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The Fed and alternatives to open market ops

lswanzer
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6/16/2018 10:11:08 PM
Posted: 11 months ago
Here is the context for my question:

The Fed buys government bonds when they want to inject more money into the economy.

Congress and the President determine how to finance spending, either by taxes or issuing debt.

The Fed has to be independent of political influence. But why couldn't The Fed be independent in determining the amount of money to inject into the economy but, instead of buying bonds, why couldn't The Fed turn over the responsibility to Congress and the President for injecting the money into the economy?

Once the Fed determines the appropriate increase in the money supply Congress and the President could spend the money on anything from infrastructure, to health care, to education, military, and so on. If the Congress and President decided to spend more than the Fed wants to inject into the economy then they would borrow the rest.