Monday, November 22, 2010
Don't Polticize the Fed?
Treasury Secretary Tim Geitner recently provided a similar thought only in reverse. No doubt aware of the growing skepticism toward our central money printing machine, the Federal Reserve, Geitner has warned Congress not to remove the Fed's mandate to pursue full employment. To do so would be to politicize the Fed, which is a definite no-no.
Again a question comes to mind. Can we prevent something from happening after it has already happened? The fact is the Fed, by its very nature is politicized. It is chartered by the United States Congress, which Geitner surely understands, is filled with politicians. Whenever Ben Bernanke is asked by Ron Paul what in the Constitution gives the Fed the authority to create dollars, Bernanke appeals to the Fed's Congressional charter and says, in effect, we serve at the pleasure of Congress.
Bernanke has also recently began carrying water for the Obama Administration in criticizing China's perceived currency policy. The idea that the Fed is fiercely independent strains credulity. The Fed is already politicized up to its eyeballs. In fact, as Murray Rothbard showed over a decade ago in his Case Against the Fed, it was the product of politics from the beginning. The quickest and surest, indeed only, way to de-politicize the Fed is to end it.