How Congress Should Reform the Fed

Source: American Institute for Economic Research
by Alexander Willliam Salter

“It’s very difficult for elected officials to hold the Federal Reserve accountable. Is that a problem? There’s a strong counter-majoritarian tradition in American politics. The Constitution itself strictly limits what simple majorities, acting through their representatives, can accomplish. Contemporary central banking’s ‘democratic deficit’ could be a feature, not a bug. While we should always be wary of populist passions, the Fed’s insularity from the political process plausibly creates more problems than it solves. No less an economist than Milton Friedman thought that the Fed should be brought under the supervision of the Treasury or Congress.” (05/18/23)