Reexamining The Federal Reserve Mandate

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WASHINGTON – (Newsblaze) After stepping away from the intense hearings into the misconduct of the Internal Revenue Service proceeding on Capitol Hill Tuesday Texas congressman Rep. Kevin Brady came to the Heritage Foundation at the conservative think tank’s weekly luncheon for bloggers and reporters with a basic message that after a century of operation of the Federal Reserve that it was time reexamine the agency’s mandate.

Despite the archaic nature of the subject, Brady is finding considerable interest in the subject since holding 50 townhall meetings in his district annually from constituents. Increasing numbers are asking “who gave the fed the power?”

That inspiration, along with deteriorating economic conditions and rising debt came after taking control of the chairmanship of the Joint Economic Committee, and lead to the idea of turning the panel into a “think tank.” He went to his staff with this challenge “what would it take to maintain an American century?” The answer to that question centered around a revamped federal reserve, in the Texan’s view.

Volatile Moves In Financial Markets

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Rep. Kevin Brady right, at the Heritage Foundation, June 2013

“Look what happened with the fed in two days,” Brady said, noting that recent statements from the federal reserves were causing very volatile moves on financial markets, with the economy missing four million jobs and shrinkage of economic activity causing the loss of twenty trillion dollars in future economic activity.

Brady went to work setting up a bipartisan group of six members of both parties “Centennial Monetary Commission” (H.R. 1176) to figure out what the role of the fed should be. Brady anticipates the net result of the commission will be the “Sound Dollar Act” which currently has 51 co-sponsors and is supported by Utah Senator Mike Lee and CNBC personality Larry Kudlow.

The act centers on the idea of changing the Fed’s “Dual Mandate” of monetary policy that ties unemployment rates back to the “single mandate” of monetary policy tied exclusively to the purchasing price of the dollar.

Other goals of the act include “breaking the New York-Washington, DC axis” in federal reserve voting with the belief that all twelve Federal Reserve Bank presidents would give a more accurate economic picture and that the transcript of Federal Reserve meeting minutes should be opened within three years.

Democrat Interest In Reforms?

Although Brady has found very little support from Democrats about Fed reforms, Brady noted “It should be a priority for them.” The congressman noted that credit analysts examining the federal government are querying lawmakers “are you serious about entitlement reform as well?”

Paralleling the Congressman’s efforts on Federal Reserve Reform, he is also tackling regulatory reform with the introduction of “the Sound Regulation Act,” which would require cost benefit analysis that is not being done now.

“Of 3,500 regulations, only 13 went through a cost benefit analysis,” the Congressman observed, and in nearly all of those cases, the agency analysis tends to be positive for the regulation rather than a real world dynamic analysis, as conservative scholars advocate.

In other news, the congressman was asked about the new Medicare report which showed two more years of solvency. He responded by noting it was “the Titanic is going hit the iceberg an hour later.”

Brady’s Centennial Monetary Commission is expected to report June 30, 2014.

Randy Foreman is the NewsBlaze White House Correspondent, reporting from inside and outside The White House and around the beltway in Washington, D.C.