The Fed and its Humphrey-Hawkins Conflict of Interest

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.

                       

But the 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 and @BusinesNewshole at Twitter.)