With the 100th birthday celebration of the FED coming in late December, the media have begun serving as the FED’s “Amen corner.”
This Associated Press article on Janet Yellen is typical. Her main qualification is said to be her independence of the President.
WASHINGTON (AP) — Janet Yellen is now the clear front-runner to be nominated as chair of the powerful Federal Reserve and her status as President Barack Obama’s second choice, while awkward, could ultimately serve as an asset during confirmation and in the central bank’s top job.
Her supporters and some Fed watchers argue that Yellen will have more independence from the president in the autonomous Fed even as she helps him avoid the bruising and potentially losing confirmation fight he would have had with his first choice, Larry Summers.
Is she liberal? Yes. Is she a dove on inflation? Yes. No matter.
Yellen is expected to have an easier time with confirmation if nominated, though she will face questions over when the Fed might begin to pull back on its bond purchase program. But while her views might be more liberal than that of Republicans, her more distant relationship with Obama might offer GOP senators some reassurance.
“Nobody ever rapped Bernanke for being too close to the White House,” Manley said. “That’s the way the Fed is supposed to operate.”
So, the FED is expected to operate independently. Expected by whom? The Establishment.
Asked whether he was concerned that the political tone of the competition between Yellen and Summers hurt the Fed’s independence, Bernanke said at a news conference, “I think the Federal Reserve has strong institutional credibility. I’m not particularly concerned about the political environment.”
Why should he be concerned about the political environment? The FED is legally independent of politics, although it was created by politics just before the Christmas holidays in 1913.
No other institution of our government gets a free ride the way the Board of Governors of the FED does. No other agency with its URL ending in .gov has such autonomy. No, not even the CIA. The CIA still must be funded by Congress. The FED funds Congress.