Huffington Post had this headline today: “Congress Fawned Over Ben Bernanke, But It Mansplains To Janet Yellen.” This officially marks the oversaturation of the word “mansplain.” It is also dead wrong, selective quotes notwithstanding. Bernanke faced withering criticism from Congress, which is a big reason why he is not serving another term. Alan Greenspan, acolyte of Ayn Rand, proponent of self-regulating markets and one of the architects of the Great Recession — Congress did fawn over him during the good years.
The reality is that the Federal Reserve’s extraordinary measures to fend off a second Great Depression, along with the vast expansion of its balance sheet, has caused unprecedented discontent with the central bank in Congress. Critics range from Rand Paul on the right to Bernie Sanders on the left.
This is not merely the Black Helicopter Tinfoil Hat crew. Some of the discontent is reasonable, such as a call for greater transparency and an independent audit. The question of whether an unelected body should have so much power? However, the Fed was specifically established to be separated from the politics of the moment and a step away from political micromanagement. Only in this way could it be the lender of last resort in a crisis, acting quickly and without meddling from Congress.
One of the big causes of our lesser depression, aka the weak recovery, is the austerity driven by the Republican House and accepted by President Obama. It has made the Fed’s job harder and forced it to take more unconventional steps. So imagine a Fed under that thumb. On the other hand, the establishment of the Federal Reserve System was a compromise and involves substantial input from the private banking sector — of which it is a regulator.
What do you think?
This Week’s Links:
• Six years after the global financial crisis, what have we learned? | Naked Capitalism
• China house prices fall in a record number of cities | Bloomberg
• Study finds Germany with the most energy efficient economy | The Guardian
• Five ways Wall Street continues to sandbag the economy and how to fix it | The American Prospect
• The labor force won’t fix itself | FiveThirtyEight
• Did the banks have to commit fraud? | CEPR
• Do patents stifle cumulative innovation? | Digitopoly
Today’s Econ Haiku:
Here come crazy deals
Satisfy risk appetite
Purge the working stiffs
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