These days, it's pretty hard for Republicans and Democrats to agree on pretty much anything. But a new poll from Bloomberg shows that they see eye-to-eye on one issue: their hatred of the Federal Reserve. While broad public discontent with the Fed isn't shocking news, the aggressive action Americans believe should be taken according to the poll shows they want big changes.
Joshua Zumbrun provides the numbers:
Americans across the political spectrum say the Fed shouldn't retain its current structure of independence. Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.
In other words, a majority of Americans want changes. This goes beyond mere discontent. And this isn't really a political issue. According to the poll, 19% of independents, 16% of Republicans, 12% of Democrats, and 21% of Tea Partiers want the central bank abolished. That last statistic isn't terribly surprising, since one of the Tea Party's favorite politicians, Rep. Ron Paul (R-TX) is arguably the chief Fed opponent in Washington.
Yet the idea that the Fed should be abolished entirely is rather crazy. A complex economy needs a central bank. Some calls for reform could be more legitimate, however.
So what are some examples of changes that could be more reasonably argued? The audit authority that Rep. Paul has called for could allow additional Congressional oversight, but wouldn't necessarily undermine the Fed's ability to conduct monetary policy. Fed independence is a good idea, since politics often cloud sound economics. But that doesn't mean that the Fed's mandate is noncontroversial. It could be argued that maintaining a steady inflation rate should be its only priority, and Congress should worry about unemployment.
Of course, there's more varied opinion on the sorts of ways in which the Fed should change, depending on one's political viewpoint. If you're further to the left and like the idea of a planned economy, then you probably like the idea that the Fed can intervene to enhance financial stability and reduce unemployment without explicit Congressional consent. But if you're further to the right and prefer a free market, then you might believe that the Fed's interference does more harm than good.
And in either case, you might be dissatisfied with the Fed right now, thinking it has done too little or too much over the past few years. That explains why there is so much discontent regarding the central bank. Since macroeconomics isn't a hard science with easily identifiable cause and effect, the Fed debate isn't likely to end anytime soon either. As long as people disagree about fundamental economic principles, they'll be disagree about how central bank economists should act to promote a healthy economy.