Is Bessent Right About the Fed?
https://www.project-syndicate.org/commentary/is-bessent-right-about-the-fed-by-willem-h-buiter-2025-11
The US Federal Reserve and most other G7 central banks have made numerous policy errors this century, making them ripe targets for criticism. But while reforms are necessary to improve their monetary-policy and regulatory performance, that does not mean their independence should be curtailed.
https://www.project-syndicate.org/commentary/is-bessent-right-about-the-fed-by-willem-h-buiter-2025-11
The US Federal Reserve and most other G7 central banks have made numerous policy errors this century, making them ripe targets for criticism. But while reforms are necessary to improve their monetary-policy and regulatory performance, that does not mean their independence should be curtailed.
Overuse of nonstandard policies, mission creep, and
institutional bloat are threatening the central bank’s monetary independence.
https://www.international-economy.com/TIE_Sp25_Bessent.pdf
https://www.international-economy.com/TIE_Sp25_Bessent.pdf
The central bank put its own independence at risk by straying from its narrow statutory mandate. By Scott Bessent (U.S. Treasury Secretary), Sept 5, 2025.
https://www.wsj.com/opinion/the-feds-gain-of-function-monetary-policy-ac0dc38a
Successive interventions during and after the financial crisis of 2008 created what amounted to a de facto backstop for asset owners. This harmful cycle concentrated national wealth among those who already owned assets. Within the corporate sector, large firms thrived by locking in cheap debt, while smaller firms reliant on floating-rate loans were squeezed as rates rose. Homeowners saw their property values soar, largely insulated by fixed-rate mortgages. Meanwhile, younger and less affluent households, shut out of ownership and hit hardest by inflation, missed out on appreciation.
By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen. Its pursuit of a wealth effect to stimulate growth backfired.
https://www.wsj.com/opinion/the-feds-gain-of-function-monetary-policy-ac0dc38a
Successive interventions during and after the financial crisis of 2008 created what amounted to a de facto backstop for asset owners. This harmful cycle concentrated national wealth among those who already owned assets. Within the corporate sector, large firms thrived by locking in cheap debt, while smaller firms reliant on floating-rate loans were squeezed as rates rose. Homeowners saw their property values soar, largely insulated by fixed-rate mortgages. Meanwhile, younger and less affluent households, shut out of ownership and hit hardest by inflation, missed out on appreciation.
By failing to deliver on its inflation mandate, the Fed allowed class and generational disparities to widen. Its pursuit of a wealth effect to stimulate growth backfired.
I wrote two pieces way back in Feb 2021 that made similar arguments:
Have misguided policies led to recent asset bubbles and boom-bust cycles? BY VIVEKANAND JAYAKUMAR, The Hill - 02/16/21
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/
The pros and cons of running the economy hot BY VIVEKANAND JAYAKUMAR, The Hill - 02/01/21
https://thehill.com/opinion/finance/536691-the-pros-and-cons-of-running-the-economy-hot
Have misguided policies led to recent asset bubbles and boom-bust cycles? BY VIVEKANAND JAYAKUMAR, The Hill - 02/16/21
https://thehill.com/opinion/finance/538921-have-misguided-policies-led-to-recent-asset-bubbles-and-boom-bust-cycles/
The pros and cons of running the economy hot BY VIVEKANAND JAYAKUMAR, The Hill - 02/01/21
https://thehill.com/opinion/finance/536691-the-pros-and-cons-of-running-the-economy-hot