Commentary

The Federal Reserve has too much power over the economy

August 31, 2021

Judy Shelton (Commentary Contributor)

federal reserve financial markets

All opinions expressed in this article are solely the opinions of the contributors.

Federal reserve officials exert too much influence over financial markets and economic outcomes. It’s time to confront the increasing dominance of our central bank.

Make SAN preferred on Google Show Transcript

All opinions expressed in this article are solely the opinions of the contributors.

Are you the kind of person who wants to know first thing in the morning how the financial markets are doing? Do you pay close attention to every speech by a Federal Reserve official, every interview, to see how they view the economy? To find out what they’re thinking?

Many people do. Smart people. People who have learned that there is money to be made by following these things closely.

That’s because the decisions made by Federal Reserve officials have an enormous effect on the performance of financial markets.

Big investors, hedge fund managers, and a multitude of professional financial analysts who give advice—they all focus like a laser when Fed Chairman Jerome Powell comments about future economic developments. Because he might give clues about when the Fed could start reducing its monthly purchases of $120 billion in U.S. government-backed debt.

But what if you personally don’t have time to dissect all these communications, looking for hints about the Fed’s next move.

Should it really matter what an unelected monetary official says or thinks?

If Fed officials decide to continue buying huge amounts of U.S. Treasury debt and mortgage-backed securities issued by government-owned agencies, it will keep interest rates artificially low—financial markets will likely keep rising—but does it put our country back to work? Does that support productive economic growth?

Here’s the big question. Should an economy based on free markets, and free enterprise, be so dependent on the decisions of a small group of monetary officials employed by a government agency the Federal Reserve?

Should they have the authority to decide whether interest rates should be higher or lower—and the power to make it happen by creating money with a digital blip?

Our founding fathers never envisioned that; money was not meant to serve as an instrument of government policy.

The Constitution grants Congress the right to regulate the value of money in the very same sentence that it grants Congress the right to establish our nation’s official weights and measures.

Because money is meant to be a standard—a dependable measure—that works for everyone by providing clear price signals to the economy. I think America’s founders were right on the money.

Left Media Miss
Jean-Christophe Verhaegen / AFP via Getty Images

UPS error caused China to get parts from F-35 stealth fighter jet: Bloomberg

10% left coverage50% right coverage
Right Media Miss
Armando L. Sanchez/Chicago Tribune/Tribune News Service via Getty Images

Family of Illinois dad killed by ICE, Silverio Villegas González, files claim over shooting

52% left coverage8% right coverage

Powered by Ground News™

Latest stories

Reuters/Rob Kerr, Charly Triballeau/AFP via Getty Images

Law and Order

28 mins ago

11m read

Oregon school shooting kills 4; Maine’s Troy Jackson tells Susan Collins to ‘shut up’
Politics

30 mins ago

3m read

Maine, Alaska Senate debates turn personal as candidates clash ahead of midterms
Law and Order

1 hr ago

2m read

Trump DOJ wants California to block ballots. The state disputes its evidence
Government Oversight

1 hr ago

6m read

Does ‘cooling pavement’ still work after a few years of traffic? We checked.

Subscriber Exclusive