In a shocking twist Wednesday night, Federal Reserve Vice-Chair Stanley Fischer decided that the Fed really shouldn’t be audited by Congress. Strangely, Fischer made his impassioned plea for the political immunity of America’s central bank…to Canada.
Speaking at the Canadian embassy in Washington, Fischer criticized the audit the Fed legislation backed most prominently by presidential candidate Sen. Rand Paul, R-Ky.
Paul’s Fed audit, and separate legislation backed by Republicans on the House Financial Services Committee, would “reflect an effort by the Congress to influence the Fed’s policy decisions,” Fischer warned. He did not mention Paul or any other lawmakers by name.
In text prepared for the speech, Fischer said the bills would subject the Fed “to the very sort of political pressure from which experience suggests central banks should be independent.”
Leaving aside the strange choice of venue, Fischer’s assertion that the Federal Reserve should not be accountable to elected representatives of the people displays a level of hubris not seen since his 1999 prediction that the Fed could manage the economy better without even the modest restraint of a monetary rule like gold:
In 1999 Dr. Fischer was interviewed by Arthur J. Rolnick, then Senior Vice President and Director of Research of the Federal Reserve Bank of Minnesota. The Fed, at that moment, was riding high. When asked about the gold standard, Dr. Fischer’s answer concluded that “It may be hubris to believe that human beings can do better than depend on the supply of gold, but we certainly should be able to do so, and are doing so now.”
I hoped that after the housing and tech bubbles popped and the disasters of QE one through infinity, Fischer would reconsider his opinion that the Fed needed no accountability. Apparently that was too optimistic.