. @NathanTankus poses a challenge. My perhaps naive reply is that the Fed is not "our central macroeconomic administrative agency." 1/ https://twitter.com/Frank_vanlerven/status/1300811220426125313

The Fed's responsibilities are financial regulation and monetary policy. The last is an aspect of macroeconomic policy; but it isn't the whole thing.

As equipped, the Fed is indeed not capable of addressing every sort of macro. problem, for the simple reason that not all macro. problems stem from mistaken monetary policies, and those that aren't generally can't be solved or solved lastingly by means of altered monetary policy.

Fiscal policy is the other, obvious means for addressing macroeconomic problems, and the only one capable of addressing those that monetary policy alone can't solve, or can't solve without creating equally or more serious problems.

That the "central administration" of fiscal policy is a typically far from satisfactory, even compared to the administration of monetary policy, is (I think) clear. This may tempt some to call on the Fed play a greater part in it. (I'm not attributing this idea to Nathan.)

The temptation becomes all the greater when the Fed has in fact shown its willingness to play a heavier than usual role in "fiscal" decision making of various sorts, as it has during this and the last crisis.

But while coordination of monetary and fiscal policy can itself be very desirable, the Fed's role in fiscal decision making can only be extended so far before it starts to encroach upon Congress' prerogatives, and hence on the basis of our democracy.

It's true that our Constitution's "nondelegation doctrine" has been interpreted so as to allow Congress to assign the Fed, or any agency, very broad powers. But to assign the Fed the power to address problems with nonmonetary origins,

Congress would have to grant it equivalent nonmonetary powers, including the power to decide how real public resources are used. In other words, Congress would have to delegate to the Fed some part of its "power over the purse."

Whether such a transfer would itself be consistent with with the non-delegation doctrine is far from obvious ( https://scholarship.law.edu/cgi/viewcontent.cgi?article=3510&context=lawreview), but even if it could be construed so, those who value democracy should be uncomfortable with it.

Alternatively, one could imagine just making Congress, or the Treasury, responsible for both monetary and fiscal policy. That solution poses challenges of its own, to put it mildly, but at least has the merit of not having Congress shirk one of its most basic duties.