Saturday, November 28, 2009
Bernanke Warns of Risks in Push to Revamp Fed
This article discusses how Chairman of the Fed Ben Bernanke is warning politicians to take a step back from bank regulations and allow the central bank to do its job. Does the Fed function as a political entity or a bank trying to make a profit?
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3 comments:
I agree with Ben Bernanke's take on the Fed losing its power especially his comment in this article in which he says “Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation." The important part is the nonpolitical and independent central bank. Yes, the Fed has not made the best decisions but can anyone say they always have? We need a central bank free from politics. Our government does not need to get any bigger.
I absolutely agree with Alexandra. I think that the Fed should be independent from the government, but more accountable for its actions. However, current better transparency of the Fed makes it more accountable than it was before. Ben Bernanke's actions strive to make the Fed independent, but more consistent with democratic principles and avoid some of the problems that were present under Greenspan's administration.
I think the challenge of completely separating the Fed from the government is the simple fact that the Fed is the central bank of the government. The board of the Fed is appointed by the President so consequently the role and influence of politics on the actions of the Fed are inevitable.
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