Republicans Need to Mind Their Own Business
Last night, the key Republicans in both the House of Representatives and the U.S. Senate sent a letter to Federal Reserve Chairman Ben Bernanke speaking out against additional monetary stimulus, and the potential for a third round of quantitative easing, now known as Operation Twist.
Here is the letter in its entirety:
Dear Chairman Bernanke,
It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures. Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.
It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate. To the contrary, there has been significant concern expressed by Federal Reserve Board Members, academics, business leaders, Members of Congress and the public. Although the goal of quantitative easing was, in part, to stabilize the price level against deflationary fears, the Federal Reserve's actions have likely led to more fluctuations and uncertainty in our already weak economy.
We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy. Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers. To date, we have seen no evidence that further monetary stimulus will create jobs or provide a sustainable path towards economic recovery.
Ultimately, the American economy is driven by the confidence of consumers and investors and the innovations of its workers. The American people have reason to be skeptical of the Federal Reserve vastly increasing its role in the economy if measurable outcomes cannot be demonstrated.
We respectfully request that a copy of this letter be shared with each Member of the Board.
Sen. Mitch McConnell, Rep. John Boehner, Sen. Jon Kyl, Rep. Eric Cantor
The Federal Reserve is supposed to be apolitical, and do what it believes is best for the U.S. economy, regardless of political affiliation. Yet, the Republicans felt the need to send a letter to the Fed questioning the potential for another round of stimulus to try to boost the economy.
This is not the first time the Republicans have done this. They did it back in November 2010, right as the second round of quantitative easing was getting underway. Almost all of the same names were on the letter back then as this most recent letter.
The Republicans are right, particularly in regards to hurting confidence. Confidence is what is needed to get the American economy going again. Yet, this is not Bernanke's job to inspire confidence. It is the job of Congress to do so, as well as the White House. Bernanke and the rest of the FOMC are doing what they see best fit to get the economy going again in the short term. Congress' job is to get fiscal policy right for economic growth. With the Senate and the White House held by the Democrats and the House of Representatives held by a Republican majority, there has been nothing but infighting and constant bickering back and forth. This letter is the latest example of that.
It is understandable that Republicans want to take control of the White House in the 2012 election, but it needs to be done on their own merit. Interference with the Federal Reserve is not helping the the U.S. economy, cause, despite what may be politically popular. There are plenty of people in this country who believe that their quality of life has been lessened thanks to the Federal Reserve. That may be true, but the Fed was set up some 100 years ago to do anything it could to try to prevent the market panic of 1907 from happening again. It has not happened exactly as it was drawn up, but nothing in life ever is. There are central banks around the world, and those institutions are not going away.
Ron Paul's wishes to get rid of the Federal Reserve and Governor Rick Perry's "treasonous" call are not inspiring confidence. Back in August at Jackson Hole, Bernanke called on Congress to get its act together, and it seems like they have not gotten the message. He wants Congress to enact good proactive housing policies from Congress, and specifically mentioned the debt ceiling debate and S&P downgrade as having negative affects on the U.S. economy. This was all caused by bickering in Congress, and to have it spill over to the Federal reserve may lead to some questioning the central banks' independence. The last thing this country needs is more confidence sapped by investors and job creators.
Republicans, Democrats, and Independents, it is time for you to worry about getting this country back to pro-growth policies. Stop worrying about what Bernanke and the rest of his team are doing at the FOMC.
At least the Fed is trying its best. Can you honestly look in the mirror and say you are as well?
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