It Doesn’t Really Matter Who Runs the Fed

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Betsey Stevenson and Justin Wolfers note that the Fed has consistently undershot its inflation target lately. Monetary policy today only makes sense if the Fed not only doesn’t care about unemployment at all, but also, for some reason, is hellbent on getting inflation under its 2% target. Matt Yglesias is contempuous: “Ben Bernanke has brought us the lowest inflation of any Federal Reserve Chairman of the postwar period. You may call it prolonged mass unemployment, but he may see it as a huge success.” Atrios goes even further:

I do wish more people who are maybe a bit more respectable than I am would start using moral language to describe the reprehensible actions of Bernanke and pals. There’s no possible analysis of the welfare tradeoffs of these policies which leads to any other conclusion than “mass unemployment is a small price to pay for keeping the rich fat and happy, or even fatter and happier.”

Time to end our failed experiment in “independent” central banking.

I don’t really disagree with any of this except for one thing: what makes anybody think that monetary policy would be any different if the Fed weren’t independent? It’s not clear to me that Tim Geithner would run things much differently, and it’s sure as hell not the case that Congress would suddenly get religion and ease up on monetary policy.

The problem, I think, isn’t Fed independence. It’s the mindset of the entire financial elite in the developed world. Until that changes, it hardly matters who runs the Fed.

HERE ARE THE FACTS:

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As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

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