The Federal Reserve and Humphrey-Hawkins

I recently commented on the Federal Reserve. Some more facts.

Independent-minded economists have always come to the Fed’s defense, in its attempt to keep the Federal Reserve as free from politics as possible.

The recent Dodd-Frank Act has made the Fed less independent of the executive branch of government.

Despite the logic for the Fed’s independence, Congress itself always has wanted to impose some influence. It has to an extent. Since 1978 the Fed has had to enforce the Full Employment and Balanced Growth Act, known as Humphrey-Hawkins. That conflicts with the Fed’s stated currency/inflation activity.

The Humphrey-Hawkins Full Employment Act enforcement creates an inflating bias, and not one of dollar stability; so there is always a conflict of interest. ( See the Earl J Weinreb NewsHole® comments.)