There is an old saying that one should never talk about politics or religion. I think that is just a way to make sure people don’t talk about anything productive or eye opening.
And I think it is basically the same attitude that makes the New York Times tell us not to “politicize the Federal Reserve.”
Yes, I had to do a bit of a double take there as well.
The article was written by Robert Rubin, the Treasury Secretary under President Bill Clinton. Clinton kept Republican Alan Greenspan as Chairman of the Federal Reserve, and now Rubin is afraid Trump will politicize the Federal Reserve when he replaces Yellen.
Trump may throw a curve ball and the powers that be need desperately to preserve the status
The Federal Reserve System was created by statute in 1913, but the independence of its monetary policy from congressional or presidential influence is not codified by law — and it wasn’t always inviolable. In recent years, so-called reforms have been proposed to subject Fed monetary policy to congressional review, but its independence has so far been preserved.
For good reason: An independent Federal Reserve led by governors who are committed to pursuing its dual mandate of price stability and full employment, as well as effective regulation — and who make decisions based on facts and analysis — is critically important to our economy, the well-being of the people and the market credibility of Fed policy making.
Hilarious. Tell me another. Oh, here it is, “I fear there may also be an effort to scapegoat the Fed if (or rather, when) the administration’s unrealistic economic growth estimates fail to materialize.”
It basically sounds like the Fed is Rubin’s religion. In their sacred temple, they make sound economic policy, and sacrifice for the good of humanity, to keep full employment, and stable rates. May the bubbles never burst, and may our economic guardian angels watch over us forever and ever, Amen.
What this really comes down to is factions of the same political beast competing for power. Rubin’s faction has had the power for decades, and they now fear that Trump may instigate a coup.
In a sense, Rubin is right when he talks around the issue of the Fed having too much power. It seems it took Donald Trump being elected President to make those on the left consider that a system is broken if it depends on having good people in power. (Especially since power attracts bad people, and corrupts good people.)
And as for Rubin’s insane claims that the Fed has never been politicized before, Ron Paul had a pretty good response.
The most notorious example of Fed chairmen tailoring monetary policy to fit the demands of a president is Nixon-era Federal Reserve Chair Arthur Burns. Burns and Nixon may be an extreme example — after all no other president was caught on tape joking with the Fed chair about Fed independence, but every president has tried to influence the Fed with varying degrees of success. For instance, Lyndon Johnson summoned the Fed chair to the White House to berate him for not tailoring monetary policy to support Johnson’s guns and butter policies.
Federal Reserve chairmen have also used their power to shape presidential economic policy. According to Maestro, Bob Woodward’s biography of Alan Greenspan, Bill Clinton once told Al Gore that Greenspan was a “man we can deal with,” while Treasury Secretary Lloyd Bentsen claimed the Clinton administration and Greenspan’s Fed had a “gentleman’s agreement” regarding the Fed’s support for the administration’s economic policies.
The Federal Reserve has also worked to influence the legislative branch. In the 1970s, the Fed organized a campaign by major banks and financial institutions to defeat a prior audit bill. The banks and other institutions who worked to keep the Fed’s operations a secret are not only under the Fed’s regulatory jurisdiction, but are some of the major beneficiaries of the current monetary system.
So I am not entirely sure in what fantasy land Rubin is living, but it is likely the same one in which the New York Times wants its readers to be living.
Just like the Fed clearly is a political organization which has always coordinated with (if not controlled) those with political power, The New York Times is just another branch of the state propaganda apparatus. The Times wants to scare people away from supporting an audit of the Federal Reserve and lull people into a false sense of security that the Fed is not only capable but willing, to do what is right in order to keep the economy on track.
But the truth is the Fed does not have the best interests of Americans in mind, and even if it did, they still wouldn’t be able to manipulate the economy for the better.