Fixing the Fed

13 Pages Posted: 7 Apr 2016

See all articles by Richard Christopher Whalen

Richard Christopher Whalen

Economic Advisory Committee of FINRA; Indiana State University - Networks Financial Institute; Association of Private Enterprise Education (APEE); National Association of Business Economists (NABE)

Date Written: April 5, 2016


This paper reviews recent developments in US monetary policy and then discusses some possible reforms that might be considered to modify the behavior of the Federal Reserve System. Since its creation a century ago, the Federal Reserve System has grown from a narrowly defined central bank dominated by JP Morgan and other large banks into a Soviet style economic planning and management agency run by and for academic economists. The Fed's actions since the 2008 crisis have taken on a quasi-fiscal character and often exceed the agency's legal authority, but so far nobody in the White House or the Congress has objected. Meanwhile, many of the policies put in place by the Fed have arguably hurt economic growth and increased systemic risk in the financial markets, suggesting that there is no positive trade-off between the cost of Fed manipulation of asset prices and credit spreads and whatever benefits these activities provide. How do we think about the relationship between the Fed and the other arms of our federal government? Is talking about "fixing" the Fed overly ambitious given's the agency's growing power?

Keywords: Federal Reserve, Federal Open Market Committee, Volcker, Bernanke, Yellen, financial repression, negative interest rates, quantitative easing, monetary policy, rules based, Reconstruction Finance Corporation, full employment, Humphrey Hawkins

JEL Classification: E1, E2, E3, E4, E5, G1, H3, H6, N1

Suggested Citation

Whalen, Richard Christopher, Fixing the Fed (April 5, 2016). Available at SSRN: or

Richard Christopher Whalen (Contact Author)

Economic Advisory Committee of FINRA ( email )

1735 K Street NW
Washington, DC 20006
United States


Indiana State University - Networks Financial Institute ( email )

Terre Haute, IN 47809
United States


Association of Private Enterprise Education (APEE) ( email )

313 Fletcher Hall, Dept. 6106
615 McCallie Avenue
Chattanooga, TN 37403-2598
United States

HOME PAGE: http://

National Association of Business Economists (NABE) ( email )

1920 L St. NW, Suite 300
Washington, DC 20036
United States


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