By Andrew Ward
This morning, former Fed chairman Alan Greenspan explained that Congress pushed the central bank to fuel the housing boom. Featured article after article has pointed out this simple fact, but it’s rather telling that the former chairman would be so open to political nature of the Fed. Reuters reports:
“If the Fed as a regulator had tried to thwart what everyone perceived as a fairly broad consensus that the trend was in the right direction, homeownership was rising and that was an unmitigated good, then Congress would have clamped down on us,” he told a questioner at a congressionally appointed commission investigating the financial crisis.
Greenspan continues to spell out just how much of the Federal Reserve’s so-called independence is at stake:
“There’s a presumption that the Federal Reserve’s an independent agency, and it is up to a point, but we are a creature of the Congress and if … we had said we’re running into a bubble and we need to retrench, the Congress would say ‘we haven’t a clue what you’re talking about’”
The fact of the matter is that Federal Reserve is a political creature. While one of its primary functions is to protect the banking oligopoly from the economic consequences of fraud, it is given the ability to legally counterfeit money by the very government that directly benefits from its easy money policies. At the very least, Congress should be legitimately auditing its own creation.