ICYMI: Rep. Hill, Amity Shlaes in WSJ: “The Fed Alone Can’t Slay Inflation”
LITTLE ROCK, AR,
August 1, 2022
In an op-ed for The Wall Street Journal, Rep. French Hill (AR-02) and Amity Shlaes, author of “Great Society: A New History,” draw on lessons learned in the 1960s and 1970s, and outline their view that the Federal Reserve can’t slay inflation alone – Congress and the president need to encourage innovation and productivity. The full op-ed can be read online HERE. The Fed Alone Can’t Slay Inflation By Rep. French Hill and Amity Shlaes The Wall Street Journal Inflation is no mystery. It is as simple as its simplest definition: too much money chasing too few goods. You can acknowledge the money side—and power of the Fed chairman. But the “goods” side matters too. The more “goods”—a shorthand here for production of all kinds—the more money the economy absorbs, and the less inflation. To produce more goods in innovative ways, businesses need free rein in deciding what they will produce, and a clear signal that they will have that freedom... The long denial of the importance of productive growth was in part owing to the rise of monetarism, a theory that emphasizes the money side of the equation. Economists and a self-aggrandizing Fed stretched that theory to an argument that the Fed could and should foster real growth. Congress institutionalized the Fed chairman’s role as economic white knight with the dual mandate of price stability and maximum employment in the 1978 Humphrey-Hawkins Act... To avoid a 1970s repeat, two changes are needed. The first is to restore the Fed to the traditional central-bank role of monitoring inflation alone. One of us, Mr. Hill, has introduced the Price Stability Act, which would replace the dual mandate with a single mandate. |
