Monday, May 7, 2012

A Diverse and Wide Open Hearing on Fed Reforms

The House Domestic Monetary Policy subcommittee, with Ron Paul in the chair, is holding hearings tomorrow (May 8) on six proposed bills to reform the Fed. The bills are remarkably diverse ranging from Ron Paul’s Federal Reserve Board Abolition Act to Barney Frank’s bill to remove the Fed district bank presidents as voting members on the FOMC and replace them with appointees of the president of the United States.

Two of the bills (Kevin Brady’s and Mike Pence’s) would refrom the Fed’s dual mandate, which in my view would help the Fed get back to more a rules-based policy with fewer of the recent discretionary interventions which have proved so harmful. The Brady bill would go further and restrict the degree to which the Fed can purchase large quantities of mortgages and other non-Treasury securities. Kevin Brady and Barney Frank will be there to defend their own bills, and Ron Paul will be able to do so as the chair.

The witnesses for this hearing also have very diverse views: two economists from the Austrian school: Jeffrey Herbener and Peter Klein, as well as Jamie Galbraith, Alice Rivlin and me. All the written testimonies are posted on the House Financial Services Committee website.

Regardless of the disagreements one might have with specific proposals or individual witnesses, the subcommittee should be thanked for placing monetary policy reform issues in a prominent place in the public debate and for endeavoring to keep the debate wide open.

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