The most cogent criticisms of Bernanke and the Fed are that: (1) they failed in their regulatory oversight of banks and other major financial intermediaries, letting them engage in reckless lending and derivative transactions that caused systemic risks and helped cause the recession; and (2), that the Fed has repeatedly pumped up the money supply to boost economic activity in downturns, leading to recurrent destructive cycles of asset inflation and distorted investment choices.
Other, more radical criticisms of the Fed are that it was formed due to a secret effort by America's financial elite in 1913, that it has too much power, that it is too tied to Wall Street, and that it is part of a system of fiat money and fractional reserve banking that cause economic instability. Such critics often urge a return to the gold standard and the adoption of a one hundred per cent reserve requirement.
On balance though, such criticisms, whatever, their merit, are less about the Fed than about the current US financial system and its reliance on fiat money. On the whole, since fiat money more or less requires a central bank, we are better served to make reforms to the Fed along the lines suggested by Cain and leave the radical proposals for another day -- if ever.
In any event, adopting or even giving serious consideration to radical changes now would compound the policy uncertainty that is impeding economic recovery. And, politics and government being what they are, there is no guarantee that junking even a flawed system will lead to something better.
The conservative choice here is as it almost always is: to make practical, well-considered reforms. And that is what Cain has proposed for the Fed.
How many votes did the Federal Reserve Act get in the Senate?