Rep. Mike Pence and Sen. Bob Corker recently spoke out in opposition to the Federal Reserve, seeing it's powers as too pervasive, opting to introduce legislation to cancel it's dual mandate of maintaining full employment and stable prices and instead have the Fed just focus on controlling inflation.As far as the stated reasons for this spark of expediency, Pence was more combative when the Fed "unilaterally' announced its new spending, which he said was 'at odds with the goals of the American people..."
Corker on the other hand "opted a much more restrained tone, saying he merely wanted to provide clarity to the Fed’s mission and maintained that, while concerned about QE2, the legislation was not in response to it," saying further of QE2, "None of us really will know, until we look in the rearview mirror [after] these policies have played themselves out as to whether these were good or bad policies.”
Essentially it is ambiguous why Sen. Corker drafted this bill and also why he is concerned about the Fed at all.
While their proposal may be well spirited and partially correct, they both have simply missed the point.We can debate all day what The Federal Reserve's mandates are but really these are more like recommendations made by Congress. When Congress really wants the Fed to act a certain way, they have no way of enforcing that, short of repealing or amending the Federal Reserve Act, or auditing their books. In the past, when asked to do something by Congress, the Fed has simply refused.
The fact of the matter is that regardless of the publicly stated goals and ambitions of a central bank, there is no such thing as a "good central bank." The power to inflate will, given the proper crisis and political influences, eventually be abused.
The power to debase a currency is to have the power to halt the economy at will. The supposed benefits of an elastic currency are vastly outweighed by the danger of this power.
It is time that we stop looking at the Fed and it's Chairmen as "maestros" and start seeing them as the problem.
Are Mike and Bob trying to safeguard the Fed by taking an essentially meaningless action? We can't know for certain, but if our distinguished Congressmen are really worried then they both ought to support a full audit of the Federal Reserve by HR 1207/S604, competition in currencies, and even call to abolish the Fed if they are so serious about their concerns. Kid gloves won't do when it comes to the "Creature from Jekyll Island;" drastic action is required.
Until the Fed is held accountable for it's actions, by an audit or otherwise, their "mandate" is to do whatever it pleases.
