Kamala Harris emphasized the importance of the Federal Reserve's independence, stating, "The Fed is an independent entity, and as president, I would never interfere in the decisions that the Fed makes." This assertion reiterates her commitment to not politicizing monetary policy, which she believes is essential for economic stability.
While many Americans might not grasp the nuances between monetary and fiscal policies, the long-term economic implications of political interference in the Fed have broader consequences, as noted by economists predicting inflation rates to rise more under a Trump administration.
Historically, central banks haven’t been treated as autonomous entities; in fact, until 1997, the Bank of England functioned under the Treasury Department. This reflects a trend toward establishing central banks as independent to prevent fiscal irresponsibility by any government.
Central banks like the Fed serve a crucial role in ensuring economic stability. The risk is that political interference can lead to practices like in Venezuela, where over-reliance on printing money led to hyperinflation and economic catastrophe.
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