George Will: Fed on its way to becoming the fourth branch of government
On this weekend’s broadcast of ABC’s “This Week,” Washington Post columnist George Will criticized the decision by Federal Reserve Chairman Ben Bernanke to pump more money into the monetary supply, a move that has been overshadowed by the recent violence in the Middle East.
“Quantitative easing is the government printing money,” Will said. “It’s part of not mission creep, but mission gallop on part of the Fed, which is on its way to becoming the fourth branch of government — accountable to no one and restrained by nothing, as far as I can tell, in exercising both monetary and fiscal policy.”
Will explained the policy as an ill-advised implementation of trickle-down economics.
“The Fed] used to have one mandate: protect the currency as a store of value, prevent inflation,” Will said. “Then we added a second mandate: maximize employment. Now we have forgotten the first and concentrated solely on the second to produce trickle-down economics. The whole point is to drive people out of bonds and into riskier assets such as equities. Great effect on the stock market, where the equities are owned by a tiny portion of the American people in the hope that the wealth effect, as the stock market goes up, will cause wealthy Americans to spend and invest. And the result will, guess what – trickle down to the rest of us. Now, banks have $1.5 trillion in reserves. Companies have $2 trillion of cash sitting on the sidelines. Who in America is not buying a house because of 30-year mortgage at 3.5 percent is too high? Who is not hiring workers because lending is too expensive now?”