Democratic Representative James Clyburn once told Federal Reserve Chair Jerome Powell in a 2021 hearing, “I trust that you will never lose sight of the fact that millions of Americans are dependent on the Fed continuing to support the economy’s recovery,” as noted by Wall Street Journal columnist Allysia Finley.
Finley highlights the shifting stance of political parties on the Fed’s independence. While Democrats showed little concern when pressing the central bank for economic support under previous administrations, there is now vocal emphasis on institutional autonomy as Republican figures urge the Fed to act in favor of economic improvement.
This double standard reveals a deeper inconsistency. Critics argue that government entities, including the Fed, do not generate resources independently. Instead, they redistribute them, often drawing from private-sector wealth. With Friday’s weak employment data, calls from Republican lawmakers and administration officials for interest rate cuts have intensified.
Historically, Republicans championed limited government intervention, echoing Ronald Reagan’s skepticism of bureaucratic solutions. Yet now, many within the party advocate for central bank actions to stimulate growth—essentially endorsing state-driven economic management.
The assumption that the Fed can spur sustainable expansion through monetary easing overlooks a key reality: economic growth originates in the private sector. Government spending or artificially cheap credit substitutes centralized decision-making for market-driven knowledge, which is far more comprehensive.
Even if the Fed injects liquidity into the financial system, it does so by absorbing capital that might otherwise be allocated by private investors. This raises the question: how can such intervention genuinely elevate overall economic performance?
Furthermore, if the central bank attempts to override market signals, private capital may respond by retreating, undermining the intended effect. The belief that the Fed can reshape economic outcomes is not just misguided—it’s a dangerous illusion.
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The Fed As A Source Of Economic Growth Is A Monstrous Delusion
“I trust that you will never lose sight of the fact that millions of Americans are dependent on the Fed continuing to support the economy’s recovery.” Those are the words of Democratic Rep. James Clyburn to Fed Chairman Jerome Powell in a 2021 hearing. The quote comes care of the Wall Street Journal’s Allysia Finley. n nFinley is making a point about how situational the Democrats are regarding the Fed’s so-called “independence.” Suddenly it becomes meaningful to them when it’s not them badgering the central bank for whatever economic sustenance they think the Fed can provide. n nWhich is a long way of saying that while there was logically no outcry from the Democrats when Clyburn leaned on Powell in 2021, the noise about the importance of Fed independence at times has deafening qualities in 2025 as President Trump and his partisans lean on the Fed to allegedly make things better. n nLet’s just say that both sides are hopeless. Really, how soon we forget, Republicans in particular, that government has no resources. And that it only has resources insofar as actual producers have less. n nWhich calls for a rethink of Clyburn’s veiled demand directed at Powell in 2021 relative to what Republicans are saying now. Even before Friday’s limp employment report, Republicans inside and outside the administration, and all the way up to the U.S. Treasury and the White House, were demanding rate cuts from the Fed. After Friday, one guesses the demands will grow louder. n nMORE FOR YOU n nWhich is the problem, for Republicans. Since when do they so readily believe that creations of government can centrally plan economic growth? If the question is flippant, that’s because it is. It was historically the Democrats who cheered government intervention, while Republicans were of the Reagan-style view that “I’m from the government and I’m here to help” were among the most terrifying words in the English language. n nA simple truth formerly understood by GOP types was rooted in the tautology that all economic growth comes from the private sector. And as a corollary to the latter, anything that governments provide in the form of spending or easier credit comes via a substitution of wafer-thin government knowledge for the immense knowledge that is the marketplace itself. n nPlease consider these historical Republican/conservative truths vis-à-vis the present and future clamor from those same Republicans and conservatives that the Fed start cutting interest rates to bolster an allegedly softening U.S. economy. Translating these demands, Republicans and conservatives are calling for government intervention to boost the Trump economy. Which is the problem, but also the delusion. n nGovernment intervention or central planning that never works during the good times hardly takes on growth-oriented virtue during the supposedly bad. That’s the problem. n nAs for the delusion, even if it’s true that the Fed’s interventions will release credit into the economy from the central bank, the Fed isn’t some “other.” It only has credit insofar as the private sector has less to allocate. How then could Fed meddling lift the economy? n nTaking the question further, and assuming the Fed capable of the magic that Democrats, Republicans and even libertarians ascribe to it, won’t private capital retreat overcome the Fed substituting itself for the marketplace in the first place? Hopefully the question answers itself. n nThe Fed can’t alter reality. To suggest it can is a monstrous delusion.