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Comment by JumpCrisscross | Hacker News Reader

> if we need the big bad lever, it should at least require congressional approval

What is the big bad lever?

If you're suggesting the Congress directly regulate monetary policy, one, Argentina. Two, do you remember the second-largest bank failure in the history of our republic two years ago [1]? What about the third and fourth? Would you prefer a depression every time some twat at Silicon Valley Bank forgets numbers can go down?

[1] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...

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Congress already manages the budget, another bomb, but year after year, they get over themselves and raise the debt ceiling, so yes I think they can handle approving changes to the amount of credit in America.

> they can handle approving changes to the amount of credit in America

The Fed doesn't control the amount of credit in America. It influences it by influencing rates by controlling how many assets it owns.

You want the Congress dictating buy/sell orders for Treasuries (and whatever other assets they can think of) to the Fed? At that point just go full MMT [1].

[1] https://en.wikipedia.org/wiki/Modern_monetary_theory

I don't understand your point, the Fed is a creature of congress and its members are selected by both the legislative and the executive, but we cede enormous power by giving board members giant terms which gives them defacto independence which is insane since they have the power to make me default on my mortgage tmrw. Monetary policy is policy and all policy should go thru congress. If congress is being useless, vote them out.

The Fed makes decisions for technical reasons, not political ones. That's a feature, not a bug.

I personally do not want a boom every 2 years just before the election, as congressmembers try desperately to make the economy look good, followed by a bust just after the election, as their medium-to-long-term-bad-ideas get shown to be bad.

How can they make you default on your mortgage? Your payment is made of 3 things, the home loan, property tax, and home insurance. The Fed influences mortgage interest rates by adjusting the Federal Funds Rate. Even if it does impact mortgage rates, it would only affect the extremely small subset of people with variable rate loans.This still only impacts the home loan, not insurance/tax.

One of the hallmarks of countries suffering hyperinflation/other monetary disasters is lack of a central bank because the legislatures fail to wield the power responsibly. It is another check and balance, and virtually ever economically stable country has one.

> One of the hallmarks of countries suffering hyperinflation/other monetary disasters is lack of a central bank because the legislatures fail to wield the power responsibly. It is another check and balance, and virtually ever economically stable country has one.

The original point of the Fed was to be a common reserve for banks which makes complete sense. Somewhere along the way, we told the fed to manipulate credit to fix inflation and unemployment and now we have a board that is virtually unfirable that can basically tax (inflate) you at any time and the theres nothing that the president nor congress can do.

> a board that is virtually unfirable

Trump fired Yellen.

I assume they have a floating-rate loan [1].

[1] https://www.investopedia.com/terms/a/arm.asp

Yeah, that's what I meant by variable rate, but ARM is the appropriate term. Thanks.

> Monetary policy is policy and all policy should go thru congress

Should the Congress also make play-by-play battle calls in war? Let's dissolve the DoJ, too, and have the Congress prosecute and investigate, à la Athens.

> If congress is being useless, vote them out

Again, Argentina. Electeds always want rates lower and spending higher. (Rich people who can store their wealth offshore, even moreso.)

> Should the Congress also make play-by-play battle calls in war?

No thats obviously the executive?

> Again, Argentina. Electeds always want rates lower and spending higher. (Rich people who can store their wealth offshore, even moreso.)

Yes this is how democracy works, if people are dumb, then things go bad. The point of democracy is that you have to take a leap of faith and hope people make good decisions. If you don't like this, we can just revert to totalitarianism. You might think I'm saying this tongue in cheek but I'm not, there's a real argument that modernity is too complex for democracy.

> thats obviously the executive?

The President chooses the Fed chairman. The Fed is an independent agency [1].

> this is how democracy works, if people are dumb, then things go bad. The point of democracy is that you have to take a leap of faith and hope people make good decisions

Which is why America isn't a democracy (and hasn't collapsed the way democracies historically collapse, in mob rule and hyperpartisanship), it's a republic. (It's also why we have independent agencies and an independent judiciary.)

[1] https://en.wikipedia.org/wiki/Independent_agencies_of_the_Un...

Ur obviously twisting my words, I'm colloquially referring to our republic by calling it a democracy, if I was for direct democracy, I wouldn't support congress.

Whether we have independent agencies is completely orthogonal to whether we are a republic or not. Even if all of these agencies were under the executive, we would still be a republic. And no, I don't support the independent nature of these agencies. The president and/or congress should be able to control these agencies directly. Knocking down the chevron deference is step 1 to eliminating statutory power.

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