Bessent's FIMA Push Exposes the Illusion of Fed Independence

The Federal Reserve's supposed independence from the Treasury has been called into question after recent events. Treasury Secretary Bessent recently took to X to celebrate what he called one of the 'highlights of the Warsh Fed.' His post didn't have anything to do with monetary policy, but rather the humiliation of mainstream financial journalists.

Bessent's attempt to persuade the Federal Reserve to expand its Foreign and International Monetary Authorities Repo Facility (FIMA) has raised questions about the Fed's independence. Japan wants to use the facility to get dollars to purchase yen and reverse its recent sharp decline against the dollar, but the current borrowing cap of $60 billion per-counterparty is a limitation.

Rothbard pointed out that 'independence' is a weird virtue to claim for a government agency. Private organizations are independent of politics because they are accountable to owners and customers, whereas a government agency cannot become independent of political control without also becoming less accountable to the public.