THE FEDERAL RESERVE'S DECADENCE SPENDING WITHIN THE POWERFUL AGENCY IS A METAPHOR FOR THE EXCESS FOUND ACROSS THE FEDERAL GOVERNMENT.

The following information was released by the Independent Institute:

By Scott Beyer

October 17, 2025

The Federal Reserve has long been a target of libertariansand for good reason. The powerful agency, which contains both public and quasi-private components, makes questionable decisions. From its setting of interest rates to its control over the money supply, it's been blamed for inflation, asset bubbles, and labor market distortions. The libertarian argumentvoiced by Ron Paul and othersis that the Fed, and money supply itself, should be replaced with private"sector alternatives, a development now seen with crypto. But a less-reported problem is the spending by the agency on itself: with the Fed devoting money to its headquarters, meetings, travel, offices, high salaries and internal luxuries. It's a metaphor for the larger spending culture within federal agenciesone that private businesses, under competitive pressure, simply cannot afford.

This issue came into focus recently when news broke about the Fed's renovation of its Washington, D.C. headquarters. Costs have ballooned to $2.5 billion, well above earlier estimates. Among the features: rooftop terraces, premium marble finishes, water fountains, VIP elevators, and architectural flourishes. Critics, including OMB Director Russ Vought, have called the project "grossly mismanaged."

But the HQ renovation, coming in an era when offices seem to be growing obsolete, merely got higher visibility than other aspects of this spending culture. The Fed's total 2024 expenses were nearly $9 billion, a major inflation-adjusted increase since 2014. Much of this is spent on the Fed's twelve regional Reserve Banks, which are housed in high-rise offices within prime downtown locations of major U.S. cities.

One area worth closer scrutiny is travel and meeting costs. The Fed, between its twelve banks and its Open Market Committee, hosts hundreds of events annually. Most notable is the Jackson Hole Economic Symposium, a three-day event in Wyoming that draws top central bankers, academics, journalists, and financial officials. It is held at a resort environment (Jackson Lake Lodge), involving business class flights, high-end lodging, meals, and security. An exact line"item cost disclosed in Fed internal documents is hard to locate publicly, and the Kansas City Fed (which hosts the event) claims it is revenue-neutral through attendee fees. But the optics of deciding rates in a resort settingwhen this could be delivered by teleconference or press releaseisn't good. (Indeed, observers see Jackson Hole more as a networking event for elites than a strictly-needed communication platform).

More generally, because many Fed employees travel with flexibility and receive reimbursement under government travel regulations, there exists an asymmetry: the private sector would scrutinize every flight, hotel, or per diem rigidly; while federal agencies often absorb such costs as part of "business as usual."

This fits a broader pattern within the federal government. The most oft-criticized examples of government waste are when bureaucrats engage in obvious fraud, such as when the GSA threw an $800,000 "conference" in Las Vegas. But the magnitude of the largesse is better embodied in the unpublicized daily expenses and sunk costs of the aforementioned "business as usual" enjoyed by government employees: posh offices, security details, catered lunches and high compensation (inflation-adjusted salaries of Fed employees increased 67% since 2007 while remaining flat at other federal agencies). The Fed is particularly prone to this, writes Mercatus Center, because its oversight by the Government Accountability Office is limited by statute.

While some of the Fed's responsibilities require a physical presence, much of it for example economic data collection could be done remotely or outsourced to private analytics firms, avoiding the extreme overhead from all these offices. The rise of AI will almost certainly reduce the need for the Fed to employ 24,000 people. Chairman Jerome Powell, to his credit, aims to cut staff by 10% after a prolonged period of employment growth within the agency. But Fed operational spending has still risen under his tenure.

If you really want to understand the class divide in America, it's worth noting how this spending culture differs from that of the private sector. Small businesses, in particular, remain the backbone of the U.S. economy but are also the least glamorous. Visit a stretch of mom-and-pop retailers on any Main Street, or blue-collar businesses in the town's industrial strip, and you'll find a common aesthetic aging signage, cramped and dingy confines, deferred upgrades. You will not see the bells-and-whistles that have become enshrined within government work culture precisely because every dollar matters.

Beneath the surface of this visible divide is a regime of confiscation and redistribution. Businesses nationwide that have minimal staff and tight margins are taxed to support the glitzy and majestic motifs of the Fed and other permanent Washington institutions. This inhibits their own ability to scale their enterprises and build wealth. The more that government bureaucracies are relied upon to (like the Fed) perform functions that could be handled by the free market, the more of this indiscipline that taxpayers will have to fund.