Bernanke, though, has brought real and valuable innovations to monetary policy. For example, one aspect of the FED’s response was based on a modern concept of liquidity. During his years as an academic, Ben Bernanke’s research led him to the understanding that there are things the central bank can do even when interest rates are zero. The key action in this case is to pump cash into the economy. Since 2008 the FED has pumped a record amount of cash into the United States economy. They also made emergency funds available to institutions that were experiencing short-term cash-flow constrictions.

It turns out that these policy actions have had other impacts, collateral damage might be an appropriate term. They have provided safety for large institutions that were arguably mis-managed, like Fannie Mae and Freddie Mac. They have maintained low interest rates that preserve the values of existing bond-portfolios. Some say these policies have benefited foreign countries, particularly China. China’s relatively large investment in dollar-denominated assets, such as U.S. Treasury bonds and Government Agency bonds, is a popular topic. The concern is that China might unwind these investments, sending the dollar sharply lower. The concern is misplaced.

The Chinese economy is intertwined with the United States economy. Millions of Americans flock to Walmart every year to purchase low-cost household items. American consumers benefit from low prices and China benefits from export-augmented economic growth. One of the oldest and most accepted of all economic theories, Ricardo’s Comparative Advantage, shows that trade benefits both parties of a transaction. The size of trade between China and the United States implies that those benefits are huge for both countries. There is, therefore, no need for the United States to have any serious disagreements with China regarding economic policy. The benefits to their economy of trade with the United States are large enough that the Chinese could not quickly or massively unwind their holdings of dollar-denominated assets.

So, why are we hitting them with trade restrictions?

The audit idea has been around for a long time. Because of the Fed’s independence, both the wacky left and the wacky right have generated conspiracy theories around the Fed for generations. The problem is that an audit could lead to new legislation that would severely change the nature of the Fed and limit its independence. Frank and Paul, two guys with two first names, argue that they will conduct the audit in a way that does not threaten the Fed’s independence.

That is impossible. The audit itself would threaten the Fed’s independence. At the very least, it would provide days of television time for “outraged” politicians. Few audits of any organization the size of the Fed would not provide fodder for politicians bent on finding reasons to get in front of a camera. That face time could lead to some terrible policy.

The fact is that, unfortunate as it may be for congressmen and women, the Fed needs its independence to be effective. Anything that threatens the Fed’s independence is to be avoided.

The idea of limiting the Fed’s lending options is also not new. Restrictions on Fed lending practices have been more or less binding since the Fed’s inception in 1914. In emergencies, the Fed has much more leeway. One of Ben Bernanke’s real contributions has been his innovations in assets purchased and in lending. Both are part of his demonstration that the Fed is not impotent when interest rates reach zero. To try and quash these innovations in their infancy is truly amazing.

I don’t think the Fed has been perfect in its response to the challenges of the past couple of years. However, I’ve seen Congress in action over that same period. I’ll take Ben Bernanke making these critical decisions over Barney Frank and Ron Paul every time. Taking monetary policy away from the Fed and giving it to Barney Frank and Ron Paul would be stunningly stupid.