A History of the Federal Reserve, Volume 2 (104 page)

The purpose of indepe
ndence is to prevent
government from using
the central bank to
finance its spending
and budget deficit. I
ndependence should no
t be left to the deci
sion of the chair or
the members of the Bo
ard of Governors. To
protect the public, i
t should be defined i
n law. At the same ti
me, the position of t
he presidents of the
reserve banks should
be clearly defined. Q
uestions about their
role arose many times
in the past, and it
has come up again. Th
e presidents have an
important role. They
talk to people in the
ir districts, and the
y have been a source
of valid criticism of
the Board’s pr
ocedures for controll
ing inflation or anal
yzing the economy. Al
so, as the system dev
eloped, the Board cha
ir became the dominan
t spokesperson. This
too seems an unwise d
evelopment.