Futility of Granting More Power to the Fed

Although plenty of questions are being asked about Secretary Paulson's plan granting sweeping new powers to the Federal Reserve, a crucial one is in danger of being overlooked. That question is: What use has the Fed made of past extensions of its powers? Is it reasonable, given the Fed's record, to expect it to use new powers responsibly?

The answer ought to give plan supporters second thoughts. It is that, whenever the Fed acquired new powers in the past, it abused them, often with dire consequences for the U.S. economy.

More here from George Selgin at UGA.

Best Line on the Fed that I Have Read Today

"There's good monetary policy and there's bad monetary policy, and it doesn't break down along Democratic or Republican lines."

More from this WSJ story discussing the prospects of Fed Chairman Ben staying on his job for a new term.

Milton and Money Stock Control

Although Milton did not prevail in his quest to have the Fed maintain a constant money-growth rate, he did prevail in his insistence that policy be apolitical and rely to the maximum possible extent on market judgments. He lost a battle but truly did win the war.

That's from St.Louis Fed's Bill Poole. More here.