| "The Federal Reserve System virtually controls the nation's monetary system, yet it is accountable to no one. It has its own budget, it is subject to no audit, and no Congressional Committee knows of, or can truly supervise, its operations." Murray Newton Rothbard (1926--1995), a professor of economics at the University of Nevada, Las Vegas, and former vice president for academic affairs of the Ludwig von Mises Institute, provided this statement about the independence of the Federal Reserve System, which has institutional autonomy in establishing long-term monetary policy. Those who support this independence say that it is essential for proactive and responsible fiscal procedures. Critics, however, contest that this institutional independence is not consistent with democratic accountability. To test the theories, this thesis will assess the autonomy of the Federal Reserve System, focusing on its latent impact on the economic crisis. It will detail the three structural features that give the Fed independence in its conduct of monetary policy: the appointment procedure for Governors, the appointment procedure for Reserve Bank Presidents, and funding. |
