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Fed Establishment Lashes Back

Former Federal Reserve chairman Ben Bernanke is out with his memoir on the 2008 financial crisis. Called Courage to Act, it is a lengthy defense of the Fed’s unprecedented intervention in the economy, an intervention that continues to this day in the form of zero interest rates. Bernanke leaves no doubt that he didn’t take kindly to criticism of the Fed, despite trenchant criticism of its actions leading up to the crisis and its post-crisis bailouts of financial institutions. So much was he nettled, that he announces he has left the Republican party:

The increasing hostility of the Republicans to the Fed and to me personally troubled me, particularly since I had been appointed by a Republican president who had supported our actions during the crisis. I tried to listen carefully and accept thoughtful criticisms. But it seemed to me that the crisis had helped to radicalize large parts of the Republican Party. 

Of course, some would say it was the radical expansion of the Fed’s powers in recent years — Representative Scott Garrett has characterized it as acting like an unelected “Fourth Branch of Government” — that fueled the criticism. But Bernanke takes a different view, and the Fed doesn’t seem to be in any hurry to surrender its new power or influence anytime soon.

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