Amar Bhidé writes in the WSJ:
Governments may pay lip service, but in times of stress they face a strong temptation to force central bankers to cover budget deficits through the printing press. Often the bankers don’t wait to be told (witness the Federal Reserve’s recent rounds of quantitative easing).
Suppose that we are uncertain as to the force that is driving the Federal Reserve’s behavior. What probability should we assign to this chain of events? I suspect it is very low. Is there evidence to support this hypothesis other than simple correlations? There are a lot of reasons to criticize the Fed, I’m not sure this is one.