Putting Some Pressure on the Fed: A Commentary Poster Putting Pressure On the Fed
'I'lie lesson may be getting through. The SenateÛªs liberal Democrats, the mental retardates of American politics, seem to be mastering the fact that the gentlemen down the street at the Federal Reserve Board really can throw 6 million people out of work.</br></br>Led by Proxmire of Wisconsin and Hubert Humphrey, of all people, the liberals plus one conservative, James Buckley (Cons.-R-N.Y.), have introduced a resolution ordering the Federal Reserve Board to stop playing games with the money supply and start following a policy that gives hope of full employment and steady price levels. Heretofore, as Proxmire pointed out, Congress has taken the position that monetary policy is too complex a subject for the simple nervous systems of its members to grasp.</br></br>While it's true that a degree of rationality at the Fed wonÛªt solve all problems, itÛªs also true that those Founding Fathers., whom our Capitol Hill crowd love to remind us of, knew perfectly well that prosperity is so closely tied to a wise regulation of money that they mandated Congress to take care of it in a very special way (Article 1, Section 8 of the Constitution). Instead Congress spent most of the last century finding weird ways to shirk its responsibilities in this regard while the nation oscillated between unnecessary booms and busts. In this century it created the Federal Reserve Board, which since its inception has continued to alternate between money floods and money droughts.</br></br>This painful foolishness has been indulged in against the best advice of the last 200 years. The United States, Monetary Commission of 1876 told us what to do but we didnÛªt have the sense to do it: ÛÏIt is in a volume of money keeping even pace with advancing population and commerce, and in the resulting steadiness of prices, that the wholesome nutriment of a healthy vitality is to be found.ÛªÛª The Proxmire-IIumphrey resolution demands that the Fed do just that, which would1 mean a steady growth of the money supply somewhere around 4 per cent per year.</br></br>Arthur Burns, the chairman of the Federal Reserve, and his colleagues arenÛªt mean or corrupt men. They get no joy out of seeing millions lose their jobs, but they are encased in an institutional situation which encourages disasterous decision making. The isolated independence of the Fed has grown to the point it thinks of itself as a co-equal branch of the government, when it is the ÛÏagentÛªÛª of Congress as this resolution stipulates.