Kevin Warsh served on the Fed’s Board of Governors during the administrations of George W. Bush and Barack Obama. In an opinion column in the Wall Street Journal, Warsh discussed the possible consequences of the Fed’s actions during the recession caused by the Covid–19 pandemic: “The Fed is exercising understandable but unprecedented power at an ahistorical moment. Without vigilance, it will risk morphing into a general-purpose government agency. America cannot afford to have its central bank lose its independence.”

a. In what way were the Fed’s actions during the pandemic unprecedented? (You may want to review the discussion of the Fed’s actions in Chapter 15, Section 15.6.)

b. What does Warsh mean by writing of the Fed becoming a “general-purpose government agency”?

c. What risks would the Fed losing its independence pose for the U.S. economy?