Macro Musings with David Beckworth Andy Levin on Holding the Fed Accountable
Apr 28, 2025
Andy Levin, a Dartmouth College economics professor and former advisor to central banks, discusses vital insights on holding the Federal Reserve accountable. He emphasizes the importance of transparency and external reviews to enhance the Fed's legitimacy. The conversation delves into the staffing debate, revealing inconsistencies in compensation compared to other federal positions. Levin also critiques the Fed's forecasting failures and its extraordinary independence, calling for reforms to improve oversight and communication with the public.
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Fed's Unique Independence
- The Federal Reserve operates with extraordinary independence not seen in other U.S. agencies or global central banks.
- It sets its own accounting standards, budgets, and programs without external audits or comprehensive oversight.
Understanding Fed Independence
- The Fed is not a separate entity but an agency created by Congress to regulate money.
- Independence means insulation from political interference, not freedom from accountability or oversight.
Surge in Fed Staffing Growth
- Fed staffing increased by about 20% since 2010 while other agencies shrank due to digital efficiencies.
- The growth accelerated since 2018 without clear justification or external oversight.