[Congressional Record Volume 143, Number 45 (Wednesday, April 16, 1997)]
[Senate]
[Pages S3257-S3258]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 A MESSAGE TO THE FEDERAL RESERVE BOARD

  Mr. DORGAN. Mr. President, I rise to ask if someone at the Federal 
Reserve Board might be willing to spend a quarter and buy the 
Washington Post and read the article on the front page above the fold 
on the left side. If they are unwilling to do that, I will at least 
read the headline for them: ``Consumer Prices Nearly Flat in March.''
  Why is this headline important? Because the most recent tax increase 
imposed in Washington, DC, was imposed by Mr. Greenspan, Chairman of 
the Federal Reserve Board, and his Board of Governors, who, meeting 
weeks ago, in a frenzy decided that the problem in our country is that 
our economy is growing too rapidly, there are too many people working 
and too few people unemployed and our economy is moving too rapidly. 
Their solution: Increase interest rates, impose a higher interest rate 
charge on every single American for every purpose. Of course, that is, 
in effect, imposing a tax on everybody, isn't it? The difference is, if 
somebody were to propose a new tax, it would have to be done here in 
the open, in debate. But in this dinosaur we call the Federal Reserve 
Board, it is done behind closed doors, in secret, outside of the view 
of the public, by a bunch of folks in gray suits, coming from their 
banking backgrounds, or as economists, peer through their glasses and 
try and see what the future holds. The future is no clearer to them 
than it was to the augurs in Roman times when practicing the rites 
called augury. These high priests would read the entrails of birds, the 
entrails of cattle, observe the flights of foul in order to portend the 
future.
  Well, we now have economists who, of course, practice the study of 
economics. I sometimes refer to it as ``psychology pumped up with a 
little helium.'' The economists now tell us what the future will hold. 
What does the future hold for us? The economists at the Federal Reserve 
Board, believed by the Board of Governors, say that our country is 
moving too fast. It is like that Simon and Garfunkel tune, ``Feeling 
Groovy,'' although I doubt that they would play that there. It says, 
``Slow down, you're moving too fast * * *'' The country is moving too 
fast, they say --2\1/2\, 3 percent economic growth. Lord, what is going 
to happen if we have 3 percent sustainable economic growth? You can't 
do that because the Fed wants to put the brakes on. They want people to 
pay higher interest rates to slow our country down.
  You know, the Federal Reserve Board had told us forever that if 
unemployment dropped below 6 percent, what would happen? A new wave of 
inflation would come. Unemployment has been below 6 percent for 30 
months; inflation is going down. The Consumer Price Index is nearly 
flat. In fact, Mr. Greenspan, Chairman of the Federal Reserve Board, 
says to us, ``I think the Consumer Price Index overstates the rate of 
inflation by probably 1 full percent and maybe a percent and a half.'' 
If that's the case, there is no inflation in our country. If there is 
no inflation in our country, why did those folks go behind the closed 
doors, lock it up, do their banking business in secret, and come out 
and announce to us that they were imposing a new tax on every American 
in the form of a higher interest rate?
  I ask the Fed today to buy a paper, read the story, convene a meeting 
and put interest rates where they ought to be. Your Federal funds rate 
is a full one-half of 1 percent, and now, after your last action, 
nearly three-quarters of 1 percent above where it ought to be, given 
the rate of inflation. What does that mean? It is a premium imposed on 
the American people--a tax in the form of higher interest. It is 
imposed on every American, without public debate.

  I urge the Federal Reserve Board to meet again with the new 
information and understand what some of us have been talking about for 
some long while: Your models are wrong. The world has changed. We don't 
have upward pressures on wages in our country; we have downward 
pressures on wages in our country. That is why you don't see consumer 
prices spiking up. We now exist in a global economy in which American 
workers are asked to compete against workers elsewhere around the 
world. It is not unusual for American workers to produce a product, to 
go into a department store to compete against a product produced in a 
foreign country by a 14-year-old child being paid 14 cents an hour, 
working 14 hours a day in an unsafe factory. It is a global economy. 
Unfair? Yes. But it is a global economy that now puts downward pressure 
on American wages. That is why consumer prices are not spiking up. That 
is why the Federal Reserve Board is wrong.
  The Federal Reserve Board ought to countenance more economic growth 
in this country. It can be done without reigniting the fires of 
inflation. It should be done by a Federal Reserve Board that cares more 
about all of the American people and economic growth and opportunity 
all across this country than it does about the interest of its 
constituents, the big money center banks.
  I did not intend to speak about this today, but when I bought the 
paper and saw the story, it occurred to me that someone ought to stand 
up and say to the Federal Reserve Board: You were wrong a couple of 
weeks ago. You ought to admit it. We don't accept your remedy. The 
American people know you are wrong because they understand what is 
happening in our economy. Our economy isn't growing too fast. If 
anything, the economic growth is too slow. We need fewer people 
unemployed and more people employed. We need more economic growth and 
more opportunity. I hope one day the Federal Reserve Board will adopt 
policies that will understand that.
  Now, we have a couple of vacancies coming at the Federal Reserve 
Board, and I expect that the Federal Reserve Board will fill the 
positions with people who essentially look the same, act the same, talk 
the same, and behave the same as all the other folks there. Take a look 
at who is at the Fed. In fact, I have brought for my colleagues to the 
floor a giant chart with pictures of the Board of Governors and 
regional Federal bank presidents, indicating where they are from, where 
they were educated, their salaries. I don't want them to be anonymous. 
I want the people to see who is making the decisions that affect all of 
their lives.
  Now we will have a couple of new people appointed to the Fed. 
Congress will have a little something to say about that. But the fact 
is, the nominations will be sent to us. I have said,

[[Page S3258]]

and I say again, that I would recommend my Uncle Joe. The reason I 
recommend Uncle Joe is the Federal Reserve Board doesn't have anybody 
serving on the board like my Uncle Joe. My Uncle Joe actually has made 
a lot of things in his life. He fixed generators and starters on cars. 
He has a lot of common sense, understands what it is to start a 
business, borrow some money, make a product, sell a product. So I 
recommended my Uncle Joe. I have been doing that for a number of years 
and Joe hasn't gotten a call yet. So I expect that the Federal Reserve 
Board will not be blessed by the membership of my Uncle Joe.
  I say this because I would like to see some new blood at the Fed, 
some new energy and new direction that doesn't just buy into this 
mantra that what we need is more unemployment and slower economic 
growth, and somehow that represents the future of our country. The Fed 
is wrong. The numbers demonstrate that the Fed is wrong. I hope as we 
go down the road talking about this, as well as filling the positions 
at the Fed that are going to be open, we can have a broader discussion. 
I wanted to at least acknowledge today that this new information 
exists. I encourage the Fed to buy the morning paper.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. NICKLES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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