What exactly is the point of having an independent central bank that won’t exercise its independence? Time was, Paul Volcker could single-handedly induce a recession in order to stamp out high inflation, and neither Jimmy Carter nor Ronald Reagan, to my knowledge, suggested that his actions were “almost treasonous”, in Rick Perry’s words. Or is it only treasonous when the Fed uses its powers to spur recovery?
This isn’t to say that there aren’t risks associated the various actions that the Fed could take, not least spurring more commodity price inflation that could impede recovery before it can get underway. But it’s rather apparent that whatever firewalls are supposed to exist between the Fed and the political system have been compromised.
