Threatening the Fed

Did the Republican leadership do anything wrong by sending Ben Bernanke an ominous letter warning him not to intervene in the economy? Atrios thinks not:

I don’t agree with the substance, but I don’t think there’s anything wrong with Republicans sending the Fed a sternly worded letter. If you believe that central bank independence is important, then you don’t want the president being able to boss the Fed chairman around and similarly you wouldn’t want Congress trying to goad the Fed into one action or another through legislation. But there’s nothing wrong with policymakers expressing their opinions about what the Fed is doing.

But there are opinions and then there are opinions. The Economist thinks this week’s GOP assault is different in several ways from ones in the past:

One is that politicians, especially those from Texas, have historically wanted easier policy from the Fed….The second difference is that past critics had a point: Mr Volcker’s tight monetary policy did tank the economy. This time, the hysteria over inflation has no obvious factual basis….Third, and most important, historically the Fed’s antagonists came from the fringes of their (usually Democratic) party. Now Republican leaders and presidential candidates are flouting the idea of central-bank independence. That has troubling implications.

On reflection, I think I probably overreacted last night. I’m not as sanguine about the concerted Republican attack on the Fed as Atrios is, partly because it now has the flavor of official threats from the Republican leadership and partly because it’s so obviously aimed at trying to prevent any kind of effort to improve the economy. That’s pretty unprecedented and pretty indefensible.

But even granting that, Atrios is right: if politicians have opinions about monetary policy, there’s no reason they shouldn’t spout them. It’s when things go beyond mere spouting that they can get dangerous. On that score, the Republican letter may be defensible, but it’s still not something to be shrugged off as just politics as usual. Boehner & Co. show every sign of wanting to push the envelope much harder than before on this.

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