Taking away employment mandate from the FRB

Congressman Mike Pense on CNBC  said (starting at 6:45 into the interview): “I appreciate the independence of the Fed, but I think it might be time to reconsider the dual mandate of the Fed, that was established in 1977. I think we ought to get the Fed back in the business of focusing on price stability and preventing inflation and not also on this dual mandate of full employment for the country. It’s creating confusion here. Printing money is no substitute for sound fiscal policy. That’s all we are really doing here and I think the reason you are seeing leaders across the country, and leaders across the world denouncing this action by the Fed is because they know it’s going to be inflationary, and it seems to be an effort to monetize our debt... We out to get the Fed back on that individual mandate of price stability and controlling inflation and the money supply as opposed to also having a dual mandate of full employment… I think the Fed ought to be about the mission of focusing on protecting the fundamental strength and integrity of the dollar and protecting the assets of the American people.

This makes sense based on the fact that monetary policy at the zero bound doesn’t do anything for employment.


1 Comment »

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