If the Fed Can’t Manage Its Own House, Why Should It Run the Economy?

Originally published on Substack. 

​While most Americans are struggling with higher prices at the grocery store, the gas pump, and their mortgage payments, Washington’s central bankers seem to be living in a different reality—one lined with rooftop gardens, VIP elevators, and marble finishes.

The Federal Reserve can’t seem to get its own house in order—literally.

While many Americans are still paying more for groceries, energy, and housing, the Fed is spending $2.5 billion on renovations for its Washington, D.C., headquarters--$700 million over budget. That translates to a staggering $1,923 per square foot, more than double the cost of renovating a typical historic federal building.

According to Russ Vought, White House Office of Management and Budget Director, the renovation includes “rooftop terrace gardens, VIP private dining rooms and elevators, water features, premium marble, and much more.” This isn’t just bureaucratic bloat—it’s Versailles on the Potomac.

Vought sent a letter to Chairman Jerome Powell questioning whether the Fed followed proper budget and oversight protocols, especially given discrepancies between Powell’s Senate testimony and project plans initially submitted to the National Capital Planning Commission in 2021.

In response, the Fed posted a quiet FAQ page defending the project. The Fed claims that cost overruns stem from asbestos removal and the preservation of buildings dating back to the 1930s. But let’s be honest—the timing of that FAQ (after public criticism) says a lot. The Fed knew the American public would poorly receive this, and they attempted to sweep it under the rug.

“But the Fed is self-funded,” defenders argue. That’s misleading. The Fed earns interest on trillions of dollars in U.S. Treasury and mortgage-backed securities—assets it buys with money it creates. It also collects fees from banks, which are passed along to consumers in the form of higher costs. That’s not self-funding—that’s taxpayer-funded in disguise.

The Fed’s balance sheet remains at $6.7 trillion, up from $4 trillion before the COVID lockdowns in 2020. That surge in money creation fueled the worst inflation in decades. Now, with interest rates higher than expected, the Fed is incurring massive operating losses—more than $200 billion since 2023, marking the first sustained deficit in its 110-year history.

And behind the curtain, we find something even more troubling: a deeply partisan institution. As noted by the Committee to Unleash Prosperity, 92% of campaign contributions by Fed employees went to Democrats in 2024. That’s part of a pattern going back to 2016, with employees contributing $2.7 million to Democrats and only $243,000 to Republicans.

This is not a neutral central bank. It’s an institution of entrenched bureaucrats—many with PhDs—who have steered policy in a direction that distorts markets, enables federal overspending, and undermines the public trust.

So what should be done?

First, Congress must conduct a full audit of the Federal Reserve. Not a surface-level review, but a comprehensive investigation into its operations, balance sheet, and regulatory overreach. Its involvement in issues like climate risk assessments and capital regulation under Basel III is far afield from its original mission.

​Second, the Fed’s balance sheet needs to be brought back to a more realistic level. Before the 2008 financial crisis, the Fed’s assets were about 6% of GDP. Today they exceed 23%. That means returning to a balance sheet of closer to $2 trillion, well below the pre-COVID level of $4 trillion. This will help restore real price signals, limit distortions, and reduce the central bank’s outsized footprint.

Finally, we need to rethink the Fed’s long-term role. If a rules-based monetary system—or even market-based alternatives, such as competitive currencies—can provide greater stability without politicization, then those paths must be seriously considered.

The Fed was created in 1913 to act as a lender of last resort. But today, it acts as a financier of federal deficits, a regulatory activist, and now, apparently, a luxury real estate developer.

It’s time for the Fed to stop building rooftop gardens and start earning back public trust. If it can’t fix itself, Congress must. And ultimately, we should question whether a central bank that consistently causes inflation, politicizes capital markets, and finances fiscal irresponsibility is one we still need at all.

Let’s audit the Fed, reduce its size, and restore monetary discipline—no more palaces—just honest money.