The goal of Federal Reserve policy should be to preserve the dollar's value rather than the current combination of maintaining stable prices and maximizing employment, says Rep. Kevin Brady, R-Texas, chairman of the Joint Economic Committee.
He thinks the Fed had it right during the tenure of its two previous chairmen.
"Under Paul Volcker [1979-87] and Alan Greenspan [1987-2006], Fed monetary policy focused on achieving price stability with low inflation," Brady writes in The Wall Street Journal. "Two long, strong expansions were the result."
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Then in 2008, the Fed shifted its focus to the jobs side of its dual mandate, he says. "Since then, maximum employment has been used to justify the extraordinary, interventionist actions taken by the Fed, such as quantitative easing (QE)."
Brady introduced a measure last year that he thinks will solve the problem.
"The Sound Dollar Act would give the Fed a single mandate for price stability, provide for a smooth, orderly selloff of the non-Treasury assets on the Fed's balance sheet, and have the Fed formally articulate its lender-of-last-resort policy for dealing with financial crises, such as in September 2008," Brady writes.
" I think the country would benefit from a bipartisan forum in which all monetary ideas can be thoughtfully examined to reach a consensus position for U.S. monetary policy. Such a policy consensus is far more important than Beltway political battles over who should head the Fed."
The hot short-term topic for Fed watchers is whether the central bank will begin tapering its QE policy in September. Diana Furchtgott Roth, a senior fellow at the Manhattan Institute, supports the idea.
"QE1, QE2, and QE3 are not achieving their stated goals of helping the economy, and are contributing to the possibility of inflation," she writes in an article for MarketWatch. "So tapering should occur."
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