This is the Cato Daily Podcast for Friday, November 16th, 2012.

I'm Caleb Brown.

Is the Federal Reserve really independent?

And are the measures of that agency's

independence even credible.

Cato Institute's senior fellow Jerry Odriscoll at the Cato Institute's

30th annual monetary conference said rumors of Federal Reserve

independence have been greatly exaggerated.

People say that the Federal Reserve is independent, but I don't think anyone really believes that anymore.

Do you? I don't believe it in the sense that the either the technical literature

Claims they're independent or that the Fed itself would like to people to believe they're independent and independence of political

influence and the most direct way that they prevents them from being

independent is when governments run large deficits impossible for a central bank not to

What economists call monetize that by buying some of it at least

Currently they're buying 70 over 70% of US Treasury debt obligations are being

purchased by the Fed and that's no Central Bank can be independent if they're doing that.

And that is to some extent endogenous to the system that is because you have huge deficits which are

enabled by a central bank that can print money.

Right.

If there's a central bank in a fiat currency system,

then it enables governments, as you say,

to run deficits, and history suggests they will.

...