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Central Banks Are Saving Democracy From Itself

Memo Pad

Central Banks Are Saving Democracy From Itself

Photo by Talk Radio News Service via Flickr.com

Those who want to make the Fed more subject to democratic control – and to a degree, I am sympathetic — should heed a lesson here. Democracy — that is, a democratically elected Congress and president — is choosing a damaging course of austerity. In Europe, it is far worse.

Needed policies are coming from America’s central bank, which was deliberately created as an independent entity. Note that it is Romney who is saying he wants Bernanke out of there and crying wolf about inflation. Bernanke, not subject to the whims of democracy, has had the courage to change his own thinking. He knows the consequences of tight policy now.

So what do we do? We should be a little modest about the universal benefits of democracy. For example, I think democracy may yet work to end the severest levels of austerity in Europe. People are mad. Governments are changing for the better. Demoracy in America is the only answer to an ever-richer and more powerful oligarchic class in the U.S., which wants to lower taxes, limit regulations, and cut government into ever smaller pieces.

But we must also deal with the disturbing fact that one of the least democratic of our institutions, the Fed, is the only one saving the day now. The same is true in Europe, where the European Central Bank is now acting intelligently, in contrast to the fiscal hawks dominated by the German policymakers and apparently supported by a majority of the German people. This issue is not simple.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

Cross-Posted From Rediscovering Government.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.


  1. bcarreiro September 17, 2012

    the price of raisins

  2. Tom_D44 September 18, 2012

    So a third round of printing money is the brilliant idea of saving the economy? Or is it really just buying a little more time because we have that ability? Unbelievable how anyone can see good in this decision.

  3. Dominick Vila September 18, 2012

    Buying mortgage backed securities, easing credit, and keeping interest rates low are traditional tactics used to stimulate a slow economy, but what will really get the economy moving in a sustainable manner is large infusions of cash by the private sector. Unfortunately, many American investors are more interested in maximizing profits by investing in countries like China, Japan and Brazil than helping their country overcome the economic problems we still have. The problem is not that there is no money to invest in America, but that investors prefer to help others and themselves than helping their homeland.

  4. Richie T September 18, 2012

    You can’t build up a business without investing in it. Romney, I’m going to do everything I can to rebuild the economy of this country. If he isn’t lying, again, why doesn’t he pull his millions invested in off-shore corporations that are tax free, and invest them where they might actually help? It’s my money, I can do whatever I want with it, doesn’t work.

  5. dljones September 19, 2012

    Bernake is irresponsible and the fundamentals of economic growth is not infusion of more dollars. QE1-2-3-are proven disasters as government cannot drive the economy. They create “wealth bubbles” and then collapse.

    There is an ample amount of money on the sideline, including banks and, expansion for manufacturing. Obama has them paranoid due to the unpredictability of his health-scare, regulation, increased taxes, social welfare, and now the Federal Reserve stimulus imminently fuels inflation.

    Economic growth is spurred from the private enterprise and not government. This administrations massive spending, taxes, and subsequently regulates prosperity right off our shores.

    This social/Marxist malevolent “leader” is so stupid that he continues doing the same thing with the same results.


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