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Pro-con: Should the Fed remain independent?

It is only a year since our over-leveraged system buckled. Fear and panic paralyzed normal market functions. What pulled us back from the chasm was the Federal Reserve Bank. The Fed led the way by cutting interest rates aggressively to nearly zero. It realized that unconventional policy tools were necessary to keep equity and debt capital flowing, introducing unique lending and asset purchase programs. The unprecedented measures restored confidence and liquidity without provoking a sharp rise in inflation. The rescue could not have happened without the Fed's independence from short-term political pressures. — Mort Zuckerman, Financial Times

There's a good chance the call for the Government Accountability Office to audit the U.S. Federal Reserve will lead to nothing. Still, it's a proposal worth enacting. Ron Paul, the libertarian-leaning Republican representative from Texas, teamed up with lefty Democrat Alan Grayson of Florida to get this very good idea into the Financial Stability Improvement Act of 2009. Some say this threatens the Fed's independence. It doesn't. Fed Chairman Ben Bernanke (in photo) is a brilliant man who may well go down in history for having spared us "Depression II" — but he isn't a king. He can be audited and still get his job done. The Fed might even be better off for being forced to explain itself in greater detail. — Michael Maiello, Forbes

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