Tuesday, January 16, 2007

Mr. Independent

First let me say that I'm more than a little surprised that Kelly Clarkson has a career. I mean, I'm not a big fan of her genre, but she has multiple legitimate hits. Did anyone expect a legitimate career from any American Idol contestant?

Anyway, Rep. Barney Frank (D, MA), chair of the House Financial Services Committee, will have other economists giving their view after Bernanke's February testifies before the committee in February. This according to the Wall Street Journal.

A bunch of blogs have weighed in on this: Greg Mankiw and Calculated Risk among them. I can hardly claim to have a better opinion than someone like Mankiw, so I won't try to. But to me, its troubling. Very troubling. I hope this is nothing more than Frank trying to look important and/or spread the lime light around to other economists who have DEM on their voters card. If that's all it is, then fine. I mean, if reasonable economists like Paul Krugman want to give an alternative view of how monetary policy is going, then I can't see the harm. I mean, people like that make their opinions known now, so what's the difference if they testify before congress?

On the other hand, if there are any steps at all that diminish the Fed's independence one iota, its the wrong move. People hotly debate policy issues with relatively minor impact, like small cuts or hikes in taxes. But if the Fed's independence is compromised, we're back to the 1970's. Get those those WIN pins back out.

I used to tell people that I voted based on a single issue: free trade. All other policy actions are debatable, but free trade is a proven good. If any serious politician begins to question the Fed's level of independence, then I'll have to add another issue.

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