down Congress's move to divest its power to tax. POTUS is trying to leverage powers that should never have been granted to attempt to apply the biggest tax increase in human history.
https://www.stlouisfed.org/in-plain-english/independence-and...
https://www.brookings.edu/articles/why-is-the-federal-reserv...
There are good reasons why the board of governors is designed to turn over slowly -- it keeps the board focused on long term performance of monetary policy instead of focusing on the next election.
The neutral dispassionate bureaucrat is a unicorn. One might exist but I won't bet on Diogenes ever finding them. It would be a strange alchemy for political appointees to transmutate into unbiased technicians. As with SCOTUS, a longer term is mostly a longer period to apply partisan values.
It also isn't a lifetime appointment, and tenures are staggered so the board isn't fixed in place for generation like the Supreme Court
SCOTUS abdicated its responsibility to shut down Congress's move to divest its power to tax. POTUS is trying to leverage powers that should never have been granted to attempt to apply the biggest tax increase in human history.