Biden Wants To Rip The Federal Reserve Apart

by | May 24, 2024

Biden Wants To Rip The Federal Reserve Apart

No folks, I’m not kidding. The current administration has made the governing and setting of interest rate policies a hot-button issue this election year, with some on Biden’s team talking about wanting to strip the central banks’ independent status and put the president in charge of setting interest rates.

Now this can be problematic in many ways, from interest rates being used as a political tool, to misusing rates for personal or political purposes causing a nationwide or even global financial collapse.

All in all, it’s a really really terrible, very bad idea.

In a speech in March, Biden shared “I bet you that that little outfit that sets interest rates is going to come down.”

And he’s made a couple of other comments similar to that since. These have received a good bit of scrutiny as the Federal Reserve and the central banks are independent agencies for the purpose of keeping politics out of monetary policy.

The White House’s Press Secretary Karine Jean-Pierre had to play defense and argued that Biden’s comments were not an effort to direct the Fed. 

She said this is what was meant instead: “he’s reflected a public interpretation of recent data. That’s what he’s speaking to.”

The Biden admin had to then play further defense and even released a blog post from the White House Council of Economic Advisors titled “The Importance of Central Bank Independence”. 

It touched on historical issues of White House meddling in monetary policy and bad economic outcomes, with the authors sharing that they “thought this was a good moment to explain.”

But the fact remains that having any president, especially someone who isn’t an experienced economist and central banker, in charge of setting interest rates and monetary policy is incredibly unwise.

Let’s take politics out of it completely and think about it this way: I’m sure your dentist is a very smart guy, he did a lot of schooling, knows his profession, etc.

Would you trust him to perform surgery on your leg?

That’s about the furthest thing from teeth as someone can get.

At the end of the day, we need the right person in the right place, doing the right job that they are “good” at.

Now, I wouldn’t exactly classify the Fed as doing a “good” job right now, as their monetary policy has been quite disastrous as we’ve seen from the sky-high inflation, poor GDP growth, and labor constraints we are seeing.

In fact, I am probably on the more extreme side when it comes to the Federal Reserve as I don’t think they should even exist… Plus, it’s not like they haven’t been political anyway.

The point of this article isn’t to talk about how great the Fed is…

However, the only thing worse than the machine we have now would be letting a President run it on the whims of his mood.

That’s why we are supposed to have an independent central bank (mostly) free from political pressures. Rather than a career politician setting interest rates that make them more favorable with the populous. 

Powell’s term as the Fed chair doesn’t expire until 2026, and current policy says he can only be fired “for cause.” 

So could Biden fire Jerome Powell? Technically, but legal experts aren’t sure exactly what would happen if a President tried to fire the central banker over a policy disagreement.

If we saw a political candidate begin attempting to use monetary policy for their own gain we would likely see a huge pushback from Wall Street. 

That level of market manipulation would likely cause so much instability and volatility in the markets that investors would be running for the hills.

— Nate Tucci

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