Is It Time to Rethink the Federal Reserve?

Event Summary

On July 26, AEI’s Paul H. Kupiec led a panel discussion on the state of the Federal Reserve. As inflation in the country approaches double digits, trust in the nation’s central bank appears to be wavering. The panel discussed what reforms could be instituted to improve the Fed’s operations.

Clemson University’s Gerald Dwyer proposed three changes he believed would make the Fed’s current position less likely, including allowing Congress to set a nominal gross domestic product (GDP) target instead of the Fed setting an inflation target.

The Cato Institute’s George Selgin focused on how the Fed has damaged its credibility by going against forward guidance it issued at the start of the COVID-19 pandemic. Mr. Selgin also supported the idea of moving from an inflation target to a nominal GDP target, which he noted would be more resilient to global supply shocks that the Fed has little control over.

The Mises Institute’s Alex Pollock focused on the importance of holding the Fed accountable for its shortcomings, including its soon-to-be-realized operating losses. He echoed Dr. Kupiec’s earlier sentiment that the Fed should not take on additional mandates on climate and racial justice, especially when it cannot meet the mandates it currently has.

—Beatrice Lee

Event Description

The Federal Reserve is having a bad year. As the Fed struggles to control inflation, it is also being asked to expand its policy remit to include climate change. Moreover, the House of Representatives just passed a bill requiring the Fed to adopt new policy goals of equal employment and wealth outcomes for targeted interest groups beyond its existing goals of price stability and full employment. How will these efforts to “rethink the Fed” affect monetary policy, credit availability, and economic growth?

Join AEI as a panel of experts discusses monetary policy, the Fed’s dual role as central banker and regulator, its independence, and recent congressional and executive branch efforts to further expand its legislative mandates.

Agenda
10:00 a.m. – Introduction: Paul H. Kupiec, Senior Fellow, AEI

10:15 a.m. – Panel Discussion
Panelists:
Gerald P. Dwyer, BB&T Scholar, Clemson University
Alex J. Pollock, Senior Fellow, Mises Institute
George Selgin, Senior Fellow, Cato Institute

Moderator:
Paul Kupiec, Senior Fellow, AEI

11:40 a.m. – Q&A

12:00 p.m. – Adjournment