The Fed Needs Humans
Don't replace the Fed's policy makers with a mechanical rule.
The human element.
Photographer: Mark Wilson/Getty ImagesThis article is for subscribers only.
U.S. legislators have a radical plan for the Federal Reserve, one of the world's most powerful policy-making institutions: They want to remove human judgment from its decisions on where to set interest rates. It's a terrible idea that could endanger the entire global economy.
The Fed's monetary policy has long been set by the Federal Open Market Committee, which consists of the governors of the Federal Reserve Board, the president of the New York Fed and four regional Fed presidents on a rotating basis. Now, some legislators led by Jeb Hensarling, chairman of the House Financial Services Committee, want to replace this group of people with a fixed mechanical rule.