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WASHINGTON, Oct. 29 – It’s not every day we get a new chair of the Fed. It is a time to check the fundamental bearings of the nominee and get some clarity on which direction she – and our next Fed chair, Janet Yellen will be the first woman to hold the post – plans to take monetary policy.
Scholars at the Competitive Enterprise Institute have done just that. They have assembled a list of questions for the nominee, who will take over the Fed in a different situation than any of her predecessors.
The money supply is at an all-time high – it has increased nearly 60 percent just since President Obama took office. The “recovery” continues to slog along, with millions of Americans no longer even looking for work. The debt ceiling must be exceeded again in January, and our nation’s fiscal house never has been in worse shape.
The paper, co-written by Iain Murray, vice president for strategy at CEI, Ryan Young, fellow in regulatory studies, and John Berlau, senior fellow in finance and access to capital, poses a variety of questions that will get to the heart of what Yellen plans to do at the Fed.
They ask about whether the Fed should encourage inflation and what might be the consequences if it did. They ask about quantitative easing, which basically means printing money, and whether a limiting principle exists. They ask about the Fed’s dual mandate – to keep both inflation and unemployment low – and what she will when these goals contradict.
They ask about the Basel III capital requirements, Dodd-Frank and its many unintended consequences and about whether the fed should be audited.
And, critically, they ask about the financial crisis – what brought it on, what factors still must be addressed and why she thinks the breakdown occurred.
“It’s a vast set of questions, but we believe these are the questions senators should be asking before they vote to confirm her,” said Murray. “The answers will provide a guide to the policies the new Fed leader plans to pursue and will give lawmakers, investors and others an idea of what to expect in coming months.”
> View the CEI WebMemo: Questions for Federal Reserve Nominee Janet Yellen