[Congressional Record Volume 140, Number 43 (Tuesday, April 19, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
               FEDERAL RESERVE BOARD'S OUTRAGEOUS ACTIONS

  Mr. DORGAN. Mr. President, last year, the Congress, with the 
participation of the American people, debated fiscal policy in a 
wrenching, crippling manner. We debated taxing policies and spending 
policies to try to find a way to reduce the Federal deficit, to lower 
interest rates, and to promote new jobs and economic growth. That 
debate lasted a long, long time. And we successfully passed by one vote 
the largest deficit reduction bill in history.
  Yesterday, and twice before in the last 2\1/2\ months, the Federal 
Reserve Board took action to increase interest rates, to slow down this 
economy, and to thwart job creation. There were stark differences 
between the two actions. The deficit reduction bill was debated openly 
by Members of the House and Senate who are ultimately accountable to 
the American people. The Federal Reserve Board's actions were made in 
secret, behind closed doors, with no public debate and input. Yet the 
Federal Reserve Board is accountable to no one.
  Mr. President, the action by the Federal Reserve Board is an outrage. 
Yes, they have a right to do what they have done. It is the last policy 
dinosaur that exists in this country that operates secretly behind 
closed doors. Yes, they have the right to do that, but we ought to 
change things down at the Fed. And we ought to do it soon.
  At the very time this country needs economic growth and new jobs, at 
the very time we need a coordination between fiscal policy and monetary 
policy that recognizes reality and tries to promote this economy and 
raises the economy, we have the Fed putting on the brakes. This is like 
an economic bicycle built for two. We are on the front seat peddling 
hard uphill and the Fed, on the back seat, is applying the brakes.
  Now, why does the Fed do what it does? There is no credible evidence 
that inflation is rearing its ugly head again. For 4 straight years, we 
have had lower inflation. We have plenty of capacity left in the 
economy. We have people still out of work. The signs are good signs for 
our economy, and there are no signs of renewed rampant inflation. The 
Fed is now behaving like a doctor who says, ``I can't find anything 
wrong with you, Mr. or Mrs. Patient, but let me give you some medicine 
just in case.''
  What is the real reason then for the behavior of the Federal Reserve 
Board? The real reason is this is a collection of bankers and 
economists whose interest is to serve the big money center banks in 
this country. We have twin goals in America: Full employment and stable 
prices. Those have always been our twin economic goals. But they do not 
have equal weight at the Federal Reserve Board. The Federal Reserve 
Board has consistently, and now especially, valued stable prices much 
more than full employment. Why? Because they are a creature of the 
banking system and they serve their constituency, the big money center 
banks. They are more concerned about inflation because big money center 
banks are injured by inflation. Families are injured by losing their 
jobs. So we have a Fed that chooses financiers over families; it 
chooses bankers over builders.
  I hope that we one day can get a bill in this Chamber, which I have 
coauthored, that opens the doors of the Fed and blinds them with the 
shining light of public inspection to find out how they make their 
policies and on whose behalf they act.
  Tomorrow, I hope to bring to the floor a chart which shows the 
pictures of all the folks who make these decisions--yes, the Board of 
Governors, but even more than that, the Open Market Committee, on which 
serves some regional Fed presidents who have neither been elected to 
anything, nor appointed to anything by the Senate or the House. They 
make public policy decisions that will cost families and businesses 
billions of dollars in this country, and they are unaccountable. They 
are accountable to no one.
  That ought to change and ought to change soon. I just think we ought 
to give the opportunity to America to see who these people are, so I 
will tomorrow bring their pictures to the floor. We will talk about who 
is making the decisions to increase interest rates, to slow down the 
economy at the very time this economy continues to need a lift. We have 
come through a difficult, dangerous recession. We have not nearly 
reached cruising speed in our economy. We desperately need the creation 
of new jobs and more jobs, and the Federal Reserve Board acts to salve 
the interests of the big money center banks, in my judgment, to the 
detriment of the American people.
  Yes, they have a right to be wrong, but they do not have a right to 
be unaccountable, in my judgment.
  Mr. President, I yield the floor.
  The PRESIDENT pro tempore. The Senator from Massachusetts [Mr. 
Kennedy], is recognized for not to exceed 5 minutes.
  Mr. KENNEDY. I thank the Chair.

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