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The Fed Steers the Ship, but We Deserve to Know Where We're Headed

Summary:
Given the release Friday of the semiannual report on Federal Reserve policy to Congress, it’s a good time to consider how to make the oversight process more useful. There has been much talk in recent years about making the Fed more transparent and accountable. Unfortunately, the proposals that garner the most interest, like the Fed Oversight Reform and Modernization (FORM) Act, have two basic flaws: They fail the accountability test, and Congress is unlikely to enact them into law.  We should consider a different approach, one based on well-developed principles of organizational oversight... Continue reading: The Fed steers the ship, but we deserve to know where we're headed

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Given the release Friday of the semiannual report on Federal Reserve policy to Congress, it’s a good time to consider how to make the oversight process more useful. There has been much talk in recent years about making the Fed more transparent and accountable.

Unfortunately, the proposals that garner the most interest, like the Fed Oversight Reform and Modernization (FORM) Act, have two basic flaws: They fail the accountability test, and Congress is unlikely to enact them into law. 

We should consider a different approach, one based on well-developed principles of organizational oversight...

Continue reading: The Fed steers the ship, but we deserve to know where we're headed

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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