The Price Stability Act and the Fed's dual mandate

National Review reports on legislation it calls the Price Stability Act, which would make stable prices the Federal Reserve's sole statutory objective, removing the employment leg of the current dual mandate. The argument, as the piece frames it, is that inflation is a form of theft from working families, and that a central bank distracted by employment targets cannot police the currency with sufficient discipline. On the diagnosis, I will not quarrel. Inflation is indeed a hidden tax — it falls hardest on those who hold wages and savings rather than assets, and I knew that lesson before the first Treasury report was dry. But a correct diagnosis does not guarantee a correct remedy.

The Federal Reserve is, in its essential function, what I argued a national bank must be: an instrument by which the credit of the republic is stabilized, the currency is given sinew, and commerce is afforded a reliable medium. I could not have anticipated its precise architecture — the mechanics of open-market operations, the federal funds rate, the payment rails it now anchors — and I will not pretend otherwise. But I understand the purpose of such an institution, and that purpose has always been broader than a single variable. A bank that watches only prices will, in a moment of financial panic, watch prices stay flat while the productive economy collapses beneath it. The Panic of 1792 taught me that credit and employment move together; you cannot save one by abandoning the other.

The National Review lead makes the case for working families, and I take that framing seriously. But consider what a single-mandate Fed does in a supply shock — a war, a pandemic, a disruption of the industrial base (I reason by inference here, not recollection). Prices rise not because money is loose but because goods are scarce. A central bank legally bound to crush inflation in that circumstance must raise rates into an economy already on its knees, throwing workers into unemployment to discipline a price level that monetary policy did not cause. That is not protection of working families; it is sacrifice of them on the altar of a clean mandate.

I am not an apologist for inflationary excess. When the Treasury borrows, it borrows at interest set by the market's confidence in the currency. Debase the dollar and you debase public credit — you make every future bond more expensive, every infrastructure project costlier, every manufacturer's cost of capital higher. I fought for sound money in 1790 and I fight for it now. But sound money requires a capable institution, not a constrained one. The flexibility to respond to both price instability and economic collapse is not a defect in the mandate; it is the feature that has prevented several bad situations from becoming catastrophes (by inference from the Fed's post-1913 record as I understand it from researchers' accounts).

The better remedy is straightforward: hold the Federal Reserve to rigorous public accountability — clear inflation targets, transparent reporting, genuine congressional oversight — without amputating its authority to act when the economy demands more than one kind of medicine. Mandate discipline through accountability, not through blindness. That is the principle I applied when I constituted the first national credit: not a weak instrument narrowly drawn, but a strong one properly checked. The Price Stability Act offers the check without the strength. Congress should reject the bill as written and pursue, instead, a framework of transparent targets with full dual-mandate authority intact.