Hurtful and ignorant things are said about the Fed every day.  The stock market obsesses over every word and comma in Fed minutes.  Now, put yourself in one of the vacant seats on the Fed’s Board.  You know you need to raise interest rates, because low interest rates hurt savers, mostly old people.  You also know that rising rates typically cause the economy to slow somewhat, which hurts the unemployed.  You know that deflation is a much worse problem than inflation and that raising rates pushes us closer toward deflation.  Importantly, you know that raising interest rates makes the dollar stronger.

Many people view a strong dollar as a patriotic objective, but those people are not exporters (down 4% for the first half of this year).  This makes our balance of payments more negative, which actually subtracts from GDP.  A stronger dollar is bad for employees in export-related industries.  If the Fed raises interest rates, savers will be happy, but export workers will be unhappy.  The Fed must pick which people are winners and which are losers.  Theoretically, the Fed is insulated from political considerations and can pick winners and losers on the basis of the greater good, and I believe they are.

But, there is no shortage of Fed-bullies!  Libertarians hate the Fed precisely because the Fed can pick winners and losers.  Tea-partiers hate the Fed because they hate everything about the government, any government.  Establishment Republicans privately support the Fed but are too cowed to defend it.  And, Democrats are too fixated on employing every last American to even discuss an interest rate increase, much less actually raise rates.

Now, how would you like Janet Yellen’s job?  Did you enjoy being bullied as a kid?