Scott Sumner: belief

Transcript context

…Say, during the great financial crisis, the Fed knows if it does nothing on the bailout front, Congress will just do more. And the Fed would rather do it through lending facilities and monetary policy than have Congress get involved, or no? Again, I think the Fed felt that the crisis was very severe and that they needed to do a lot. I think to some extent they did the wrong things. In terms of their mindset, they were, particularly Ben Bernanke, who was a scholar of the Great Depression, right? — he was, in a sense, the perfect person to be in that role — he didn’t want to repeat what he saw as the key mistakes during the early 1930s, allowing the banking system to partially collapse and bring the economy down with it. I don’t think, again, they were thinking that much about what Congress might do instead of their actions, but just the crisis right in front of their face that they had to address. How did we end up with this one institution, which by your account is so nonpolitical in its decision-making? That feels quite miraculous, in a way. In response to the last few questions, you seem to be saying, “Well, the Fed just does what it thinks is best.” That’s a nice place to be, right? No other part of the government works that way. How did we get to that?…

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