Rumors circulate that Janet Yellen’s days as chairman of the Federal Reserve cartel are numbered. Bloomberg and Narayana Kocherlakota ran an article yesterday about central bank uncertainty under the Trump administration. It’s worth noting that the author is an insider, being a former Fed branch president.
Research has documented that central banks around the world have been better able to control inflation if they enjoy independence from elected officials. The election of Donald Trump seems like a good time to remind ourselves that, historically, the executive branch has presented the greatest threat to the independence of the U.S. Federal Reserve.
Since its founding in 1913, the Fed has experienced two big failures of independence…
Failures of independence. Since 1913 the Fed has been a colossal and constant failure for us though a smashing success for itself and its owners. We’d be much better off without it.
One hopes Trump will dramatically shake things up. Short of abolishing the syndicate and driving its stakeholders into the sea, that might be the best that could happen. The worst case is another bout of interference with independence. Yes, that might mean some bad things. Different bad things, rather – different from the usual badness.
With all the potential for “bad” one wonders how on Earth we made it to 1913 without this system. That’s what I’m yellen ’bout.
Burn it down!