Question

The Federal Reserve controls monetary and credit conditions in the country. The authority for conducting monetary policy is given only by the Fed: out nation’s central bank. The members of the Federal Reserve Board are not elected by anyone, but appointed. While the president and the members stand for re-election, no provision exists for Fed members. This has made the agency somewhat controversial at times.

The Fed is believed to have arguably far more power over controlling the economy than the president, yet its members do not stand accountable to the public for its actions.

Is this a wise arrangement in a democratic society? Or are there reasons why these members perhaps should not be elected by the voters at large?

Answer 1

Yes this is a wise arrangement in the economy. In this question you need to talk about credibility of the central bank. This is mainly the independence of the central bank from the political decisions of the government which always tries to meddle with economic policy making. The members should not be elected by the people because this will make central bank more prone to populist deciding making. Such decisions are not possible if view of people are taken into account as it is going to harm them.

So, for independence of central bank and establishing the credibility which guides the expectation in the economy it is necessary to keep it away from political decision making.