Federal Reserve Governor Sarah Bloom Raskin addresses the Y’s Men today. (CLICK TO ENLARGE) Larry Untermeyer for WestportNow.com
Federal Reserve Governor Sarah Bloom Raskin, responding to a questioner at today’s Westport Y’s Men meeting, said abolishing the Federal Reserve as some have urged would “be a mistake” and a “huge step backwards.”
“My personal view is that would be a mistake,” she said before breaking into a smile as her answer drew loud laughter in the packed Westport Unitarian Church. “The Federal Reserve was put into place with a lot of thought, primarily a very hyper cyclicality preceded the creation of the Federal Reserve.
“And there was a sense that actually adherence to the gold standard was not in the long term interest of an institution building a kind of moderate –- and steering a moderate—path of growth in the economy.
“One thing that I say when I hear people argue for ending the Fed is ‘and then what? What would we put in place? What is the alternative here?’
“I’d be more than interested in hearing what other institutional arrangements might look like, what possible other mechanisms could do the job of a central bank.
“My initial reaction is that it would be a huge step backwards, and it certainly be quite a departure from the path of most advanced and emerging economies which all have central banks, not unlike the construction of the Federal Reserve’s.”
