Reforming or Deforming the Fed?

Maintaining a fixed dollar price for gold, imposing a Taylor rule for monetary policy, barring private bankers from being directors of the Fed’s regional reserve banks, releasing full transcripts six months after the Fed’s meetings – Barry Eichengreen comments on US presidential candidates’ proposals for reforming the Fed.

“The fact that three of the nine directors of the Fed’s regional reserve banks are private bankers is an anachronism that creates the appearance, and potentially the reality, of a conflict of interest. [Bernie] Sanders’ suggestion that the US president, rather than their own directors, nominate the regional reserve banks’ presidents is also worthy of consideration.

It is important to recall that the peculiar arrangements prevailing today were designed to overcome the financial sector’s opposition to the establishment of a central bank when the Federal Reserve Act was passed in 1913. This, clearly, is no longer the problem; on the contrary, the financial sector today is one of the Fed’s last staunch defenders.”

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