Fed’s Challenge, After Raising Rates, May Be Existential

BYEduardo Porter
MARCH 14, 2017
Photo The Senate confirmed Janet L. Yellen as chairwoman of the Federal Reserve three years ago by the tightest margin in at least 35 years. Credit Doug Mills/The New York Times

Is the Fed at risk for real this time?

Throughout American history, few institutions have inspired such persistent mistrust among voters and their elected officials as the mysterious authority that determines the value of their money.

The Federal Reserve wasn’t even around yet when the fiery Nebraska populist William Jennings Bryan rose to the Democratic presidential nomination in 1896 by charging that the gold standard that ruled monetary policy at the time was crucifying the workingman “upon a cross of gold” to serve bankers’ interests — depressing farm prices and crushing indebted farmers by limiting money in circulation.

Since its inception in 1913, the Federal Reserve has been alternately accused of either making money too scarce and expensive or making it too plentiful and cheap.

In 1981, a Democratic congressman, Henry B. Gonzalez of Texas, threatened to introduce a bill to impeach the Fed chairman, Paul A. Volcker, and most of its other governors, accusing them of squelching the economy with tight monetary policy.


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Thirty years later, on the Republican presidential campaign trail, another Texan, Gov. Rick Perry, famously suggested roughing up the Fed chairman, Ben S. Bernanke, for “printing money” to stimulate growth: “I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas.”

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