Warsh: The Fed Helped Create Fiscal Dominance

By William J. Luther – The Daily Economy

For decades, economists have warned about the risk of fiscal dominance. Over the past year, the topic has graduated to news headlines. At first glance, the US’s deteriorating fiscal situation appears to be the culprit.

Kevin Warsh sees it differently: fiscal dominance is an outgrowth of Federal Reserve actions that enabled profligate federal spending, led the Fed to stray from its monetary mission, and ultimately undermined Fed independence.