Source: EconLog
by Scott Sumner
“Given a choice between the rule of law and the law of rulers, I’d choose the former every time. That’s even true if I happen to agree with the ideology of the people who are currently in change. Thus I’ve consistently opposed ‘court packing,’ regardless of which party is in power at the time. One little known aspect of Fed rules is that the interest rate on bank reserves is technically set by the seven member Federal Reserve Board (not the 12 member FOMC). The president appoints the members of the Reserve Board, but not the 5 reserve bank presidents that also serve on the FOMC. In practice, the FOMC has a sort of ‘gentleman’s agreement’ to allow all 12 members to vote on where to set the IOR, as it has become the key tool of policymakers, but technically only the Reserve Board members have a vote.” (11/17/24)