How a Fed Overhaul Could Eliminate the Federal Debt Crisis, Part II: Curbing Fed Independence
There has been considerable discussion in recent years about reforming, modifying, or even abolishing the Federal Reserve. Proposals range from ending its independence, to integrating its functions into the U.S. Treasury Department, to dismantling it and returning monetary policy to direct congressional or Treasury oversight.
The Federal Reserve Board Abolition Act (H.R. 1846 and S. 869, 119th Congress, 2025-2026), introduced by Rep. Thomas Massie in the House and Sen. Mike Lee in the Senate on March 4, 2025, calls for abolishing the Fed’s Board of Governors and regional banks within one year of enactment, liquidating Fed assets and transferring net proceeds to the Treasury. It echoes earlier efforts like Ron Paul’s 1999 bill to “end the Fed”, but the odds of its passing are slim.
Less radical are proposals to curb the independence of the Federal Reserve. Former Fed governor Kevin Warsh is considered one of five finalists to take over as chairman after Jerome Powell. In a July 17 CNBC interview, he called for sweeping changes in how the central bank conducts business, and suggested a policy alliance with the Treasury Department.
Substantial precedent exists for that approach, both in the United States and abroad. In the 1930s and 1940s, before the Fed officially became “independent,” it worked with the federal government to fund the most productive period in our country’s history.
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Thank You again, Ellen. This will go into my next blog post of news and analysis:
"Printing money is not inherently inflationary. It depends on what the money is used for. If it funds speculation, it inflates bubbles. If it funds production, it builds prosperity. The vaunted independence of the Fed is not a constitutional mandate but is a political choice."
It also matters, as you have often pointed out, that profits going to the public purse are different from profits being extracted to the private purse, where they are tasked to extract more profits, rather than build societal wealth and/or stability.
"Maximizing shareholder benefit" necessarily impoverishes a society.
"History shows that sovereign money creation can be a tool for public good when wielded wisely. It is time to reclaim that tool, not to serve the banks and speculative investment but to serve the public and the productive economy." I agree wholeheartedly. I think sovereign money creation, which the American Revolution was all about, should be the focus of our political activism for it determines who makes the rules. Do we want a system run by a profit-motivated few, or a public system that is care-motivated and serves the many? The legislation is already wrtten to create a sovereign money system. The 2011 NEED Act HR2990.