Libertarian Republican Representative Ron Paul (R-Texas) and socialist Sen. Bernie Sanders (I-Vt.) have been pushing for a bill that will increase the transparency of the Federal Reserve, the secretive government institution that sets U.S. monetary policy.
But The Washington Post — and perhaps, by extension, the entire Beltway — seems dead set against the idea.
The paper's editorial board argues that the Fed's "independence" is much like the federal judiciary's independence, and it is "absolutely vital for the institution's proper functioning, it nevertheless depends on Congress and the president to respect decisions with which they disagree."
The best protection for either the Supreme Court or the Fed is to "stay strictly" within their respective, prescribed authority and to act according to principled criteria: legal ones for the justices, technical economic ones for the central bank, the editorial board opines.
The Federal Reserve Transparency Act, sponsored by Sanders and Paul, would allow Fed's decisions to be audited by the Government Accountability Office, the investigative arm of Congress.
"Though the bill has attracted 276 co-sponsors in the House and 17 in the Senate, it is wrongheaded in the extreme," according to the paper.
"By opening up the Fed's most sensitive interest rate and credit policies to public second-guessing, the bill would create a risk — real and perceived — of monetary policy bent to suit congressional overseers."
The editorialists think this would eviscerate financial markets' faith in the Fed and, by extension, the value of the U.S. dollar, just as surely as a political "audit" of the Supreme Court's deliberations would undercut public faith in the justice system.
The editorialists, however, acknowledge that the reason the bill is "gaining traction" now is that under Chairman Ben S. Bernanke the Fed has expanded its role in the U.S. economy to an "unprecedented extent," making use of its balance sheet to prop up troubled Wall Street firms and the commercial-paper market.
Others seem to agree that the more Americans know about the Fed's doings, the better.
"Much of our financial travails could have been avoided if the Federal Reserve had been an effective guardian of our financial system," writes financier Henry Kaufman in Barron's.
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