Question

The Federal Reserve is set up to be relatively independent of the President and Congress. For example, members of the Federal Reserve are appointed for 14-year terms, which is longer than the term of a president or member of Congress. Why is this? What would happen if independence was removed, and the Fed was placed under closer supervision of Congress?

150 WORDS PLEASE

Answer 1

ans.....
The appointment of the Fed governor is by the president in office at the time. The president will thus make an appointment along party lines and so this will determine policy. But the Fed governor is supposed to act independently. If the independence was removed then Fed Governor would be changed by Congress depending which party was in power and this would remove all consistency in economic policy. Also the policy will be dictated by whether the democrats or thr republicans were in power. A Fed governor is appointed for longer so that their policies outlive the life of a congress batch or that of a president. This will also allow the economic policies would be consistent and would be good for the economy as a whole. Congress would dictate all policy if such independence was removed and so this will hamper the economy as only policies supporting