Importance Of Independent FRB

Mesirow Financial with an excellent piece on the importance of an independent FRB.

Short and Sweet.
We need to get the Fed back to the days of Volcker, where the Fed made decisions away from political circles. The main reason we are in trouble today is because Ronald Reagan appointed Greenspan who is the ultimate political vehicle to which the Fed has done business with over the last 30 years.

The problems that ensue come from the fact that most Inflation and Interest Rate Policies are set via political circles. We currently have a Politically driven inflation and interest rate policy. You actually think Bernanke would make a move with short rates without speaking to Obama and or Geithner first?

When doing things this way it leads to more destabilization of the economic system. Also the policy is completely ineffective as every one knows whats going to happen.

The author makes a lot of good points, but in the near and intermediate term, politics will be mixed with everything associated with money. That is a fact of life.


Mesirow Financial