Posted by: Dirk | July 13, 2009

Fed under Fire

The whole argument of central bank independence is built on the neutrality of monetary policy with respect to distribution. Now that the supposedly neutral 2-3 percent of inflation cannot be reached anymore, the game gets political and with that the Fed would need some rules regarding responsibility. Why should it be allowed to dole out a trillion in credit, while the government is not? That is a very tricky questions at this moment, especially since the government is democratically elected and the Fed is not.

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