Over the years, there have been a number of people who have urged the politicization of the Federal Reserve. The Fed, of course, is independent and there are some people who have a big problem with that. There are those who would like to see the Fed subject to the President, or to Congress. But, wisely, Congress set up the Fed in 1913 as an independent agency; ever since then, however, there has been a tension between the Fed and those who would like more control of it.
The campaign season for the Republican nomination for president official launched with the Iowa Straw Poll on Saturday, and the guy who came in a close second, Ron Paul, has a long history of criticizing the Fed. He would certainly like elected officials to have more control of the Federal Reserve. Now, Texas Governor Rick Perry, who just announced his candidacy for the Republican nomination, is in the news for attacking the Fed. Here is how the Wall Street Journal covers it:
Mr. Perry brought the Fed directly into the campaign debate Monday night by saying it would be “almost … treasonous” for the central bank to play politics by expanding the money supply.
No one wants to see inflation; monetary policy is tricky business and getting the balance of rate setting and money supply is complicated. But I like the idea of that task being in the hands of an agency that is at least supposed to be independent. It would be highly imprudent to put such a task in the hands of politicians.