Congressional Tinkering with Federal Reserve Board Spells Disaster

By Talton, Jon | THE JOURNAL RECORD, October 12, 1989 | Go to article overview

Congressional Tinkering with Federal Reserve Board Spells Disaster


Talton, Jon, THE JOURNAL RECORD


It's tempting to fire a burst of blazing outrage at congressional proposals to tinker with the Federal Reserve Board.

After all, here are the same people who brought us the $160 billion-plus thrift debacle, now wanting to try their economic genius on the money policy of the United States.

But in fact the Constitution gives monetary policy authority to Congress, although lawmakers have delegated that power to the Fed since 1913. Moreover, the congressional proposals themselves are not created equal.

Rep. Stephen Neal, D-N.C., has introduced a bill requiring the Fed to eliminate inflation in five years - a measure endorsed by Fed Chairman Alan Greenspan.

However, more concern has been generated by Reps. Lee Hamilton, D-Ind., and Byron Dorgan, D-N.D., who advocate giving the Treasury secretary a seat on the Fed's Open Market Committee. This would allow the administration a voice on the Fed's influential and super-secret policy committee.

Hamilton also wants to let Congress examine the Fed budget, and allow each president to name a new Fed chairman; now the chairman serves a four-year term and cannot be removed by the president. Other House members want additional measures to reign in the Fed, including adding representatives of consumers, small-business people, farmers and builders to the board.

Critics rightly worry that these measures would politicize the central bank and usurp its independence.

Hamilton has a point, that the Fed operates without the checks and balances characteristic of the Republic. This is deliberate: the Fed was established to take control of the money supply out of the hands of the private New York bankers. It was refined to blunt efforts by politicians to manipulate the central bank.

Yet the Fed, which often deals in murky theoretical waters, has hardly been infallible. In the wake of the Crash of '29, Fed tightening of the money supply played a major role in causing the Great Depression.

In the '70s, after President Nixon took the U.S. off the gold standard, the central bank did a poor job of managing the paper currency. Fed officials, as well as others in government, used inaccurate Keynesian economic models as a guide for policy. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Congressional Tinkering with Federal Reserve Board Spells Disaster
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.