King Fed v. the Gonzilla
A CENTRAL banker's life, as Mr Ver- plaetse can confirm, is full of hazards. Mar- garet Thatcher thought the Bank of Eng- 12ind was a nest of wets and crypto-Keyne- sians. She once told off a director in terms which had never been used to him in his life, and, as her memoirs make clear, is against any declaration of Bank indepen- dence which might have stopped her from doing it again. Believers in this concept (Norman Lamont joined their ranks on his retirement from office) should glance across the ocean to what is happening to the Federal Reserve System, independent since its birth eight decades ago. Not the President nor the Treasury Secretary can tell the Fed what to do. However, on Capi- tol Hill, Henry,Gonzalez is having a go. He heads the House banking committee, and he is pushing a bill to have the chairmen of the 12 reserve banks appointed by the Pres- ident and approved by Congress. (They are now chosen locally.) Mr Gonzalez says he
wants to make the Fed accountable to the American public, the Fed thinks he is trying to get leverage on it. Representative Kweisi Mfume (one of the Maryland Mfumes) from the Congressional Black Caucus wants to place more women and 'minori- ties' high up in the Fed, which, one way and another, is a notably straight institution. Other congressmen would be happier twist- ing the Fed's arm and making it prime a sluggish economy by printing more money. President Clinton says that since the Fed is not broke he does not plan to fix it, but Mr Gonzalez and his bill show no signs of going away. Moral: for a central bank, inde- pendence is not so simple as it looks. What matters is whom you are independent of.
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