Here’s a reminder that the GOP is still intent on right-wing “pop­ulist” reforms for the Fed­er­al Reserve like elim­i­nat­ing its “dual man­date” so that high unem­ploy­ment is no longer some­thing the Fed is expect­ed to care about. And that’s just one of their pro­pos­als. There are plen­ty of oth­ers:

The New York Times
In Repub­li­can Attacks on the Fed, Experts See a Shift

By BINYAMIN APPELBAUM
APRIL 7, 2015

WASHINGTON — At a hear­ing in Feb­ru­ary, Rep­re­sen­ta­tive Scott Gar­rett, a New Jer­sey Repub­li­can, com­plained that Con­gress and the Fed­er­al Reserve had trad­ed places.

Dur­ing pre­vi­ous peri­ods of high unem­ploy­ment, mem­bers of Con­gress pressed the Fed to print more mon­ey even as the Fed remained wary of the infla­tion­ary con­se­quences of such efforts.

After the Great Reces­sion, by con­trast, the loud­est crit­i­cism has come from politi­cians demand­ing that the Fed shut down its print­ing press and raise inter­est rates.

Repub­li­cans like Mr. Gar­rett argue the cen­tral bank needs to be reined in because they say it has aban­doned cau­tion in its con­tin­u­ing effort to stim­u­late faster eco­nom­ic growth. They say the Fed was grant­ed con­sid­er­able auton­o­my so it could keep infla­tion under con­trol, and it is now abus­ing that inde­pen­dence.

“The peo­ple push­ing back on your deci­sions are those argu­ing for a tougher mon­e­tary pol­i­cy, not a loos­er one,” Mr. Gar­rett told Janet L. Yellen, the Fed­er­al Reserve chair­woman, dur­ing the hear­ing in late Feb­ru­ary. “This flies in the face of the orig­i­nal stat­ed ratio­nale for polit­i­cal inde­pen­dence in mon­e­tary pol­i­cy.”

The Fed has long been a pop­u­lar tar­get for politi­cians dur­ing peri­ods of eco­nom­ic dis­tress. Sarah Binder, a polit­i­cal sci­en­tist at George Wash­ing­ton Uni­ver­si­ty, has shown that con­gres­sion­al prod­ding of the Fed ris­es and falls with the unem­ploy­ment rate.

But she also found a strik­ing shift: Democ­rats once pro­posed most bills to change the Fed­er­al Reserve but in recent years Repub­li­cans have tak­en their place, offer­ing about two-thirds of such mea­sures since 2010.

The Fed’s chair­man for most of that peri­od, Ben S. Bernanke, was a Repub­li­can ini­tial­ly appoint­ed by a Repub­li­can pres­i­dent. Under his lead­er­ship, the Fed reduced inter­est rates near­ly to zero and embarked on sev­er­al rounds of high­ly unusu­al “quan­ti­ta­tive eas­ing,” amass­ing more than $4 tril­lion in Trea­sury and mort­gage-backed secu­ri­ties in a bid to fur­ther reduce bor­row­ing costs for busi­ness and con­sumers.

Easy-mon­ey poli­cies like those pur­sued by Mr. Bernanke and con­tin­ued by Ms. Yellen his­tor­i­cal­ly have drawn sup­port from pop­ulist politi­cians in both par­ties. But Ms. Binder sug­gest­ed that Repub­li­cans were attack­ing those poli­cies in part because Democ­rats had sup­port­ed the Fed’s efforts to fight unem­ploy­ment, and the polar­iza­tion of nation­al pol­i­tics encour­aged the par­ties to accen­tu­ate their dif­fer­ences.

“You now have these hard-mon­ey pop­ulists from the right who are con­cerned that mon­e­tary pol­i­cy has been too lax and that the Fed needs to tight­en,” Ms. Binder said. “It’s an inver­sion of what we might more typ­i­cal­ly see.”

One pro­pos­al, which the House has passed twice in recent years, is known as “Audit the Fed.” Backed by Sen­a­tor Rand Paul, a Ken­tucky Repub­li­can who is con­sid­er­ing a pres­i­den­tial cam­paign, it would autho­rize the Gov­ern­ment Account­abil­i­ty Office to review mon­e­tary pol­i­cy deci­sions.

A stronger mea­sure, backed by the Repub­li­can lead­er­ship of the House Finan­cial Ser­vices Com­mit­tee, would require the Fed to pub­lish a math­e­mat­i­cal for­mu­la that it planned to fol­low in rais­ing and low­er­ing inter­est rates. The Fed would then be required to explain devi­a­tions from the path pre­scribed by the for­mu­la.

There are also pro­pos­als to change the selec­tion process for mem­bers of the Fed’s pol­i­cy-mak­ing com­mit­tee, includ­ing a plan to strength­en the role of the bank­ing indus­try in pick­ing the pres­i­dents of the Fed’s 12 region­al reserve banks.

So far, how­ev­er, none of the mea­sures have gained trac­tion in the Sen­ate, where Democ­rats still have con­sid­er­able pow­er to stall leg­is­la­tion. And the White House has expressed gen­er­al oppo­si­tion to restric­tions on the Fed’s auton­o­my.

The Fed is charged by Con­gress with min­i­miz­ing infla­tion and max­i­miz­ing employ­ment, a man­date for­mal­ized in 1978 by the Humphrey-Hawkins Act. Since the Great Reces­sion, infla­tion has been unusu­al­ly slow while jobs have been unusu­al­ly scarce. Ms. Yellen and oth­er Fed offi­cials have described the Fed’s actions as a nec­es­sary response to those cir­cum­stances.

Democ­rats, ral­ly­ing to the Fed’s defense, say the cen­tral bank is doing its best to ful­fill its twin objec­tives, which can some­times pull in oppo­site direc­tion. Repub­li­cans, they say, are seek­ing to change its job descrip­tion.

“The root of the issue at this point, I can sum it up in two words, Humphrey and Hawkins,” said Bar­ney Frank, the for­mer Mass­a­chu­setts con­gress­man. “What you have is a vehe­ment objec­tion to the dual man­date. Many Repub­li­cans do under­stand that the atmos­pher­ics of repeal­ing the unem­ploy­ment part of the dual man­date would be very bad, but they are opposed to it philo­soph­i­cal­ly.”

Some Repub­li­cans are in favor of direct­ing the Fed to focus sole­ly on price sta­bil­i­ty, in line with the oper­at­ing instruc­tions for most cen­tral banks in devel­oped nations, includ­ing the Euro­pean Cen­tral Bank and the Bank of Japan. The Repub­li­can sen­a­tors Bob Cork­er of Ten­nessee and David Vit­ter of Louisiana intro­duced leg­is­la­tion in 2013 that direct­ed the Fed to focus on keep­ing infla­tion low.

Bills being put for­ward now, how­ev­er, do not attack the dual man­date direct­ly. The pro­pos­al to make the Fed adopt a pol­i­cy rule, for exam­ple, includes a base­line rule that incor­po­rates both infla­tion and a mea­sure of eco­nom­ic out­put. But that rule, known as the Tay­lor Rule, sug­gests that the Fed has kept inter­est rates near zero for too long, and the bill would require the Fed to jus­ti­fy that choice.

John Tay­lor, a pro­fes­sor of eco­nom­ics at Stan­ford Uni­ver­si­ty and the intel­lec­tu­al force behind the leg­is­la­tion, said that requir­ing the Fed to estab­lish a pol­i­cy rule would serve the same pur­pose as the check­lists that some hos­pi­tals use to help doc­tors avoid errors.

“Prac­ti­cal expe­ri­ence and empir­i­cal stud­ies show that check­list-free med­ical care is wrought with dan­gers just as rules-free mon­e­tary pol­i­cy is,” Mr. Tay­lor wrote in a recent defense of his pro­pos­al.
...

The cur­rent debate also has revived a strug­gle that dates to the Fed’s cre­ation in 1913. Repub­li­cans want to strength­en the inde­pen­dence of the Fed’s region­al reserve banks, whose pres­i­dents par­tic­i­pate in mon­e­tary pol­i­cy deci­sions, while Democ­rats want to strength­en the fed­er­al government’s con­trol.

Leg­is­la­tion intro­duced by Mr. Gar­rett would let the region­al banks select their own boards and increase the bank­ing industry’s rep­re­sen­ta­tion on those boards. It would also let the banks pick pres­i­dents with­out Washington’s approval.

A coun­ter­vail­ing bill intro­duced by Sen­a­tor Jack Reed, a Rhode Island Demo­c­rat, would make the pres­i­dent of the New York Fed a pres­i­den­tial nom­i­nee, sub­ject to con­fir­ma­tion by the Sen­ate. A coali­tion of com­mu­ni­ty groups is pres­sur­ing the Fed to allow pub­lic input in the selec­tion process for all region­al Fed pres­i­dents.

Most of these pro­pos­als are revivals of ear­li­er leg­is­la­tion, from ear­li­er peri­ods of frus­tra­tion, and Mr. Con­ti-Brown said it was quite like­ly noth­ing would change.

“I think chances are strong that if the recov­ery holds, then even though the Fed after the cri­sis is a much big­ger and more pow­er­ful insti­tu­tion, the Fed will slink back into the shad­ows,” he said. “Peo­ple like me are just going to be talk­ing to oth­er aca­d­e­mics and cen­tral bankers and won’t be talk­ing to the pub­lic any­more.”

“You now have these hard-mon­ey pop­ulists from the right who are con­cerned that mon­e­tary pol­i­cy has been too lax and that the Fed needs to tight­en”
As we can see, hard-mon­ey pop­ulist are over­flow­ing with ideas for how to reform the Fed. Ideas like:

Leg­is­la­tion intro­duced by Mr. Gar­rett would let the region­al banks select their own boards and increase the bank­ing industry’s rep­re­sen­ta­tion on those boards. It would also let the banks pick pres­i­dents with­out Washington’s approval.

Yes, in addi­tion to elim­i­nat­ing the dual man­date, the GOP’s plans for the Fed include giv­ing the finance indus­try even more rep­re­sen­ta­tion on the region­al Fed­er­al Reserve boards and then giv­ing that board even more pow­er to choose its own region­al bank pres­i­dent. How pop­ulist!

And here’s a reminder that one of the objec­tives the right-wing hopes to achieve by elim­i­nat­ing the Fed’s dual man­date and/or putting in place things like the pro­posed “Tay­lor rule” is so the next time there’s a sig­nif­i­cant finan­cial cri­sis the Fed can’t pre­vent the US from descend­ing into a Great Depres­sion/eu­ro­zone-style mega cri­sis. That’s pre­sum­ably also sup­posed to be pop­ulist. Pre­sum­ably:

The New York Times
The Con­science of a Lib­er­al
John Galt Hates Ben Bernanke

Paul Krug­man
April 3, 2015 5:53 pm

Ah: I see that there was a Twit­ter exchange among Brad DeLong, James Pethok­oukis, and oth­ers over why Repub­li­cans don’t acknowl­edge that Ben Bernanke helped the econ­o­my, and claim cred­it. Pethok­oukis — who pre­sum­ably gets to talk to quite a few Repub­li­cans from his perch at AEI — offers a fair­ly amaz­ing expla­na­tion:

B/c many view BB as enabling Obama’s spend­ing and arti­fi­cial­ly prop­ping up debt-heavy econ­o­my in need of Mel­lon-esque liq­ui­da­tion

Yep: that das­tard­ly Bernanke was pre­vent­ing us from hav­ing a finan­cial cri­sis, curse him.

Actu­al­ly, there’s a lot of evi­dence that this was an impor­tant part of the sto­ry. As I point­ed out a cou­ple of months ago, Paul Ryan and John Tay­lor went all-out con­spir­a­cy the­o­ry on the Bernanke Fed, claim­ing that its efforts were not about try­ing to ful­fill its man­date, but rather that

This looks an awful lot like an attempt to bail out fis­cal pol­i­cy, and such attempts call the Fed’s inde­pen­dence into ques­tion.

Basi­cal­ly, lead­ing Repub­li­cans didn’t just expect a dis­as­ter, they want­ed one — and they were furi­ous at Bernanke for, as they saw it, head­ing off the cri­sis they hoped to see. It’s a pret­ty awe­some posi­tion to take. But it makes a lot of sense when you con­sid­er where these peo­ple were com­ing from.

After all, what is Atlas Shrugged real­ly about? Leave aside the end­less speech­es and bad sex scenes. What you’re left with is the tale of how a group of plu­to­crats over­throw a demo­c­ra­t­i­cal­ly elect­ed gov­ern­ment with a cam­paign of eco­nom­ic sab­o­tage.

...

“B/c many view BB as enabling Obama’s spend­ing and arti­fi­cial­ly prop­ping up debt-heavy econ­o­my in need of Mel­lon-esque liq­ui­da­tion”
Yes, Mel­lon-esque liq­ui­da­tion is what the right-wing real­ly wants and would have got­ten it already if it was­n’t for that pesky Fed with its pesky dual man­date that requires the Fed to actu­al­ly care about mass unem­ploy­ment instead of just assum­ing that “Mel­lon-esque liq­ui­da­tion” will take care of it. Let the pop­ulism flow.