Gingrich’s vision for the Fed

December 6, 2011

Surging Republican presidential candidate Newt Gingrich told TheStreet in an interview on Tuesday he would commit the Federal Reserve to ensuring that the dollar would not lose value.

I would return having the Fed having an obligation to have hard money, meaning if you save a dollar this year, it should be worth a dollar 20 years from now.

Since the value of the dollar depends on many variables and is relative to other currencies around the world, it would be interesting to learn how he thinks the Fed would accomplish that.

The presidential hopeful also said he would strip the Fed of its full employment mandate. The Fed is currently required to ensure both price stability and full employment. Gingrich added he would remove the central bank’s chairman Ben Bernanke from his post “as rapidly as we could get a bill through Congress.”

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Without hard backing the only way this could be done is through less printing/debt….and giving up control of interest rates and let the market determine the proper rate based on demand…and demand at any given point must be able to have an IRR high enough to make a profit and pay the cost of funds….in other words more robust than just speculating.

Posted by KarlMarx | Report as abusive