Congress may finally have to get smart about the Fed

It is so apparent that the Federal Reserve is out of options to force another artificial economic turnaround that lawmakers and Federal Reserve Chair Janet Yellen are having serious discussions about the prospect of negative interest rates. That’s bad news for the economy and any hope of a more sensible financial future in the U.S.

In other words, it’s long past time for lawmakers to get a handle on the nation’s central bank.

If you’re paying attention to the latest trouble the Fed finds itself in, the you know that the U.S. economy is headed for trouble thanks to the central bank’s easy money gamble over the past several years. You also know that after all those years of “extraordinary” stimulus efforts, there’s really nothing left for the Fed to do.

Still, unwilling to admit its powerlessness and expose the Federal Reserve as the sham that it is, Fed officials are toying with the idea of pushing interest rates into negative territory to keep up with the panicked economic meddling of the world’s other fiat money institutions.

And it’s not just an idea, Fed officials are telling banks to prepare for the possibility of negatively yielding Treasury rates now.

But there are still questions of whether the central bank even as the authority to manipulate rates so dramatically.

Senate Banking Committee Chairman Sen Richard Shelby (R-AL) is among those in Congress who doubt the authority exists. But, he warns, the Fed usually does as it wishes.

“The Fed generally interprets the law to their advantage,” Shelby told reporters during a recent interview. “We will have our counsel look into it. That’s the question. I would doubt it, but I haven’t personally checked it.”

During an appearance before the Senate last week, Yellen told lawmakers that none of the current turmoil is the Fed’s fault and—in true central banking fashion— rejected lawmaker suggestions that it may be time to take a second look at the central bank’s functions.

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Fed officials routinely claim that legislative efforts to place more government scrutiny on the central bank would hamper its ability to quickly respond to emerging economic threats and keep the economy afloat. Yet, repeatedly Americans find that emerging economic threats at any given moment have pretty close ties to the Fed policies of years not so long past.

It’s almost like saying Congress can’t function as efficiently as possible because voters can hold members accountable via elections, therefore we should outlaw elections so we don’t distract lawmakers from doing their jobs.

Republican Senator Bob Corker told Yellen last week that he and a growing number of his colleagues believe the Fed is “probably out of ammunition.”

If it can’t fix anything and it can’t be held accountable, it’s time lawmakers think about economic alternatives for the nation’s financial future. Arguments that replacing, or at very least restructuring, the Fed is too radical for the nation to handle are bunk. After all, creating the Fed was a pretty radical solution for a non-problem 100 years ago. Ditto for unhitching the dollar value from gold decades later.

If fail to act and the Fed does embark on a policy of negative interest rates, the situation will be no different than if Congress passed an unprecedented hike in taxes on every Americans’ savings. But maybe that’s the goal.

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