Helicopter Ben

Congress is currently creating a bill that would threaten the independence of the Federal Reserve.  Basically they want the Government Accountability Office to be able to audit federal reserve policies.

This is one of those things that most Americans probably don’t care about.  The fed was set up to be an independent institution, so that the tools of monetary and fiscal policies could be used without consideration to shortsighted political pressures like elections every two years.

You can agree or disagree with what the fed is doing, but it is hard to argue that it would be better for Congress to be able to intervene with the Fed and do things like set or even influence interest rates.

I am not sure where Congress gets so much confidence in their abilities to fix things.  One of the positive things about this bill was the response it produced from Bernanke:

Bernanke separately urged Congress and the administration to lay out a plan that would bring the budget deficit down to a “sustainable” level of 2 percent to 3 percent of gross domestic product, from a projected ratio of about 13 percent this year. Much of the shortfall stems from the $787 billion fiscal stimulus — which Bernanke said is too soon to judge for its effectiveness — and the Treasury’s financial-rescue efforts.

“Unless we demonstrate a strong commitment to fiscal sustainability, we risk having neither financial stability nor durable economic growth,” the Fed chairman said in his testimony.

Bernanke also outlined the Fed’s exit strategy from many of their bailout efforts.  We have yet to hear an exit strategy from Obama or Congress after they rushed into a quagmire of debt with no exit strategy.