What Are the Major Strengths of Monetary Policy?

The greatest strengths of monetary policy are increased accountability and transparency on the part of the Federal Reserve. Because the Reserve is in no way democratically elected or appointed, this gives taxpayers more involvement in and control over its decision-making.

Monetary policy sets guidelines within which the Federal Reserve would theoretically have to operate. These guidelines are varied and include strictures on GDP projections versus reality and on control over rates of inflation. As of 2014, these processes were heavily weighted as the sole purview of the Reserve itself, which has little oversight and little accountability with which to contend.

The Reserve would be obligated to follow guidelines established by Congressional committees when it set inflationary rates and made many other major fiscal decisions. If it deviated from these practices, it would be subject to Congressional oversight and review, obligated to explain its reasons for doing so and subject to correction and censure.

Monetary policy would bring the electorate closer to direct involvement in, and control over, the policies and actions of the Reserve. This furthers the goals of democratic government as a process in which the citizens of the country in question possess agency in their own futures and in the practices of their government and its institutions.