Cato Senior Fellow Alan Reynolds said he’s been understanding of the Fed’s moves up until now, and even the first round of quantitative easing, but he thinks people need to realize this is a 2011 economy, not 2008 or 2009 anymore. The gamble of trading off higher inflation for lower unemployment could prove a losing bet.
The primary job of the Fed, Reynolds said, is to protect its product – federal reserve notes – and Reynolds believes a simplified mandate would help.
“To give them [the Fed] conflicting instructions means they can do anything they want,” Reynolds said.
He said that Paul Volcker, while serving as Federal Reserve Chairman, actually told him that a clear mandate would indeed help. Reynolds said Pence’s legislation is on the right track but that the mandate must be specific and detailed to be most effective.