Former Federal Reserve Chairs Pen Op-Ed: 'America Needs An Independent Fed'

A handful of former Federal Reserve leaders deplored the central bank's current leadership to act independently and implement policies in the best interests of the economy.

What Happened

Former Fed leaders Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen wrote in a Wall Street Journal op-ed they all made decisions based on nonpartisan and nonpolitical factors. Domestic and international history is full of examples where an economy performs at its best when central figures refuse to cave in to near-term political pressures and implement policies based on economic principals and data.

On the other hand, policies that even appear to be politically motivated or influenced by threats from more senior levels of governments can undermine public confidence, they wrote. The outcome in this case is an unstable financial market and a deterioration in economic metrics.

Why It's Important

They wrote that the Federal Reserve's independent status is set in law as governors, chair and vice chairs can only be terminated if they are found to be in violation of a law. In fact, policy differences with political leaders is not a reason for termination.

In return, the Fed acknowledges the right of everyone, including the U.S. President, to advocate for any one particular set of policy. After all, a strong public debate helps make monetary policy better so long as all the rules are followed.

It remains important to ensure the Federal Reserve's ability to make decisions that are consistent with the best interests of the U.S. moving forward, the letter concluded.

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