Francis Kim advocates for an independent Federal Reserve

Furman University’s Francis Kim is a regular contributor to the Korea JoongAng Daily. In his latest column, Kim, a professor of finance in the Department of Business and Accounting, looks at the political pressures placed on the U.S. Federal Reserve to keep interest rates artificially low. Drawing from lessons of the Korean War, Kim cites the government’s wartime policy of pegging or fixing U.S. Treasury yields at certain levels, which crippled the Fed’s ability to respond to soaring inflation – until the Fed and Treasury agreed to keep monetary and fiscal policy separate.

“That 75-year-old principle – the Treasury does not interfere in monetary policy, and the Fed does not finance government debt – is again coming under strain today, in a striking echo of that earlier era,” Kim writes. “Whatever the debate over Fed independence or whether history is repeating itself, one lesson is clear: When interest rates are left to politics, markets pay the price.”