Principles of Macroeconomics / Unit 12 MAC 1104 short lesson, about 20 seconds
Independence, and Why It Is Contested
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The idea
The Fed is insulated from the government by long terms and by funding itself from its own bond holdings, returning surplus earnings to the Treasury. It is not, strictly, part of the government.
In practice
The case for independence is that inflation control needs a longer horizon than an election cycle.
Where people slip
The case against is that unelected officials make decisions with enormous distributional effects.
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