The folly of Fed bashing

FED bashing - strident criticism of the Federal Reserve - is back in style, and it's taken a new turn. Traditionally, it's been a liberal sport. When the Fed raised interest rates, liberals attacked it for driving up unemployment and oppressing small businesses. Liberal Fed bashing abated in the 1980s and '90s, as inflation and interest rates receded. The financial crisis prompted a revival, with the Fed vilified as Wall Street's lackey. This, too, has faded as the economy improved.

By contrast, Fed bashing from the right is on the rise. When Janet Yellen, the Fed's chair, recently testified before Congress, her reception was often hostile. One Republican congressman accused her of meeting secretly with the treasury secretary, characterising these get-togethers as a partisan plot. Actually, the meetings date back to at least the Kennedy administration. Talks typically exclude monetary policy (the changing of interest rates), where the Fed's jurisdiction is supreme.

Interestingly, conservatives' mistrust of the Fed does not seem to reflect a fundamental disagreement over monetary policy. Of course, there are differences. Probably more conservatives than liberals think the Fed should quickly end its zero-interest-rate policy, but the dispute concerns timing more than direction. Almost everyone believes the direction should be up.