May 13, 2015 Reading Time: 2 minutes

federal reserve building, chicago

It’s happening. People are finally starting to realize that the Federal Reserve’s policies might not be working and central bankers are going on the defensive. At least former Fed Chairman Ben Bernanke did when, in response to a recent editorial in The Wall Street Journal, he claimed that “he never promised monetary policy would be a “panacea” for our economic troubles.”

In an op-ed published by The Hill earlier today, Dr. Judy Shelton pointed out that “such defensiveness is not reassuring.” It’s been nearly six years since the recession ended, but the Fed continues to push its zero-interest-rate policy “even as the negative aspects of this approach are imposing significant economic costs. That is to say, there’s still close to no economic growth, business investment has slowed to a near halt and small businesses can’t get loans.

In her piece, Dr. Shelton notes that the good intentions of the Fed and its bankers shouldn’t be called into question, but their outcomes absolutely should- at a Congressional level. She notes that “an accountable Fed would accept the notion that its monetary stimulus strategy needs to be examined because it has not delivered anticipated results, by the Fed’s own projections, within a reasonable time period.”

Instead, Fed Chairwoman Janet Yellen will likely pursue further experimental policies that will scare the market and lead to the  misallocation of investment resources. Whatever she does, it likely won’t be pretty.

To read Dr. Shelton’s piece in its entirety, click here.

Johannes Schmidt

Get notified of new articles from Johannes Schmidt and AIER.