Prof. Brands writes op-ed for L.A. Times
Posted: November 15, 2006
Pity Ben Bernanke. As chairman of the Federal Reserve, his every utterance (or cough or sneeze) is analyzed for clues as to the future direction of interest rates. The weight of the American economy is laid on his shoulders by pundits and much of the public. And he labors in the shadow of Alan Greenspan, the legendary Fed chief who became the icon of American prosperity during the glory days of the 1990s. It's like following Elvis onstage.
But matters could be worse. Trying as Bernanke's job as the nation's head banker might sometimes be, it is nothing like the task his more distant predecessors faced. The modern Fed was born nearly a century ago of a grand compromise that terminated one of the longest-running and most bitter struggles in American political history: the fight over the money question.
From the 1780s until 1913, the money question roiled American public life — spawning political parties and candidates, sparking legislative fisticuffs and convention brawls, prompting boardroom conspiracies and White House scandals. It fell into two parts. What constituted money? And who controlled it? Was money gold, silver, paper currency or bank notes? Should the private sector control the money supply, the way it controlled the supply of wheat, corn and steel? Or should the public sector, which typically controlled water supplies and police services? In other words, should money be primarily the province of capitalism or of democracy?...
Professor H.W. Brands