The Federal Reserve is a creation of the legislature, not the Constitution. Congress is trying to reassert its control. The latest reports indicate that the Republicans, which enjoy a majority in both chambers, will call for a vote tomorrow on the Fed Oversight Modernization and Reform Act.
There are three measures in the bill that have in particular raised the ire of the White House and Fed Chair Yellen. First, the bill requires that the Fed a mathematical formula, like the Taylor Rules, to set short-term interest rates. Second, the bill would limit the emergency powers that the Fed claimed during the crisis. Third, the bills require the Government Accountability Office to review monetary policy decisions.Marc to Market
Democratizing the Fed or Politicizing Monetary Policy?
Marc Chandler
3 comments:
America seems to be the only country in the world where there is significant opposition to the very idea of a central bank. Very strange as viewed from a European perspective.
This measure won't pass, however, it is going to be increasingly hard to avoid bad legislation getting passed when we have an ideological extremist like Paul Ryan now as Speaker of the House.
Agreed... Of course it won't pass (or not get vetoed). The far right does this for the same reason they didn't vote to renominate the Fed chairman on 01/28/10. In 'The Courage to Act' (Part III chapter 19), Bernanke writes that on one call from a Republican senator apologizing that he voted no, his reason was "Well Ben, sometimes you just have to throw some red meat to the knuckle-draggers."
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