Bush’s best appointment is one of O’Bama’s better reappointments. Bernanke is not the best choice yet is the right choice at this time. Yet there should be some reservation about and reflection on the entire Federal Reserve scheme.
The Founding Fathers as they are known could not agree on the creation of a central bank. The issue was at the heart of many early presidential elections. Every sovereign nation needs a central bank. The bankers created a central bank in 1913 and filled the vacuum. America must examine the role of the Federal Reserve and incorporate it into our constitutional system characterized by a separation of powers and accountability to the populace.
The central bank has a history of competent and independent chairmen such as Paul Volker who pursued some harsh policies with painful but necessary consequences without any significant political intervention.
Alan Greenspan, a conservative Republican, acted as the “central planner” of the economy for far too may years with devastating consequences. At least he has enough integrity and self-awareness to admit some mistakes. Some thoughtful political intervention was appropriate and necessary during his tenure.
Faith in the Fed. has dissuaded Congress from taking more direct control and dictating policy. Legislation such as the Humphrey-Hawkins Full Employment Act does set some guidelines and parameters. However, the Fed cannot and should not attempt to establish full employment.
At this time, Ben Bernanke is determining both “monetary policy” and “fiscal policy.” Fiscal policy has been and should be the province of Congress. Monetary policy should focus on price stability.
Who should address these matters? The politicians. That should give one pause and yet motivate us to act.
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