section discusses the federal reserve is an independent agency of the government. This means that although the president selects members of thefederal reserve and they have to be ratified by the...

section discusses the federal reserve is an independent agency of the government. This means that although the president selects members of the

federal reserve and they have to be ratified by the senate ,the members are independant of the president and congress.

 

these are my questions,

 

*Why do you think the federal reserve was established as an independent ageny?

 

*What problems might occur if the federal reserve was controlled by the president or by congress?

 

Asked on by carnige

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The Fed was made independent so that it can make its economic decisions without being pressured by the public or by the elected officials.

If the Fed were controlled by the President or Congress, it would come under major pressure to do what those people want.  The Fed would not be able to do what they think best based on their economic expertise.  The idea is that they might do things that are foolish in the long term just to satisfy the short term needs of the elected officials.

Basically, it would be like letting students pick how much they were going to work or kids pick how much candy they could have -- they'd be likely to do things that would be bad in the long term.

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