Criticisms of the Federal Reserve

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Criticisms of the Federal Reserve

Criticisms of the Federal Reserve

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The Federal Reserve Agency has attracted a lot of criticisms since it was established. Federal Reserve System has been criticized by a number of influential Americans including President Thomas Jefferson and many others. While initial criticisms stemmed from the notion of central banking and influence of larger banks, this has shifted to the way Federal Reserve handles monetary policy and recurrence of economic crisis despite the existence of the Federal Reserve.

Criticisms of the Federal Reserve

The memories of Great Depression, the current economic crisis and failure by the Federal Reserve to cushion the country against such extreme economic conditions have raised a lot of criticisms on the Federal Reserve. Federal Reserve System has also been criticized on ground of high rates of inflation and fractional reserve banking. More recently, political connection and cult of personality surrounding the management of the Fed has also attracted a lot of criticism. There are also issues of lack of transparency and political patronage in employment which revolves around the rule of elite theory. The ranging criticisms on Federal Reserve especially on the role of Federal Reserve during economic crisis have eroded confidence of Americans on the agency.