<p>There is no <em>direct</em> economic rationale for this. This is done because there is a worry that if Fed will directly deal with government it will undermine its independence.</p>
<p>When it comes to the independence itself most economists would argue that independent central banks perform their duties better than ones that are not independent (the same way how for example independent courts usually rule more fairly than ones that are not). This is also how Fed itself justifies its independence as you can see at their page <a href="https://www.federalreserve.gov/faqs/why-is-it-important-to-separate-federal-reserve-monetary-policy-decisions-from-political-influence.htm" rel="nofollow noreferrer">here</a>. Also for gauging the consensus among economists on central bank independence you can see <a href="https://www.igmchicago.org/surveys/fed-appointments/" rel="nofollow noreferrer">this IGM poll</a> amongst the top US economists (the poll is about political appointments - but that is all part of the whole Fed independence issue).</p>

CC BY-SA 4.0
2020-11-27T14:50:11.867Z
2020-11-27T15:24:25.527Z
2020-11-27T15:24:25.527Z
1muflon1
<p>I know it's forbidden in its charter.  But what is the economic rationale?</p>

CC BY-SA 4.0
2020-11-27T14:48:40.953Z
To constrain government spending/ensure time-consistent policy.
EB3112
<federal-reserve>
Why is the fed forbidden from buying gov't debt directly from the treasury?
Mr. Cooperman
# Why is the fed forbidden from buying gov't debt directly from the treasury?

(Asked by: username_0 on 2020-11-27)

I know it's forbidden in its charter. But what is the economic rationale?

**Tags:** federal-reserve

> **Comments:**
> **username_1**: To constrain government spending/ensure time-consistent policy.  

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## 1 answers

### Answer by username_2 on 2020-11-27. Score: 1 | Accepted answer

There is no *direct* economic rationale for this. This is done because there is a worry that if Fed will directly deal with government it will undermine its independence.

When it comes to the independence itself most economists would argue that independent central banks perform their duties better than ones that are not independent (the same way how for example independent courts usually rule more fairly than ones that are not). This is also how Fed itself justifies its independence as you can see at their page [here](https://www.federalreserve.gov/faqs/why-is-it-important-to-separate-federal-reserve-monetary-policy-decisions-from-political-influence.htm). Also for gauging the consensus among economists on central bank independence you can see [this IGM poll](https://www.igmchicago.org/surveys/fed-appointments/) amongst the top US economists (the poll is about political appointments - but that is all part of the whole Fed independence issue).


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