Posted 10 years ago on Dec. 22, 2011, 4:29 p.m. EST by anonwolf
from West Peoria, IL
This content is user submitted and not an official statement
The Republican Party, falling deeper into the clutches of Ron Paul’s radical ideology, has a new item on its anti-populist agenda: Castrate the Federal Reserve so that it no longer can promote job growth.
In Fed-speak, this is known as cutting in half the Fed’s “dual mandate” to curb inflation and unemployment, by taking out the “unemployment” part — the nation’s persistently high jobless rates notwithstanding. The ranking Republican on the Joint Economic Committee, Kevin Brady, disclosed this week that he is drafting legislation that would turn the Fed’s long-standing “dual mandate” into a single mandate.
This great leap backward isn’t likely to happen as Democrats remain in control of the Senate. But what it does show is the extent to which Ron Paul’s fixation with the Fed has infected the Republican Party. Anti-Fed rhetoric, once the province of ultra-right groups like the John Birch Society, has gone mainstream with the rise of Paul, who has been surging in the polls and now ranks third behind Mitt Romney and Newt Gingrich. He is actually leading in Iowa, and a victory there would really rev up his famously loyal followers.
It’s no secret that Paul wants to end the Fed. That’s the title of one of his books, and it’s central to his libertarian ideology, which is influenced by Ayn Rand, who opposed the Fed’s existence, and Austrian economists who championed laissez-faire. In January 2011 he became head of the House Financial Services subcommittee overseeing domestic monetary policy. Given Paul’s growing influence, it’s not surprising that Republicans are pushing for a measure that would cut back significantly on the Fed’s power. Bray’s legislation amounts to “Ron Paul Lite.” The proposed law wouldn’t toss the Fed in the ashcan, as Paul wants, but it would go to the very heart of the Fed’s mission.
The dual mandate has been around since 1977, when the Federal Reserve Act was amended to require the Fed to strive to curb both unemployment and inflation. The operative language in the Federal Reserve Act, in its Section 2a, is as follows: “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregrates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”
What this means is that the Fed can’t just focus on inflation, but must take into consideration whether its policies will help or impede the functioning of the economy as a whole. Fed Chairman Ben Bernanke made that point in a speech to the CATO Institute in 2007. In other words, the dual mandate is just common sense. It’s not terribly controversial, either, unless you’re really indifferent to throwing people out of work.