Source: United States Senator Kevin Cramer (R-ND)
“I have great respect for and confidence in our free market economy with a very light regulatory touch,” said Senator Cramer. “I also want to associate myself with Senator Kennedy’s strong word of encouragement to keep the Fed[eral Reserve] independent.
Senator Cramer then pivoted to discussing the relationship between price stability and maximum employment, as it applies to skyrocketing inflation rates endemic of the Biden economy.
“How do you balance the two mandates? Doesn’t price stability naturally lead to a strong economy which naturally leads to maximum employment?” asked the senator.
“Most of the time monetary policy works the same way for both of them. Usually inflation is low when the economy is weak and when unemployment is high. So you cut interest rates and that helps unemployment go down and helps inflation move up, back up to 2%. Usually that’s the case. Almost all the time. In rare occasions though you have a situation where the two sort of goals are not complimentary… The current application of [Federal Reserve goals] would say you need to focus on getting inflation under control because you’re not going to have maximum employment unless you have price stability,” responded Chairman Powell.
Senator Cramer concluded with a warning about the threat of mission creep, specifically as it relates to possible climate work of the Federal Reserve.
“What I worry the most about with the [Federal Reserve], and you and I have discussed this previously, is the mission creep that both clouds and frankly complicates the main mission of price stability… Climate risk, in my mind, is really regulatory risk because climate is a global issue, it’s not a domestic issue,” said Senator Cramer. “I worry about the natural outcome of further regulations in the climate sphere – and that’s what we’re talking about with a climate stress test or cyber stress test or any other number of test. The natural outcome is we are going to transfer our climate guilt to other countries who don’t have our environmental or labor standards.”
“I agree with your principle which is we have to stick to our knitting if we want to remain independent. I really do,” replied Chairman Powell. “I guess I would say climate is appropriate for us as an issue to the extent to which it fits within our existing mandates. It does in the sense of it’s another risk over time that banks are going to run. The broader answer to climate change has to come from legislators and the private sector.”