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The Fed Should Be Kept Independent?

Tuesday, February 21, 2017 19:50
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from ""
target="_blank">The Daily Bell

width="500" /> President Trump, Keep The Federal Reserve
Independent – It’s Too Expensive Not To … There is talk about that
Donald Trump and his administration will try to bring the Federal
Reserve to heel with some appointments to the board of that body. …
But there’s a definite limit to how far this should go for, as not
enough people know, the point of the Fed is to curb the enthusiasms
of the politicians. And not leaving it operationally independent
would be very expensive indeed, so much so as to be entirely
counter productive. – Forbes

According to this article, it is better to leave the Federal
Reserve alone because to do anything else within the context of a
viable Fed would cost too much.

The article does admit that it is possible to change the Fed. In
fact Patrick T. McHenry (R-N.C.), vice chairman of the House
Financial Services Committee, has already written to Janet Yellen
indicating she has no authority to engage in certain regulatory

Citing the “clear message by President Donald Trump” to put
America first, he called on her to cease all international
negotiations on regulations covering bank capital, systemic risk
and other areas, and suggested that the Fed had no authority to
engage in such activities.

McHenry went on to call the Fed’s activities “secretive,” and
suggested that its participation in international forums was
“killing American jobs.” His letter echoes the heated rhetoric by
President Trump during the campaign in which he said that Yellen
should be “ashamed of herself” for keeping interest rates low for
political reasons.

This is a big battle shaping up regarding the Fed. The Fed
apparently has not been given authority to carry out international
negotiations. It’s not even an international body.

On the other hand, the Fed has to carry out these negotiations
within the context of its growing globalism. Otherwise it has to
admit its merely one more bureaucratic institution with a job to
do. The Fed was not set up in this way.

The Fed has always exceeded its boundaries. In fact, it has
never recognized boundaries to begin with. From near to its
beginnings, in the 1920s, the Fed did much that was illegal. It
consistently issued more notes than it had gold backing.

But this article argues nonetheless that the Fed’s independence
is a very “valuable thing.”

The article point out that Trump can fill up to three vacancies
on the board this year. So the central bank may not be exempt from
a Trump-led shakeup, strategist, Mark Grant said on CNBC on

“The Fed of today is not going to be the Fed of tomorrow,” the
chief strategist at Hilltop Securities said to “Squawk Box.”

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