Let’s hope this isn’t what she is saying when she says that scrutiny of the Fed (ha!) in the 1970s was the reason for stagflation. I mean they must be REALLY scared of an audit to float that line. I’m actually surprised.
For the record even Keynesian witch doctors understand that they created the malaise of the 1970s. It is their great failure. That the 70s funk (the economic kind not the good, musical kind) was because the public knew too much about the secret workings of the Fed in the 1970s is ridiculous. It’s more than ridiculous.
But what Yellen is doing here could be considered a modified version of what the Wall Street banks pulled in 2008, when they argued that if we the taxpayers didn’t bail them out, the world would end. (It wouldn’t have, but some of the banks would have inflicted some intentional pain on their way down.)
Again, let’s hope this isn’t what Janet Yellen is trying to say to Congress and the American people in a veiled way. Perhaps her concern is legitimate. (If probably wrong.)
The Fed is to be independent yes (according to its charter), but it is NOT sovereign. There’s a big difference.
(From The Washington Examiner)
Federal Reserve Chairwoman Janet Yellen invoked the Great Inflation of the 1960s and 1970s in pushing back Tuesday against a congressional proposal to subject the central bank to an audit of its monetary policy.
That ugly episode, in which inflation soared into the double digits and pushed up interest rates, was one of the biggest black marks in the Fed’s 102-year history. Yellen blamed it on pressure from Congress, which she said would follow legislation to audit monetary policy proposed by Sen. Rand Paul, R-Ky.
“I would remind you that in the early ’70s, when inflation built and became an endemic problem in the U.S. economy, history suggests that there was a political pressure on the Fed that interfered with its decision-making,” Yellen told lawmakers Tuesday.