Humphrey-Hawkins and the Federal Reserve

                               

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 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 a major 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.

                       

Humphrey-Hawkins 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 @BusinessNewshole at Twitter.)