Comments on External Pressures and the Operations of the Fed

Ed Kane offers us some thoughtful propositions about the political economy of the Federal Reserve and a useful summary of his earlier work. As the title suggests, Kane emphasizes external pressures coming from Congress and the Executive and outlines the way in which these pressures operate on the Fed. He finds that the Fed's political role is to act as a scapegoat, or buffer, between the public and the government. The Fed accepts the opprobrium for decisions over which it has limited influence in exchange for the appearance of independence.