Upon learning recently that the economy shrank for the first time in more than three years, the Federal Reserve decided to continue its longstanding policy of printing money at full speed until investor confidence runs out or the ink runs dry. Unfortunately, this is all within its purview due to its “dual mandate,” which requires it to focus on the often contradictory mission of “maximum employment” and “stable prices.”
Americans can blame the misplaced trust in central planning of the Carter era for this conundrum. In 1978, a Democratic Congress and the Carter White House gave the Federal Reserve its dual mandate of fighting unemployment and inflation, an impossible and contradictory mission, because firing up the printing presses during times of high unemployment weakens the dollar. Thirty-five years later, the Fed is buying $85 billion in new assets each month and still failing to make a dent in the country’s unemployment crisis.
Our country now has $16 trillion in debt, more than 12 million people looking for work and an administration intent on “solving” the problem in large part by printing more money.
Last September, the Fed announced a third round of quantitative easing, but QE3 merely proved the ineffectiveness of QE1 and QE2. While unemployment stays close to 8 percent, inflation threatens to drive prices higher, undermine families’ savings and hurt seniors living on fixed incomes. Regrettably, Chairman Bernanke’s medicine has become his bread, and this unconventional tool has become the Fed’s standard procedure.
Despite years of pleading from conservatives to do otherwise, printing money ad nauseum is not sound economic policy. Since the dual mandate basically encourages this misguided action, it’s time to put a stop to it, which is why I am introducing legislation to do just that.
Just as we cannot borrow and spend our way back to a growing economy, we also cannot print our way back, either. In the real economy, the American people understand that achieving recovery means empowering families, entrepreneurs and small businesses — not bureaucrats.
The Fed’s efforts to combat unemployment have failed and will weaken the dollar. It’s time to end the dual mandate and force the Fed to pursue sound monetary policy once and for all. Backed by a healthy currency, Congress and the president must act swiftly to pay off our nation’s $16 trillion debt, tear down regulatory barricades and cut taxes so that Americans keep more of their hard-earned paychecks.
Washington is trying to borrow, bail and print its way to prosperity, and it isn’t working. We can ill afford the inflation, debt and insecurity that this misguided approach causes. Now is the time to repeal the dual mandate and break this destructive cycle. The American people deserve a strong dollar and a shot at building a real recovery.