Stabilizing, Maybe?

It's time for a trickle-up theory of economic growth.

"The economy is making progress." --  Janet Yellen, chair, U.S.  Federal Reserve

Global economic growth "is too weak, fragile and uneven." -- Christine Lagarde, managing director, International Monetary Fund.

   As the national and the world economies struggle to gain some momentum, assisted by central banks and international lenders through monetary policies that try to induce lenders and borrowers to jump-start economic engines, the U.S. Congress wants a bigger role as overseer of what the Fed does, with regular audits of the Fed's monetary policy as well as any transactions "involving a foreign central bank, the government of a foreign country, or a nonprivate international financing organization." So says an analysis by the Congressional Budget Office of a House proposal to increase Congressional authority over what the Fed does.
   The CBO report on H.R. 24, the Federal Reserve Transparency Act, said the bill would direct the Government Accountability Office (GAO) to audit the Fed Board of Governors, and the Fed's 12 district banks. Such audits are now banned, and repealing the prohibitions would not only call for audits with 12 months of enacting the bill, but would also bring on "future requests from Members of Congress for GAO to conduct additional oversight and analysis of the Federal Reserve System."
   Cost: $5 billion over five years to hire staff and pay expenses for the audits, the CBO said. In addition, a loss of revenue that the Fed pays to the Treasury of as much as $7 million.

   So even as the Fed sees some progress and warns that its future actions will be cautious, and international agencies such as the IMF and central banks in Europe push to keep money -- and consequently the economy -- flowing and growing, some in the U.S. Congress want to put their leash on the monetary watchdogs at the Fed. In short, politicians want to monitor the monitors.

   Is this a good idea? Since its inception a hundred years ago, the Federal Reserve has been independent -- even secretive -- in its efforts to step in to boost the economy when needed, and to slow things down when business partying gets too raucous. Granted, they don't always succeed, but political oversight -- read interference -- by partisans who may be anxious to blame incumbents for economic malaise can be more dangerous.

   Meanwhile, things may be getting a bit better. The Census Bureau reported that the poverty rate in America declined for the first time since 2006. A small change, statistically insignificant, the report admitted, along with a statistically insignificant change in median household income. But at least it's not getting worse. That, however, is small comfort to those in the middle and lower income groups whose income is stable even as those in the highest grouping see increases in their wealth.
   And while the U.S. may have halted an economic decline, many other nations are still looking at a potential downward slide.