Trump is Right to Blow Up the Fed -The American Conservative
"Last week, President Donald Trump set the economics community aflame by suggesting that he will appoint businessman and presidential aspirant Herman Cain to the Federal Reserve Board. Even more than political economist Stephen Moore, the critics maintain, Cain represents a threat to the cabal that has controlled the central bank for decades.
Why? Because Cain is a successful executive who founded a real business, took risks, and created jobs, things most academic economists will never ever do....Those worried about the independence of the Federal Reserve Board should reconsider. Independence from what exactly? While the Fed is meant to be independent from the executive branch on a day-to-day basis, it is certainly not independent of Congress or the law...Case in point: the dubious notion that we should seek a 2 percent rate of inflation. Anybody who cares to read the 1978 Humphrey Hawkins law will know that the Fed is directed by Congress to seek full employment and then zero inflation. Not 2 percent, but zero....Quantitative easing, to take another example, represents a vast inflation of the financial markets and housing, yet Fed officials actually appear in public and talk about the conundrum presented by 'low inflation.'....Not only are these pro-inflation policies in violation of the letter of the Humphrey Hawkins law, but they have contributed to increased volatility in the financial markets....The basic problem with the Fed today is that it has gradually fashioned a new set of rules for itself, particularly since 2008, on which Congress has never been consulted....Quantitative easing, 'Operation Twist,' and the explicit 2 percent inflation target are just three example of how the Federal Reserve Board is operating outside of its legal authority. It’s high time that President Trump put some new faces at the Fed and started asking questions about what policies it follows and why."