Common Sense Must Prevail

In 1978 Congress passed the Humphrey-Hawkins Law which forced the Federal Reserve to concentrate on stable prices and maximum employment. Two things which are impossible to achieve simultaneously. Now Congress has decided to infuse another $600 billion in federal reserves to try and bolster employment in the short run. This action will do nothing more than devalue the dollar, add to the already bulging federal deficit and cause severe inflation. There will be too much unbacked money bidding on a limited amount of goods and services. The result will be a recession and/or depression deeper than the one we have now. The government has got to stop thinking it can solve long term complicated problems with short term solutions. This is a definite lack of foresight on the part of the leaders in the federal government. The Federal Reserve should stop trying to create maximum employment and concentrate on price stability. Once prices have stabilized then business will know how much raw materials and labor will cost and be able to project future hirings while maintaining a normal profit margin. The average person and family will know how much to budget for housing, food, utilities, etc. and not be afraid to spend money on things they want or need. The increased hirings will also be able to stabilize their own budgets and start to contribute to economic growth again. With price stability long term interest rates and inflation will remain steady. These facets are critical to an economy that is consumer driven. The more the average person has to spend the faster we will pull out of this recession. This isn't rocket science it's basic common sense. If you force an agency, business or person to concentrate on too many avenues at once it is doomed to fail. There is an old adage. It's the KISS Theory (KEEP IT SIMPLE STUPID). What is needed now is some straight line linear thinking. We must call or Email our representatives and let them know that they must repeal the Humphrey-Hawkins Act. Repeal the act and let the Federal Reserve do what it was chartered to do. Concentrate on price stability. Barring anything unforeseen the rest will fall into place. It's just common sense.

Written by

Ric Wells

Common Man
Wilton, N.Y.

11/15/2010

Published in Washington Times

11/30/2010

Published in Albany Times Union

12/12/2010