[Congressional Record Volume 140, Number 111 (Thursday, August 11, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: August 11, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                            MORNING BUSINESS

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                        NATION'S MONETARY POLICY

  Mr. FAIRCLOTH. Mr. President, this is a crucial time for our Nation's 
monetary policy.
  If you look on the front page of this morning's Wall Street Journal, 
Money and Investing section, you will see a chart that shows that our 
dollar has been falling all year. It has been falling not just against 
the yen, but against a whole index of currencies. You will also see 
that commodities prices are up, short term interest rates are up, and 
bond prices are down.
  Mr. President, the Federal Government has taken on obligations which 
it cannot possibly hope to meet. The long-term outlook for the Federal 
deficit and the Federal debt are bleak. Every unbiased observer 
believes that if nothing is done, deficits will begin to rise again in 
only a couple of years, and then continue as far as the eye can see or 
the mind can conceive.
  President Clinton's own budget indicates that a child born today will 
face a combined lifetime tax rate of over 80 percent simply to meet the 
obligations that Government has already made. That does not include new 
entitlements like new Government health care programs. Clearly this 
cannot be sustained.
  The pressure will be on the Federal Reserve for easy money to try to 
cure the problems caused by runaway spending and runaway debt. But easy 
money will only make matters worse for working men and women.
  What America needs is a Federal Reserve that not only will say ``no'' 
to easy money, but will also say loud and clear that its first, second, 
and third priorities are no inflation, no inflation, and no inflation.
  Janet Yellen and I met in my office, where we had a wide ranging 
discussion about the economy. Mr. President, unlike most Members of 
this body, this is my first elected office. I spent the last 45 years 
in the private sector as a businessman and a farmer, meeting a payroll 
and creating jobs. So I was disappointed to learn that the President 
had nominated a person with little or no private sector experience to 
the Fed.
  But Janet Yellen certainly has the academic credentials to be a 
Governor of the Federal Reserve Board. I also want to stress that I 
know of no deep dark secrets which would disqualify her from the job.
  But, Mr. President, I simply do not believe that Janet Yellen 
understands how grave our country's underlying problems are. She 
believes that the Federal Reserve should have multiple policy goals--
like targeting interest rates, promoting certain rates of economic 
growth, providing liquidity to the financial system, as well as 
promoting price stability. Many of these goals can only be achieved by 
easing up on the fight against inflation.
  I do not believe that Janet Yellen understands what will happen if 
the Federal Reserve abandons a tough anti-inflation stance in order to 
pursue her multiple policy goals. The Federal Reserve's anti-inflation 
stance is one of the few things that is keeping capital from leaving 
this country.
  Mr. President, if that anti-inflation stance is compromised, then the 
world's capital markets will judge this Nation's credit worthiness 
based upon the policies of Congress and the President, instead of the 
Fed. And if relying on Congress to do the right thing is what will 
determine whether we will continue to attract the capital we need, then 
I fear for the Republic.
  Mr. President, it is time for this Congress to cut spending, balance 
the budget, and stop penalizing people who work, and save, and invest. 
Until it does, the Federal Reserve's inflation fight is more important 
than ever.
  Ending barriers to economic growth is the job of Congress. Protecting 
the value of working people's dollars is the job of the Federal 
Reserve.
  The Federal Reserve cannot bail out the politicians in Congress and 
the White House--past and present--by inflating away the Federal debt. 
This country is going to have to face economic reality before the world 
capital markets shove it down our throat.
  The time to start facing that reality is right here, and right now, 
and with this nomination.
  Mr. President, I yield the floor.

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