Central Banks Sacrifice Independence as Crisis Grows

[Joanne98]

Feb. 9 (Bloomberg) -- The global financial crisis is forcing the world’s central bankers to surrender some of their prized independence. Regaining it won’t be easy.

More than a principle is at stake. For longer than a quarter-century, independent central banks have been able to take painful and politically unpopular measures needed to restrain inflation. The worst economic calamity since the 1930s leaves Federal Reserve Chairman Ben S. Bernanke, Bank of England Governor Mervyn King, Bank of Japan Governor Masaaki Shirakawa and their colleagues under pressure to align policies with those of their nations’ elected leaders.

As a result, policy makers may find it harder to act whenever the time finally comes to begin soaking up the money with which they’ve flooded the globe.

“The lines between central banks and governments are becoming fuzzier,” says Nouriel Roubini, a New York University economist. “Inflation is the path of least resistance for politicians, but it is dangerous.”

Finance ministers and central bankers from the Group of Seven nations will discuss what more they can do together when they meet Feb. 14 in Rome. What’s brought them to this point is the collapse of credit markets, which has robbed traditional monetary policy of much of its punch.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a0n9HXRAM61g&refer=home

They need a big fat protest. With thousands of people wearing vampire costumes.

[HamdenRice]

1. Translation: Central banks sacrifice independence to liberal democratic parties for first time

The Fed under Greenspan always propped up the Republicans and has "taken away the punch bowl just as the party was getting good" under Democrats.

The translation of this article is that for the first time central banks have to cooperate with liberal parties. The Fed has been subservient to the Republicans for decades.