Come on and answer my question so you can move up on your level?

Question

Defend or refute the following statement: The independence of the Federal Reserve System is essential to the health of the economy.

Answer 1

The independence of the Federal Reserve System is essential to the health of the economy.

Absolutely;  When Congress screws up fiscal policy, the Fed fixes their mistakes with monetary policy. If Americans could elect who sat on positions in the Fed, I'm sure the economy would be in a state of chaos. Monetary policy is very complicated and any random Joe couldn't occupy  a position like people fill up Congress.

Congress created the Federal Reserve System in 1913, charging it with the responsibility to foster a sound banking system and a healthy economy. This remains the broad mission of the Fed and its component parts: the 12 Federal Reserve Banks nationwide that each serve a specific region of the country, and the Board of Governors in Washington, D.C., which is set up to oversee the Fed System. Each person that fills a spot in the Fed specialize on each of the 12 districts and know which policy to undertake so each of the 12 disticts can benefit  most.

Monetary policy is complicated and the people that occupy positions at the FED are best suited to the job.

Answer 2

Absolutely. In general, only when the monetary authority is non-political, then it is able to sustain economic health of the economy.

For simple reason, we know that monetary authority or central banks are mainly in charge of seignorage, which apparently if abused can result in drastic inflation in the economy. On the other hand, politicians are always tempted to spend the government's money, so as to boost their votes during election (such as upgrading of neighbourhood, to 'buy votes'). Apparently, there is a conflict of interest. Suppose the chairman of federal reserve position is held by a George W. Bush at the same time. The moment he needs money for war, but the country is faced by budget constraint, what he can do is simply print more money.

However, this is very bad for the economy, as we know that when money supply increase when the government is running a deficit, inflation will come and haunt the economy. This can leads to drastic inflationary effect.

History taught us how bad it can get. The Germany hyperinflation in 1972 proves how bad uncontrolled seignorage can leads to economic turmoil in the economy. It went so bad, that restaurants literally get somebody to announce the new menu pricing to its customers every couple of hours!

Hence, economist always advocate that the monetary authority must be politically independant.

Sadly, not every monetary authority in the world is politically independant. A classical example is Singapore, where the Monetary Authority of Singapore is chaired by Senior Minister Goh Chok Tong, and Deputy Chairman Lim Hng Kiang, Minister of Trade and Industry. Both are politicians and currently held position in the cabinet. However, Singapore manage to maintain its economic health. I argue that Singapore is an exceptional case, as the political structure is different. The parliament is dominated by one party, left with less than a handful of seats for the oppositions, hence it has the capacity to maintain such a management system.

Answer 3

originally that was supposed to be the idea but it never worked out. after the federal reserve was created in 1913 to help stabilize the economy we went into a very bad depression in 1929. through the years the feds got more and more power till today they control almost most of the gov and if you look around they certainly are not keeping the economy in check nor the gov spending. I say it's time to get rid of the feds because they obviously can't do their job.