That's a valid critique. But here's the problem: the Fed has performed vastly better on any metric except "being elected" than the Congress. There's little doubt in my mind that if we had not had an independent central bank, unemployment would be many percentage points higher, GDP would have contracted much more strongly, and we wouldn't now be making optimistic noises about the thing bottoming out.
Where does that leave me?
Pascal-Emmanuel Gobry tackles this question as part of a larger post on the compatibility of democracy and capitalism, and his thoughts mirror mine.
Megan McArdle is very happy that Ben Bernanke, unelected and unaccountable, has a bigger role in the response to the financial crisis than Maxine Waters, and is only able to take the dramatic steps he is precisely because he is unaccountable, and so am I. But -- and I realize this is a cliché, but an unescapable one -- even if you have the smartest technocrats running the country today, what about their successors, and their successors' successors? The historical record of unelected governments in this regard is not very good.
Democracy is not so much about electing people as having a process and a system of checks and balances that ensures that basic rights are protected.
Of course, libertarians and liberals and conservatives all mostly abandon this committment to Democracy when there's a principle they care about at stake; democracy is, of course, good and wonderful, but that shouldn't let the majority dictate their opinion on the position of homosexuality in the public sphere . . .
All the people that I know, left and right, who are currently very worried about the democratic implications of the Fed's actions, seem to spend an awful lot of time trying to insulate their pet cause from the democratic process--whether that cause be property rights or sexual behavior. As an institution, what the Fed is doing now is not much different from what most of them want the Supreme Court to do on some issue or another: rule it out of the bounds of majority debate. All of those people would, of course, say that that's different--their issue is really important, and personal. But trust me, any student of the Great Depression will tell you that what happens in a massive financial crisis is both really important, and very personal.
I'm not saying that as some sort of useless hypocritical gotcha; my ideas are at least as muddy. I'm just saying that I'm having a hard time discerning some firm governing principle upon which to base my views.
Still, the longer I think about it, the longer my thoughts linger on Mencken's famous quote about democracy: 'the theory that the common people know what they want, and deserve to get it good and hard."
I think that the political process will hopelessly screw up the management of this crisis (something which libertarians are perfectly able to see when the government screwing things up is a left-wing populist one in Latin America). But maybe The People, God bless them, deserve to screw up their economy if they want. On principle, I am opposed to saving people from themselves. And anyway, maybe I'm wrong and the wisdom of crowds will prevail.
On the other hand, do they have a right to screw things up for everyone else? Should a populist 60% be allowed to plunge their neighbors deeper into crisis? In the case of America, to plunge the whole world deeper into crisis?
The uncomfortable conclusion I'm coming to is that yes, they should. Ben Bernanke should be hamstrung even though it's likely that this would make everyone worse off. And people who advocate for ending the independence of the central bank should be willing to accept all that this entails: inflationary monetary policy (the people love inflation!), bad and unpredictible banking policy, the collapse of the US economy. I just wish I didn't have to go along for the ride.
What a great post. McArdle revealed! Ideology always rules. If possible, she will usually try to come up with half-baked quantitative rationalizations. But empirical reality doesn't guide her thinking --it's just a kind of window dressing.
Pragmatism is always in tension with ideology. I think back to Jefferson's Louisiana Purchase, which still seems to conflict with his views on the role of the federal government. The country is better off because he broke with ideology. And the country is also better off with Bernanke, who seems to have the intellect and character for the role. Unfortunately, such folks are scarce, and no matter what system of checks and balances we design, we will be plugging lesser folks into those roles in an expected reversion to mediocrity.
The country is better off because he broke with ideology.
Are you sure?
Yeah, what the hell Megan? I'm going to pretend I didn't read this.
That's sort of interesting.
But given the choice of one and not the other, I would much rather know how you reached your conclusion than what your conclusion is.
Details on the journey are scant for a good reason - there is no logical path that leads to where she's found herself.
Isn't there a defensible way to a bit more positive about the current system? We take a technical area where Congress is unlikely to be competent and assign it to unelected technocrats. But those technocrats are appointed by people who are elected. So the system as a whole, including the technocrats, is still responsible to the voters. And Congress behaves like a drunk who locks up his liquor cabinet. Yeah, he's still a drunk, but he's one with enough sense to limit the damage that he can do to himself.
I think JimB is quite right.
Let's look at the Supreme Court as an example. Yes, in the short run, the Court is anti-majoritarian. But in the long run, the Court moves with democratic sentiment. Eventually, cases like Plessy get overruled and we get rulings like Lawrence. Over time, as popular sentiments change, so will the court. Eventually Lawrence may be overturned, but only if the people turn against it first. This isn’t to say that everyone agrees with the court right now, but looking back, the court normally moves with the people. This is, I think, partly the result of appointments by political actors.
I think the same is true with the Fed. In the long run, it is going to follow popular opinion, but it is insulated from short term swings in political passions. Indeed, we have the Fed precisely for this reason.
Lawrence was one of the worst bouts of illogic the Supreme Court has had since Roe.
"the court normally moves with the people"
---The Court should only "move" with the Constitution.
My statements are descriptive, not normative. Regardless of how the court should move, it does move with the people. Thus it is not as anti-majoritarian as it might appear.
There were 107 intervening years between these decisions. A more apropos comparison of Plessy and Brown yields a difference of 58 years.
In the very, very long run, the Court moves with democratic sentiment. But in the meantime, three to five generations of schoolchildren (or homosexuals or whatever) get the shaft.
homosexuals.....get the shaft.
thomas, please don't do that.
Sorry, I missed that. You get the idea.
ThomasBlair, I get your point that between Plessy and Brown, minority schoolchildren suffered. But, would they have fared any better if subject solely to the majoritarian will?
I am not arguing that the Court reaches the right decisions; I am arguing that they reach decisions that for the most part are in-line with majoritarian will.
Plessy was wrong, but at the time it was decided, I doubt that majoritarian sentiment was strongly against it. Later, as political winds shifted, so did the court, and the decision was overturned.
There are lots of valid reasons to criticize the Court. I am just arguing that claiming it is anti-democratic is not one of them. By analogy, claiming the Fed is anti-democratic is not a valid criticism, but there may be many other valid reasons to attack the Fed.
I just wish I didn't have to go along for the ride.
Not to worry, we're forming a small community dedicated to property rights and sensible economic policy. D'Anconia will be by later to give you directions.
Who ever said anything about a democracy? The constitution does not enshrine a positive right to vote. The Senate was intentionally apportioned anti-democratically, as was the Federal bench. The President is not directly elected. I think we can agree that the secretaries of State, Treasury, Defense, and Justice are important -- they're not elected at all. The constitution guarantees that the individual states shall be republics, not democracies.
Of all these structural antidemocratic features in the Federal system, you think what really be needs to be opened up to the masses is the running of the national bank?
I think we should give Madison, Hamilton et al the benefit of the doubt here and be glad the Fed's governors are not elected.
Why don't you consider taking monetary policy out of the hands of both the Fed and the government? Why not support the institution of free-banking and let market participants, as opposed to democratic voters, decide what currency they will use and how much of it they wish to hold? It might be harder to get politicians to support an institution that deprives them of power, but as you point out, the Fed is already supposed to be independent, so it seems like it would be a much easier step to take than say, eliminating government intervention in education. I know you've got an inner libertarian somewhere deep inside to which this idea should appeal.
The whole point of money is to have a common medium of exchange. Allowing for the possibility of everyone having their own money and their own medium of exchange simply creates too much friction in the economy.
Besides, all the money we use now is fiat money -- it holds value because someone big and powerful (the government) says so. Without the government its hard to get someone big and powerful enough to enact fiat money. The alternative is a barter society (I'll trade you a cup of coffee for half an hour of math tutoring) or commodity money. The problem with commodity money (and this one goes out to all you Ron Paul fans) is that you easily get stuck in a deflationary spiral: you have a (mostly) fixed supply of precious metals and an ever expanding population.
What is a deflationary spiral? Why would it be any worse than the inflationary environment in which we currently live? Shouldn't we expect things to get cheaper in nominal terms overtime as productivity increases?
Yes, deflationary spirals are almost always worse than inflations. Inflation is much easier to slow. Once a deflation starts, it tends to be self reinforcing.
11 myths about deflation:
http://mises.org/story/1254
Inflation is where money decreases in value over time. A dollar 50 years ago bought a lot more than a dollar does today, hence we have inflation. Deflation is where money appreciates in value over time.
There are several problems with deflation. The most obvious is that investment dramatically drops, as in companies stop building new productive facilities. Why go through the hassle of building a factory that will employ lots of people when you can simply camp out on your money and let it grow over time?
Deflationary spiral is when everyone holds back on purchases because they know the price level will be even lower. This is a disaster in a recessionary climate where the paradox of thrift is exemplified (saving leads to more unemployment).
On the contrary, inflationary spirals exist. When an economy's workforce is over-employed (Yes, there is such a thing. Full employment is actually 4-5% unemployment based on our potential economic output and cyclical/natural rates of unemployment), a wage/price spiral can occur. When there is too much money supply, workers demand higher wages to combat inflation, businesses will raise their prices and so on.
Example: My dad is buying my sister a car for grad school in the fall. He's been holding off waiting for an even better deal while the dealer could be very well slashing hours or laying off workers because no one is buying. I recognize the tight credit is a contributed factor to poor auto sales too.
If you average out the 4 dollar gasoline with the continuation in declining price levels we're likely to see, the long run price levels will look pretty darn stable.
Central monetary authorities aren't as evil as you'd think. Throughout the century, the US Fed has done a pretty damn good job at curbing both deflation and inflation. In fact, in the early 80s Paul Volker (Fed Chair, now Obama's NEC co-chair) actually tightened the money supply and caused a small recession for the purpose of stabilizing the inflationary price levels at the time.
The dollar is not some evil plan by the government to make us poor. At the end of the day, we, the private citizens, determine the market value (provided we don't have legal price ceilings/floors or HMOs/PPOs/Gov't transfers setting the price) of goods and services. If Bernanke goes Robert Mugabe on us, we'll hold our wealth in alternative assets (ex: they use flatscreens in zimbabwe) or "translate" an asset we value the same (won't work harder for) into the new price level of the inflationary currency. The only thing that is evil about currency inflation is it makes it difficult to plan and investment over the long run.
Assuming that your government continues to collect taxes, it needs to decide which currency or currencies it will accept as payment for taxes. (If the government will accept taxes paid in any currency it creates an incentive for taxpayers to use a currency to pay their taxes that is really really easy to forge).
Whichever currency the government accepts as payment of taxes will have an advantage as a currency and inflation or deflation in that currency (or currencies) will be an issue.
This is not to say that free-banking is a bad idea, just I have my doubts as to whether it is a solution to all monetary problems.
Question for Megan: can't you make the same argument about the US Supreme Court? Does that change your thinking?
If even 1 out of a 1000 members of the public had a good solid understanding of what the Fed does, I'd be shocked. I am not one of those people, and I know more about economics than your average layman.
Common sense is great, but only for common experiences. And that is the ultimate pitfall of democracy on the scale we practice it--- the instincts that are fairly decent in making decisions on a family or neighborhood level simply don't scale correctly to a 300 million person polity stretching thousands of miles.
And the ins and outs of the Fed? C'mon, be real.
Common sense is great, but only for common experiences.
Nice. Is that a quote? Because I'm gonna steal it.
It seems like two characteristics of a good government are a reflexive mechanism that tends to oppose expansion and another that tends to destroy existing apparatuses whose utilities are no longer apparent.
Elections are in line with the second mechanism (imagine elections as a mechanism that tend to throw out officials according to a Poisson process) and perhaps neutral to the first; net positive to good government. Bureaucracies are opposed to both mechanisms (mission creep and retrenchment).
I think in this way Megan's point of view is pragmatically justifiable; even if the policies resulting from more-direct popular control are inferior to technocrat-derived policies in the short run, in the long run elections might foster more creative destruction in the public sector.
Anyway, that's one possible world.
Is there some sort of populist movement out there arguing the Fed shouldn't be allowed to do its job?
Only the libertarians who are out teabagging.
So a miniscule fraction of a percent, then.
This might cause a few to blow their top, but capitalism is a form of democracy. People vote with their wallets, all the time. However this gives some people considerably more say in events than others, and this is of questionable fairness.
In democracy, we get to vote once, every few years. The vote is can be one or the other, but never somewhere in between. Representative democracy makes this even worse, since ones vote gets averaged out over districts time and time again. A democrat's vote in Texas makes little difference, as does a republican's living in California. The result has a scientific analogy, it is similar to rounding off members of a formula. Take any reasonably complex formula, and work it with all members being rounded off to one decimal place. Then start over, and try it while holding 5 decimal places and see how different the result comes out.
So, in our current democracy, out sample rate is pitifully slow, and we truncate the inputs again and again and again. That is pretty far from ideal, and one enlightened stateman can often do better. But as a whole the system works better than anything else people have tried (which is pretty amazing, if you think about it).
In the past, the low sampling rate and the truncating has been a logistical limitation, but it need not be so bad today, not in the information age. A gov't can hold referendums daily, or multiple times a day, on many different subjects. People can be allowed to state preferences and priorities. About which are your feelings stronger, gay marriage or abortion? Or let people decide how much of their taxes should different branches of gov't get? Don't support a war? Send less of your taxes to the military. Think the education system is underfunded? Divert your taxes there. Let politicians dance to the tune of the issues that are important to people, instead of battling each other with straw men and photo ops.
Bernanke is accountable; he's accountable to the President.
Government is filled with agencies, typically called authorities, that have this kind of accountability. The people who run them report to the elected officials. Authorities are created to protect sensitive things, like municipal airport management, from hoards of angry taxpayers, looking to save a dime this year.
To suggest that there is no accountability is just plain silly.
What do you think would happen if Obama tried to have Bernanke impeached?
How accountable do you think unionized teachers are to public officials in California?
How accountable do you think the NSA is to its oversight committees in Congress?
How do you think the military's accountability is affected by the joint oversight of the Executive branch and several Congressional committees?
How accountable is Congress to voters? Does your answer change when you consider incumbency rates for the last fifteen years?
Who is your accountabilibuddy? That is to say, to whom are you accountabilibuddiable?
What do you think would happen if Obama tried to have Bernanke impeached?
That would depend on the reasons given.
How accountable do you think unionized teachers are to public officials in California?
Not at all just now, but the budget crisis there will, I think, have interesting effects. See below, for instance...
How accountable do you think the NSA is to its oversight committees in Congress?
As accountable as Congress wants it to be. They can always cut the funding if NSA balks too much.
Of course that has consequences when people on the right scream about the effects on our defensive capabilities.
How do you think the military's accountability is affected by the joint oversight of the Executive branch and several Congressional committees?
Only the Legislative branch has oversight. The executive branch has Command authority. The legislative branch has oversight of the executive.
How accountable is Congress to voters? Does your answer change when you consider incumbency rates for the last fifteen years?
Very. It's the State Legislatures that set the voting districts to make them nice and safe.
Except in California where the financial crisis resulted in one legislator being able to force open primaries/caucuses through. So now anyone can vote in any caucus. That should have effects on incumbency.
All I'm saying is that there's hypothetical accountability, but what you actually see is that often the bromide holds and the tail wags the dog.
This especially in a system of reciprocal accountability - really, the President and Congress and the Supreme Court and the bureaucracy are all accountabilibuddies - where groups with reciprocal checks can cooperate to evade their responsibilities.
I believe Obama's remedy against Bernanke would be replacement, not impeachment.
School teachers in Maine (where I live) are accountable to an elected school board.
NSA's lack of accountability to Congress is Congress's problem; they've refused to do their jobs to enforce their oversight.
Why don't you ask Norm Coleman about voter accountability, because he's feeling the impact of it today.
As for the rest, it's nonsense for which you must account. Personally, I'm accountable to myself, my husband, and my children.
what children you deigned to let survive, yes. the children you chose to kill? nope. no accountability there.
NSA's lack of accountability to Congress is Congress's problem; they've refused to do their jobs to enforce their oversight.
I don't care who is failing to perform oversight properly. I'm just saying that it's not being done.
Why don't you ask Norm Coleman about voter accountability, because he's feeling the impact of it today.
Citing a contrary anecdote does not counter a large number of observations of persistent incumbency.
I think a more interesting question is "how accountable are unions to the teachers they represent?" A great example is the teachers' union in California donating $1 million to the effort to defeat proposition 8 (the ban gay marriage act). Now regardless of how you feel about prop 8, there's something a tad unseemly about an organization that extracts membership dues as a condition of employment spending money on a cause that has nothing to do with the core purpose for its existence.
Libertarianism for me but not for thee.
Hmmm... I kind of like it.
In the very, very long run, the Court moves with democratic sentiment. But in the meantime, three to five generations of schoolchildren (or homosexuals or whatever) get the shaft.
The homosexuals, at least, shouldn't mind getting the shaft, considering they were complaining about a law that made it illegal for them to.
But in all seriousness, Brown and Lawrence cannot be called "majoritarian" decisions, for the simple reason that if a majority had supported their outcomes at the time, no such decisions would have been necessary. Essentially, they were decisions where the Court guessed right about what future majorities would think; they led popular sentiment but were vindicated when popular sentiment shifted to match their formerly anti-majoritarian position.
Contrast with Roe v. Wade, where the Court made a bad guess about future majority views and now is stuck with the loss of legitimacy that bad guessing brings.
So then, what we're supposed to take out of this is: "All's well that end's well"?
When can authoritarian legitimacy run out of rope? What happens when it does?
Future majority views on Row Vv. Wade? Can you link to poll date supporting that?
Because I think a majority support a woman's right to choose.
A very vocal minority just can't accept that and let it be a personal choice.
If you look at polls, the majority favor abortion in the first trimester in the case of rape/incest/life of the mother. The majority do NOT favor anything close to as liberal as actual American abortion law, and definitely do not favor allowing late term abortion except for life of the mother considerations. And as Rob says, they're getting more conservative. Though if you ask me, Americans want abortion law to be looser than that--they just don't want to make a moral stance in that direction. They want wiggle room. But there's no way to prove that.
I find the ancient rule of "quickening" is still a pretty good comfort zone for most people, which is about between 4 and 4.5 months.
But in the end, being female, I still come down on the side of a woman's rights. Conflating discomfort with late-term abortion with a majority against abortion doesn't help the dialog.
Personally, I want to see men held more responsible for unwanted pregnancy. I'm not sure how, but I see a similarity here with domestic abuse: it's a woman's problem, not a human problem. Yet I know many men who've been victims of abusive partners. And unwanted pregnancy is all too much a woman's problem. I don't buy a father's financial obligations as part of the deal; they r don't have to deal with the impact of pregnancy on their bodies.
And when it comes down to matters of belief, mine is that there are too many people. I'd prefer to see rational choices lead to population control instead of war, disease, and famine. Controlling reproduction, first and foremost, would be among those rational decisions. I find it much more distasteful to murder children in Iraq then to abort an unwanted pregnancy.
But I grew up in an era when we talked about the problem of overpopulation. And it dismays me that we've surrendered that argument to the religious right.
Hey zic, notably, with the election of Obama, I read one news story saying that "young people today are to the left of their parents' generations...except as to abortion." And its called the murder of children, not the feminist-child-hating euphemism "right to choose."
Lurker--you can either call it "right to life/right to choose" or "pro-life/pro-choice". Trying to load the terms of the debate isn't useful.
Heh. I'm reminded of when I was a teenager and found it oh-so-clever to discuss the issue in terms of "anti-life/anti-choice"
Not that anything's changed, of course.
More seriously, it's a line-drawing exercise (as Megan pointed out), and the simplistic framing of "pro-life/pro-choice" does nothing to capture the nuances of the debate. In my opinion, that makes those terms similarly useless.
I'm not saying decisions are majoritarian when they are decided. I'm saying that with time if the public doesn't agree, the decisions get overruled. There are few venerable cases that are both good precedent and universally condemned. You call it good prediction of public sentiment, whereas I call it reversing unpopular decisions.
Rob, I think it is disingenuous to suggest that the issue of abortion is settled. I would argue that the issue of abortion is still being debated. For example, there is no way the 111th Congress would pass an anti-abortion bill even if it would be constitutional. But, if you’re right about the direction of public sentiment, and you may be, I am certain the Court will have no difficulty in finding a way to reverse Planned Parenthood v. Casey and Roe v. Wade at some point in the next forty years.
Future majority views on Row Vv. Wade? Can you link to poll date supporting that?
I had in mind present day views, which were in the future when the decision was made. They remain sharply divided and polling results depend strongly on how the question is worded.
The court doesn't try to predict the future; they try to understand the past. As the scope of definition changes, the words of the past still have to be interpreted. When it became unsupportable to consider black men as 3/5's, Brown became inevitable. When it became unsupportable to restrict rights accorded to men only to the male sex,amendments were made to broaden their application to the species man.
As to the role of the Fed in the current crisis, I would agree plays a similar role to the juidiciary. It becomes accountable when it is ineffective. Central Banks have come and gone in the past.
They want wiggle room. But there's no way to prove that.
Sure there is. The very notion of a rape/incest exception to a general prohibition is morally incoherent (Thou shalt not kill, unless the father is an asshole, then it's OK) and practically disastrous (false claims of rape up 200% this year!). It's only explainable as a desire for wiggle room.
Megan,
by your logic, any institution insulated from the democratic process should be taken down.
The Fed isn't some random institution; it is an institution created by our government with the purpose of keeping our economy as healthy as possible. Our democratic leaders pick the leaders and gave it its mission statement.
If you're going to take out the Fed, you might as well take out all the Federal Courts then too. The Constitution only calls for a Supreme Court. The rest was given to Congress to charter.
My history is is hazy, but wasn't the Fed created because Congress learned from its past mistakes where the lack of an independent Central Bank led to havoc in the economy?
What I am getting at is, well, every Executive agency is insulated from the democratic process. Why should the Fed be treated any differently?
Megan, the present crisis really is creating some thorny ideological problems that call into question a lot of our philosophical assumptions.
But the one you've picked here doesn't seem to me to be one of them. The political philosophical issues surrounding the balance of the "will of the people" versus the need for, on the one hand, professional administration of government and, on the other hand, defense of individual rights have been with us for a very long time. Where that balance falls is constantly being re-evaluated on largely pragmatic grounds as society changes. But the fact that we have professional civil servants and government-chartered institutions that are not immediately subject to the will of the people (like, say, the Supreme Court) is a long-accepted and necessary part of republican governance and doesn't present any deep philosophical challenge.
I don't see why the philosophical problems surrounding the Fed making monetary policy are any more thorny than those surrounding the fact that we select our representatives in Congress for terms of several years at a time, and they then make decisions that the people can't overrule or contest except by not re-electing them -- in other words, that we have representative rather than direct democracy. If the chairmanship of the Fed were to be vested as an inherited title belonging to the firstborn son of the Bernanke family, then I think you'd have a political-philosophical problem.
The NZ system for central bank independence is that the Government of the day signs an agreement with the central bank as to how the central bank is to operate, eg "the central bank will keep CPI below 3% on an annual basis" and then has no hand in day-to-day decisions. The Government can change the agreement to whatever it likes eg "the central bank will add an extra burst of liquidity every election year", the intention however is that having to do it publicly will encourage the Government to avoid such blatant political meddling.
This system has only been tried since 1989, so I don't think it's really been tested yet against the most short-sighted politicians a democracy can churn up, but it does strike me as a reasonable attempt to address the conflict between a desire for democratic oversight and that sometimes we want central banks to take decisions that cause short-term pain and thus are hard for democratically-elected politicians. (Non-democratically elected politicians have of course a far greater incentive problem).
As the Old Greeks (and most republican philosophers since) tell us, elections are oligarchic, sortition is democratic.
Just a reminder.
>I'm having a hard time discerning some firm governing principle upon which to base my views.
How about this: the model used to determine which military bases to close. Not a perfect equivalent to the Fed (which is a permanent institution), but a direction.
Legislators empanel an independent group of experts to develop a recommendation.
At the same time, they impose this restriction on themselves: when the recommendation comes back, it receives an up-or-down vote. No amendments allowed. (There can be a provision whereby the recommendation is sent back to the panel for revision, but things start to get iffy there.)
This:
o Brings to bear the undeniable value of technocratic expertise.
o Insulates that expertise to a great extent from political manipulation.
o Leaves legislators responsible to their constituents for A) their choice of panelists and B) their final votes.
o Channels the "political slack" that Bryan Caplan discusses so ably into virtuous channels.
For more of this thinking, cogently presented, see Fareed Zakariah's The Future of Freedom.
I wrote this up at more length and with links here:
http://www.asymptosis.com/bring-back-the-philosopher-kings.html
Megan quoting Menckin! I statrted to think that there may be hope for our girl yet, but then this:
I'm having a hard time discerning some firm governing principle upon which to base my views.
If you really are a libertarian, then that principle is called "freedom." The system can't be fixed with tweaks like NUDGE, vouchers and other pseudo-libertarian crap. More radical changes are needed.
Democracy is simply the tyranny of the majority. It may be the least-worst of the options for running the State, but that's not good enough. As long as the state claims a monopoly on initiating force and providing government services, any system of controlling it will be futile. The state must be abolished altogether.
Yeah, that's where I get off the libertarian bus. I'm not willing to sacrifice the well-being of society for the principle of democracy.
Even so, I don't think that having an independent Fed necessarily means that it's unaccountable. It's insulated from political pressure, not immune to it. The fed has sufficient independence to address this crisis because they have a bank of goodwill built up with members of both the elite and the general public. If the Fed was looked upon as an institution which was incompetent and corrupt, it wouldn't get anything like the deference it has from Congress and Treasury.
Bernake was appointed by the President and his appointment was confirmed by the Senate. The scope of his authority could be changed by legislation--though the likelihood of that happening is nil, since the idea that Congress is more competent than the Fed is laughable on its face.
Essentially, Congress and a previous administration decided that rather than subject macro-economic policy to the vararies of congressional process and administration approval, it was important enough to outsource it to an entity that focuses on only that, and which is quasi-independent. But it's hardly an unelected government.
Yeah, that's where I get off the libertarian bus. I'm not willing to sacrifice the well-being of society for the principle of democracy.
Democracy is not a libertarian principle.