The Federal Reserve And Why It's Got To Be Kept Independant of Congress

Only the truly economically ignorant can fail to appreciate the importance of an independent central bank to a large industrial country.  Hamilton argued the case with Jefferson and Hamilton was right.  Andrew Jackson tore down our central bank and soon the American banking system was in chaos.  And, so, once again, America had to create a central bank.  But, because of the baggage of history, we now called it the Federal Reserve.

I am reminded of this reading of Ben Bernanke's testimony to the House Budget Committee where he urged Congress to enact a plan to reduced the federal debt.  It was reported that Bernanke repeated his caution that Congress should not cut spending too quickly nor raise taxes too quickly.  In other words, Congress should begin to exercise fiscal responsibility but do it in a cautious responsible way.

Again, for those ignorant of how the parts of government work, the Federal Reserve controls monetary policy.  It has no say regarding fiscal policy.  That is the role of Congress and Congress has proven remarkably inept in carrying out its responsibility.  Spending must, I repeat, must be brought down.  But, per Bernanke, not too quickly.  Have no fear dear reader, the last thing Congress will do is bring down spending too quickly.  Damn lucky if they manage to bring it down at all.

But here's what's weird.  The Republicans fear that Bernanke's cautious approach will result in unmanageable inflation, while the Democrats, who generally favor entitlements  -- a prime cause of runaway spending -- defend Bernanke.

What's going on here, or is this just politics as usual?  My greatest fear is not fear itself.  It's that America will turn to Ron Paul's blueprint for financial reform.