The Myth of the Independent Fed

Bernanke is said to support stimulus (NYT): “If Mr. Bernanke opposed Congressional action on the ground that spending increases and tax cuts would increase the budget deficit, the Fed might restrain its own effort to stimulate the economy with lower interest rates. Mr. Bernanke wants to keep the Fed out of political jockeying, but he is also wary of endorsing measures that could aggravate the government’s long-term fiscal problems.... He has long made it clear that there are times when it makes sense for the federal government to run higher deficits to head off an economic downturn.”