Fed faces magician criticism for spending – Commerzbank

The damage to the independence of the Fed does not have to occur abruptly, but could be much more subtle. There are criticisms of the Fed by some sectors of the Maga camp because supposedly spends too much money: too personal, the new office building is too expensive (‘A second palace of Versailles’), etc. That is why he must be subject to political control, says Ulrich Leuchtmann, Chief of Currency Research and Raw Matters of Commerzbank.

Luxurious buildings seen as threat and justification

“It also surprises me sometimes that at a time when commercial banks are practicing a new modesty (there have been scaffolding in front of my office for months!), The central banks are building buildings that leave speechless. This observation is actually an argument in favor of the independence of the central banks. It shows that no one who can print money can resist the temptation to spend unnecessarily. In your case, it is not so serious.

“Macroeconomic damage would be huge, with an acceleration of inflation as a result. Therefore, it is a hundred times better to allow central banks their buildings and luxurious personnel levels that attack their independence. The Fed has now announced that it will cut 10% of its staff in early obedience. Is that reassures me? On the contrary! The Fed has proven to be receptive to political pressure.”

“In the worst case, we could end with a Fed that has been so much reduced that it is de facto unable to act. Very similar to USAID. This is another way in which the independence of the central banks can be abolished.”