What’s worse than Congress picking winners and losers and distorting the free-market with bailouts, stimulus, and tendentious interventions on behalf of specific industries? Unelected members of the Federal Reserve doing the same through monetary policy.
It is amazing to watch how many Republicans will speak with such conviction against Keynesian fiscal stimulus policies, yet they will fervently promote monetary stimulus policies by the unaccountable Federal Reserve. Their support for near-zero interest rates, quantitative easing, bailouts, and intervention in the housing sector has muddled our message against Obama’s anti-free-market policies. Moreover, in this time of record commodity prices, pro-(monetary) stimulus Republicans preclude us from showing how government intervention on behalf of special interests distorts the markets, depletes savings, and devalues the currency – a winning political argument if there ever was one.
Richard Fisher, president of the Dallas Fed and frequent dissenter on the Federal Open Market Committee (FOMC), recently said that he is “personally perplexed by the continued preoccupation, bordering upon fetish, that Wall Street exhibits regarding the potential for further monetary accommodation—the so-called QE3, or third round of quantitative easing.” He explained that Wall Street has become hooked on “monetary morphine” based on the previous expectation that the Fed will always come through with stimulus measures. We need to break this addiction.
Undoubtedly, our complex economy would be restricted by a pure gold standard, but it’s not too much to ask that we reform the Federal Reserve to end its interventions in the economy and promote a strong dollar. Advocating some reform to our 30-year old mandates on the Fed it not tantamount to advocating for ending the Fed. Senator Mike Lee is introducing a bill, the Federal Reserve Modernization Act, to do just that. Here are the major provisions of the bill:
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