The Myth of Independence: How Congress Governs the Federal Reserve by Sarah BinderThe Myth of Independence: How Congress Governs the Federal Reserve by Sarah Binder

The Myth of Independence: How Congress Governs the Federal Reserve

bySarah Binder, Mark Spindel

Hardcover | September 5, 2017

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Born out of crisis a century ago, the Federal Reserve has become the most powerful macroeconomic policymaker and financial regulator in the world. The Myth of Independence traces the Fed's transformation from a weak, secretive, and decentralized institution in 1913 to a remarkably transparent central bank a century later. Offering a unique account of Congress's role in steering this evolution, Sarah Binder and Mark Spindel explore the Fed's past, present, and future and challenge the myth of its independence.

Binder and Spindel argue that recurring cycles of crisis, blame, and reform propelled lawmakers to create and revamp the powers and governance of the Fed at critical junctures, including the Panic of 1907, the Great Depression, the postwar Treasury-Fed Accord, the inflationary episode of the 1970s, and the recent financial crisis. Marshaling archival sources, interviews, and statistical analyses, the authors pinpoint political and economic dynamics that shaped interactions between the legislature and the Fed, and that have generated a far stronger central bank than anticipated at its founding. The Fed today retains its unique federal style, diluting the ability of lawmakers and the president to completely centralize control of monetary policy.

In the long wake of the financial crisis, with economic prospects decidedly subpar, partisan rivals in Congress seem poised to continue battling over the Fed's statutory mandates and the powers given to achieve them. Examining the interdependent relationship between America's Congress and its central bank, The Myth of Independence presents critical insights about the future of monetary and fiscal policies that drive the nation's economy.

Sarah Binder is professor of political science at George Washington University and senior fellow at the Brookings Institution. Her books include Advice and Dissent and Stalemate. Mark Spindel has spent his entire career in investment management at such organizations as Salomon Brothers, the World Bank, and Potomac River Capital, a Was...
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Title:The Myth of Independence: How Congress Governs the Federal ReserveFormat:HardcoverDimensions:296 pagesPublished:September 5, 2017Publisher:Princeton University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0691163197

ISBN - 13:9780691163192

Reviews

Table of Contents

List of Illustrations ix

List of Tables xi

Acknowledgments xiii

1 Monetary Politics 1

2 The Blame Game 26

3 Creating the Federal Reserve 52

4 Opening the Act in the Wake of the Depression 82

5 Midcentury Modern Central Banking 124

6 The Great Inflation and the Limits of Independence 165

7 The Only Game in Town 201

8 The Myth of Independence 232

Notes 241

References 259

Index 275

Editorial Reviews

"With persuasive evidence, The Myth of Independence looks at how the structure and behavior of the Fed is shaped in fundamental ways by Congress. This book is an important and interesting contribution to the study of the American political economy."-Nolan McCarty, Princeton University