A notably bad idea, but one which has precedent

Letters to the editor
Written By Alex J Pollock

Published in the Financial Times.

Among current “wild ideas” Gillian Tett writes (“Threats to the Fed go beyond firing Powell”, Opinion, July 19) that President Donald Trump may ask Scott Bessent, the Treasury secretary, to head the Federal Reserve too.

I agree that it is a notably bad idea to have the borrower be the boss of the lender, particularly to have the world’s biggest borrower, the US Treasury, be the head of its most important lender, the Fed.

But historical clarity requires us to realise that the first chairman of the Federal Reserve Board was none other than the then Treasury secretary, William G McAdoo.

Indeed, under the original Federal Reserve Act of 1913 until the amendments of 1935, the Treasury secretary was by law automatically the chairman of the Federal Reserve board.

That was how President Woodrow Wilson and the Congress designed it.

Alex J Pollock
Senior Fellow, Mises Institute, Auburn, AL, US

Alex J Pollock
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