Der Spiegel on The Shrinking Influence of the US Federal Reserve
Gabor Steingart reports from the Spiegel’s Washington DC bureau:
Humiliation for Mr. Dollar: Ben Bernanke, the chairman of the United States Federal Reserve Bank, faces a general investigation by the International Monetary Fund. Just one more example of the Fed losing its power.
The United States Federal Reserve Bank, or Fed, seems as much a part of America as Coca-Cola or Pizza Hut. But at least one difference has become apparent in recent days. While the pizza chain and soft-drink maker are likely to expand their scope of influence in the age of globalization, the US central bank is finding that its power is shrinking.
[snip parts explaining the doom and gloom of the current financial situation]
Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members — but never the United States — have already endured this painful procedure.
For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush’s last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.
When the final report on the risks of the US financial system is released in 2010 — and it is likely to cause a stir internationally — only one of the people in positions of responsiblity today will still be in office: Ben Bernanke.
We are against the IMF and federal style regulation over markets at all levels, yet we painfully yearn for more transparency from the Federal Reserve. If we aren’t yearning for more transparency from the Fed we are advocating abolishing it outright.
So the question is then, do we support the IMF investigating the hated Federal Reserve because it conveniently supports our anti-Fed sentiments? Or are we truly and purely against the IMF and it’s authority to perform such investigations?