Is the Fed Playing Politics? (Kenneth Rogoff, Project-Syndicate)

In his recent debate with his opponent Hillary Clinton, Republican presidential candidate Donald Trump pressed his claim that US Federal Reserve Chair Janet Yellen is politically motivated. The Fed, Trump claims, is applying overdoses of monetary stimulus to hypnotize voters into believing that economic recovery is underway.

https://www.project-syndicate.org/commentary/trump-accuses-fed-of-playing-politics-by-kenneth-rogoff-2016-10

Why don’t checks clear instantly? Ask the Fed. (Aaron Klein, Brookings)

Whenever you make a payment—with a credit card, a check, a wave of your iPhone—you’re piggybacking on a system built during a time of punch-card computing, a time when billions of paper checks were flown across the country to be physically sorted one by one. Today, living in a land of smartphones and click-to-same-day delivery, one would think the payment system would have evolved. It has not.

https://www.brookings.edu/opinions/why-dont-checks-clear-instantly-ask-the-fed/

Can the Fed stay independent in a polarized era? (Philip A. Wallach, Brookings)

My Brookings colleague Sarah Binder and her coauthor Mark Spindel have an important new paperout today: “Independence and accountability: Congress and the Fed in a polarized era.” They ask who in Congress seeks to alter the Fed’s structure or responsibilities and when they do it. They provide answers backed up by an impressive new dataset encompassing 879 bills introduced by 333 lawmakers in the House and Senate between 1947 and 2014 that address the power, structure, and governance of the Federal Reserve.

Continue reading here ...

Philip Wallach is a senior fellow in Governance Studies. He writes on a wide variety of domestic policy topics, including climate change, regulatory reform, the debt ceiling, and marijuana legalization.

The Fed’s interest payments to banks (Ben S. Bernanke, Donald Kohn, Brookings)

At Janet Yellen’s recent hearing before the House Financial Services Committee, a few representatives expressed concern that the Federal Reserve is making interest payments to banks. Specifically, the Fed uses authority granted by Congress in 2008 to pay interest on the reserves that banks hold with it. Total payments to banks last year were about $7 billion. Why is the Fed paying such sums to banks? Are they “giveaways” to the financial sector, as some have implied? We’ll argue in this post that the interest payments the Fed is making are well-justified. In particular, they are essential to prudent monetary policy in current circumstances and do not unduly subsidize banks.

http://www.brookings.edu/blogs/ben-bernanke/posts/2016/02/16-fed-interest-payments-banks

(Global) Why the Fed Should Postpone Rate Hikes (Project-Syndicate)

http://www.project-syndicate.org/commentary/why-the-fed-should-postpone-interest-rate-hikes-by-anders-borg-2015-08