The Subcommittee on Domestic Monetary Policy and Technology held hearings Tuesday :
“The hearing, chaired by Texas Republican Rep. Ron Paul… focused on several proposals to alter the Federal Reserve…”
The reform bills ranged from Marcy Kaptur’s small ball bill to (among other things) ban Fed governors from working for member banks for 4 years after leaving (just like the NJ Casino Control Commission!) to Paul’s own plan to abolish the Fed and return to the gold standard (Geez, who would vote for this guy? Oh yeah, never mind).
I doubt much will come of any of these bills. Whether Congress knows it or not, sooner or later the Supreme Court is going to dropkick the Fed onto the front lawn of the White House.
If anyone’s interested, the committee website has the webcast and witness written testimony online. As is usually the case with such things, the role of “voice of reason” was played by one James K. Galbraith (“the Humphrey-Hawkins Full Employment and Balanced Growth Act of 1978… set interim targets of four percent unemployment and three percent inflation”.)
Galbraith in testimony:
“Today in economics our pressing need is for a fresh look at theory, and a thorough revision of doctrines that have dominated the subject for decades. In view of this, any law prescribing a single line of thought for the Federal Reserve would be a serious step in the wrong direction.
Were we writing today the preamble of the Humphrey-Hawkins Act, or Section 2a of the Federal Reserve Act, it’s likely that we would choose different language. But the language that is there, with its multiple goals and objectives, is flexible and pragmatic; it permits discussion to continue in times of
uncertainty, when learning is needed. It does not lock either side into a rigid formula that it will then become necessary to evade. It is serviceable. That is the enduring value of the process now in place. I close therefore by reminding you of the words of the immortal American poet, Ogden Nash:
“If there is one principle to Americans unknown,
It is: leave well enough alone.”
- Refreshingly non-crazy and sensible.
http://financialservices.house.gov/UploadedFiles/HHRG-112-BA19-WState-JGalbraith-20120508.pdf
Even…Pragmatic
I think Galbraith has sensibly concluded that any change this particular Congress is likely to make would be in the wrong direction. So better not to do much other than to shore up the political accountability of the Fed.
Shoring up the accountability of the fed would be a huge step. If the fed was forced to abide by the laws they should obey anyway, the world would be better off.
I don’t want to get into a row about monetary policy. I just think having a fed actively talking about hitting employment numbers would be hugely beneficial to the climate for fiscal.
“I just think having a fed actively talking about hitting employment numbers would be hugely beneficial to the climate for fiscal.”
Indeed
Agreed. When monetary policy is basically inept, having the Fed chairman speaking some truth to Congress about fiscal policy is about the best thing the Fed can do.
Well, he’s been telling them the economy needs fiscal help for some time now. But unfortunately, Congress and the President don’t want to hear that message. He’s giving them some help by describing the problem coming up as a “fiscal cliff”. In principle, that should give them the cover to take some fiscal action for the purpose only of keeping the country from falling off such a cliff. But a lot of the Republicans will be thinking, “Oh goody! A fiscal cliff! Grover Norquist’s government-drowning bathtub is at the bottom of that cliff.”
While I strongly prefer fiscal policy to monetary for many reasons, if we are going to keep the Fed in its current form I think it would be good make explicit that a 3.5-4% inflation target is acceptable. The Fed has set an implicit target for iteslf of 1.8-2% which leads it to kill every exapansion before we even get to full employment. IMO, as long as inflation is not high enough to hamper real growth, then there is no reason to choke off the economy to stop the inflation.
Yes, I very much agree with this.
The fed targeting this rate would help. Even it’s failure to reach the target would be helpful.
Norquist’s strategy worked when the Dems were fully in control. But now that the GOP has the House, where appropriations originate, that has changed. Now the public gets to see the priorities and consequences. If the GOP gains more control in the coming election, that will change more.
For example, the GOP took a huge hit when the Catholic bishops conference came out against the Ryan Plan. The GOP had the bishops solidly behind them due to the abortion debate, and then they found themselves watching that advantage “devolving.” In addition, Ryan had to disavow Ayn Rand publicly.
People aren’t stupid when it comes to themselves and their pocketbooks. They are all for austerity and cutting expenses when they think it just involves ending “waste, fraud, and abuse,” and ending foreign aid — which they believe is about 25% of the budget instead of less than 1%. When specific cuts are spelled out, public support plummets.
Drowning government in the bathtub is not going to be a slam dunk, and even if they make it, they have then to make it stick in the face of obvious consequences. We all said what was going to happen in the UK is the Cameron govt carried out its program, and it has. The US has double-dipped.
From the comments in the old article about Paul that Beo linked to above-”Not directly related, but Paul’s stance on war in general is equally admirable. I am not sure it comes from a general hatred of war (which is right) so much as it comes from a hatred of govt (which is wrong), but it’s the right stance to have.” -Cullen Roche
I’ve been reading a lot of Teddy Roosevelt recently and re-read his Citizenship in a Republic speach yesterday after someone brought up the ‘Man in the Arena’ excerpt (or as I like to call it, the ‘Haters gonna HATE’ excerpt).
There are some greeat thoughts from TR on war, among other things (including the respect of other classes being part of the basis for a healthy republic), in that speach-
“There are well-meaning philosophers who declaim against the unrighteousness of war. They are right only if they lay all their emphasis upon the unrighteousness. War is a dreadful thing, and unjust war is a crime against humanity. But it is such a crime because it is unjust, not because it is a war. The choice must ever be in favor of righteousness, and this is whether the alternative be peace or whether the alternative be war. The question must not be merely, is there to be peace or war? The question must be, Is it right to prevail? Are the great laws of righteousness once more to be fulfilled? And the answer from a strong and virile people must be “Yes,” whatever the cost. Every honorable effort should always be made to avoid war, just as every honorable effort should always be made by the individual in private life to keep out of a brawl, to keep out of trouble; but no self-respecting individual, no self-respecting nation, can or ought to submit to wrong.”
Defense of your country is one thing….something that virtually every citizen whole-heartedly supports…constructing and maintaining a global empire is quite another….we now have a military industrial complex that’s dependent on the perpetual conduct of war. And I dare say that true national defense, and maintaining an empire are not morally compatible.
” And I dare say that true national defense, and maintaining an empire are not morally compatible.”
Maintaining an empire creates more enemies for you necessitating more defense. You can not be secure when you create more enemies. No matter how strong you think your defense is, if you have enough enemies you will never have enough defense