Nearly 600 Economists Sign Letter, Defend Independence of the Federal Reserve

Posted4 months agoActive4 months ago

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Federal ReserveMonetary PolicyPolitical Independence

Key topics

Federal Reserve

Monetary Policy

Political Independence

Nearly 600 economists signed a letter defending the Federal Reserve's independence amid political pressure, sparking a discussion about the balance between independence and accountability to voters.

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01Story posted
Sep 2, 2025 at 4:40 PM EDT
4 months ago
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Discussion (9 comments)

Showing 9 comments

delichon

4 months ago

3 replies

That would be independence from accountability to voters. Should congress be able to spin off any number institutions insulated from democracy? Isn't SCOTUS enough?

jljljl

4 months ago

1 reply

Fed governors are subject to democratic accountability (nomination by the president and confirmation by the Senate), but their term is 14 years instead of 4. The Chairman is subject to the same accountability, but on a 4 year term.

There are good reasons why the board of governors is designed to turn over slowly -- it keeps the board focused on long term performance of monetary policy instead of focusing on the next election.

delichon

4 months ago

2 replies

> it keeps the board focused on long term performance of monetary policy instead of focusing on the next election.

The neutral dispassionate bureaucrat is a unicorn. One might exist but I won't bet on Diogenes ever finding them. It would be a strange alchemy for political appointees to transmutate into unbiased technicians. As with SCOTUS, a longer term is mostly a longer period to apply partisan values.

jljljl

4 months ago

You probably can't eliminate any sort of political bias, but a single 14 year term puts you pretty much outside of any electoral cycle considerations, which is important for maintaining long term stability in monetary. Making them have to stand for election or make the president happy every 4 years would completely eliminate any ability for the board to focus on the actual technical issues. There's a reason why countries that eliminate CRB independence tend to see hyper inflation

It also isn't a lifetime appointment, and tenures are staggered so the board isn't fixed in place for generation like the Supreme Court

deeg

4 months ago

I hear where you're coming from but an independent Fed has worked pretty well since it was started. Mistakes have been made, of course, but afaik they were based on bad economics, not politics.

Making the Fed more political, especially now, seems like a bad idea.

nerpderp82

4 months ago

1 reply

Maybe the Fed should run tariffs as well, at least something with a wavelength longer than 6 weeks.

delichon

4 months ago

1 reply

I blame Congress. It was an abdication of their direct Article I responsibilities to create the ambiguity of "emergency economic powers" in IEEPA in 1977. It is an abdication now to fail to repeal it. Trump is the teenager proving that you shouldn't leave your car keys in the ignition.

SCOTUS abdicated its responsibility to shut down Congress's move to divest its power to tax. POTUS is trying to leverage powers that should never have been granted to attempt to apply the biggest tax increase in human history.

nerpderp82

4 months ago

Abdicating your responsibility should require a constitutional amendment. All these laws where congress hands over power to someone else are unconstitutional and should be voided.

mitchbob

4 months ago

The Fed was created by an act of Congress, our elected officials. Some background:

https://www.stlouisfed.org/in-plain-english/independence-and...

https://www.brookings.edu/articles/why-is-the-federal-reserv...

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ID: 45108737Type: storyLast synced: 11/20/2025, 7:50:26 PM

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