What Will the Fed Do in the Next Emergency?

Congress may enjoy having a fourth branch of government that can wield enormous powers without accountability

Letter to The WSJ. 

"The Federal Reserve’s mission creep is well known, but Emre Kuvvet’s op-ed “Sun Shines on Fed “Doomsday Book” (Dec. 12) sheds new and troubling light on how far the Fed’s mission might go. As if it weren’t bad enough that, during quantitative easing, the Fed bought trillions of dollars in mortgage-backed securities, specifically subsidizing housing, the highly influential New York Fed bank has let it be known that it believes “gaining ownership stakes in companies” is also within the Federal Reserve Board’s powers.

Government ownership of the means of production is an hallmark of socialism, by the way. In the next “emergency,” expect the Fed to buy shares in failing electric-vehicle and renewable-energy companies.

Subsidizing industries was once the purview of Congress, which can be held accountable by the voters. The Fed has no such direct constraint and near-limitless power to create money. Congress may enjoy having a fourth branch of government that can wield enormous economic powers without political accountability. Perhaps we need a new Congress to get some constraints on the Fed.

Em. Prof. Burton Abrams

University of Delaware

Bovey, Minn."