The US Federal Reserve is a Law unto Itself

‘As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.’

From the US Federal Reserve Bank website

Don’t fight the Fed. That’s what they say on Wall Street. And for good reason. While technically accountable to the US Congress, the US Federal Reserve’s monetary policy decisions do not require approval from ‘the president or anyone else’, as the Fed boldly states on their website.

The Fed’s culture of omnipotence is evident in former Chairman Alan Greenspan’s reply when asked
about the Fed’s relationship with the president. ‘Quite frankly it does not matter who is president as far as the Fed is concerned. There are no other agencies that can overrule the action we take.’

The CVs of former Chairman Ben Bernanke and current Chair, Janet Yellen, reek of academia and public sector employment — not a hint private sector experience.

So the most influential financial institution in the world is run by a bunch of theorists with absolute authority to experiment to their hearts’ content.

From the outside looking in, this appears to be precisely what’s happening. Since Greenspan took control in August 1987, the Fed seems to have become a giant economics laboratory.

It’s not hard to imagine Federal Reserve chairmen in lab coats mixing ‘eye of newt and tongue of dog’ behind the closed doors of the Eccles Building (the Fed’s Washington home). Perhaps I am being harsh. But considering their track record, you can cut me some slack for thinking their approach to economic management harebrained.

All of their tinkering seems to have one aim: to repeal the business cycle. Expansion and contraction are natural economic forces. Yet, they have no part in the Fed’s economic model. Instead, these mad scientists prefer only expansion, and more of it.

Exuberance followed by crisis has been the order of the day for the past 25 years. But we’re being told that this time is different. The official message is that the Fed and the other sycophant central bankers actually know what they’re doing this time around, that everything’s trending in the right direction.

But the fact is that the world’s central bankers have gone way past the boundaries of their predecessors as they recklessly experiment to reflate an ailing economy.

We don’t know where it will all lead. But we do know that their previous experiments have all failed. Odds are they’ll fail again…but on a grander scale.

Read the rest of this article at The Daily Reckoning