[Congressional Record (Bound Edition), Volume 146 (2000), Part 6]
[Senate]
[Pages 7807-7808]
[From the U.S. Government Publishing Office, www.gpo.gov]



                         FEDERAL RESERVE BOARD

  Mr. DORGAN. Madam President, I thought I had seen some fairly unusual 
and Byzantine proposals around this town, but one that was described in 
last Friday's Washington Post almost takes the cake. Going back some 
years, there was a proposal by the U.S. Post Office that would allow 
people to file change of address forms in the event of a nuclear war. I 
thought that was rather bizarre. One can imagine being under nuclear 
attack and trying to find the road to the post office to leave a 
forwarding address. That is not very likely. There is a proposal even 
goofier than that.
  On Friday, May 12, John Berry, a Washington Post staff writer--
someone for whom I have respect and he is an excellent writer and 
thinker--wrote an article about ``Rate Forecasts Climbing.'' He was 
talking about interest rates. John describes the thinking of some 
members of the Federal Reserve Board and the Open Market Committee 
about what they intend to do with interest rates. I wish that this 
story, however, included an analysis of opposing views and there are 
some.
  Here is the situation: Tomorrow morning at 9:30, there will be a 
meeting in this town of the Federal Reserve Board of Governors and 
regional Fed bank presidents--five of them--who will make decisions 
about interest rates. The speculation is they will increase interest 
rates by one-half of 1 percent despite the fact there is no evidence of 
inflation that suggests they should do this.
  It is the same as deciding they are going to tax the American people. 
In fact, the rate increases last June, August, November, February, 
March, and now tomorrow--we will have another, mark my words--those 
rate increases have added about $1,210 in interest charges to the 
average household. If one has a $100,000 home mortgage, one is paying 
$100 more a month because of what the Federal Reserve Board has done. 
Every household is paying on average some $1,210 more per year in 
interest charges.
  That is from the folks who meet in secret and effectively impose a 
tax on every single American. The only difference is, when it is done 
in this Chamber in the form of taxation, there is a debate and then a 
vote. It is done in the open. Tomorrow, the Federal Reserve Board will 
deal with interest rate questions in secret.
  At 9:30, if those who are paying attention to C-SPAN want to go down 
to the Federal Reserve Board and say, I want to be involved in this 
discussion, they will be told: No, you cannot be involved; this is 
secret; the doors are locked; we intend to make decisions about your 
life and you can have no involvement.
  Here is what the Washington Post article said about what these folks 
are going to think tomorrow which I think is bizarre. They are saying 
that American workers are becoming more productive and because the 
productivity of the American worker is up, they believe that justifies 
higher interest rates.
  It used to be the same economists who cannot remember, in most cases, 
their home telephone numbers and their home addresses but who can tell 
us what is going to happen 5 years or 7 years from now, would say our 
problem is we have inflation pressures in this country because we do 
not have increases in productivity. If we have increases in 
productivity, that will deal with all of the other pressures that come 
to bear on the economy and offset them.
  Now they are saying, but if workers become more productive, we are 
going to have to raise interest rates. You see, they are concerned 
about workers' pay. If workers in this country receive more pay, they 
say that is inflationary. So the workers are kind of stuck, aren't 
they?
  The Fed has already said, if workers receive more money, that is 
going to drive up inflation. But in the past they have said, if 
workers' productivity goes up, that will be all right, because you can 
receive more money if you have greater productivity, right? You ought 
to. American workers ought to expect they would be able to share in 
their increased productivity and increased output.
  Now the Fed is saying: That is not right either. Workers can be more 
productive, but we don't intend to see them get more money. We intend 
to continue to raise interest rates to slow down the American economy.
  If workers in America become more productive, the Fed wants to go 
into a room tomorrow and penalize them--all of them. Talk about a goofy 
idea.
  I was going to go through the entire article. I will not.
  But let me do this, as I conclude. The folks who are going to do 
this, they all have gray suits, they all look like bankers, and they 
all think like bankers. They all have worked there for 100 years. These 
folks are confirmed by the Congress. To be appointed to the Board of 
Governors, they have to be confirmed by the Senate. But these other 
folks also serve on that Open Market Committee on a rotating basis--
tomorrow five of them will be in a room with the Board of Governors. 
They are not confirmed by us. They represent their regional Federal 
Reserve Banks. They are all presidents of the regional banks. They are 
going to be voting.
  I could have described what they said in that article. I could have 
described what Cathy Minehan said in that article. Strange. I don't 
understand this at all. Workers are more productive, and therefore you 
must penalize them? It used to be that people would say, if workers 
were more productive, they would be able to expect to receive more 
wages.
  None of you folks down at the Fed has ever given a whit about the top 
executives in this country who earn $1 million, $5 million, $10 
million, $100 million, or $200 million a year. You all have seen those 
numbers. I have spoken about some of them on the floor. It does not 
matter to these folks if the upper crust is getting a lot of money. But 
let the American workers get a gain in productivity and an increase in 
wages, and then you have these folks running in a room, closing the 
door, and, in secret, deciding they want to impose another higher 
interest rate on the American people. There is no justification for it 
at all.

[[Page 7808]]

  The core Producer Price Index is up only three-tenths of 1 percent 
over the past 6 months. Retail sales are down. Auto sales fell seven-
tenths of 1 percent--the second straight monthly drop. Building 
material sales are down 1.6 percent. These are the last monthly 
figures. There is no justification at all.
  The only thing I can conceive of is these people just do not sleep. 
They see things that do not exist. Imagine how they must feel when the 
lights are turned off. They see inflation that does not exist.
  For nearly a year they have been worried about inflation that does 
not exist. They have been willing to impose a penalty on the American 
economy and the average American household to the tune of $1,210 a 
year.
  What do you think people would say if this Congress said: We have a 
proposal; let's increase taxes on the American people $1,210 a year on 
the average household? They would have apoplectic seizures around here. 
But these folks are doing it in secret, with no justification at all. 
Why? Because they tilt on the side of money center banks on the 
question of monetary policy. They always tilt that way. It is funny 
they can stand up, they tilt so far.
  It seems to me this country deserves a monetary policy that allows 
workers in our factories, on our main streets, in our towns, to be more 
productive and to be able to receive the rewards of that increased 
productivity.
  If these folks close that door tomorrow--and they will; mark my 
words--and increase interest rates another full one-half percent--and 
that is likely what they are going to do--they are going to continue to 
injure this economy and injure the American workers.
  I said before that Mr. Greenspan has sort of used himself as a set of 
human brake pads. His only mission in life somehow is to slow down the 
American economy. He has always insisted we could not grow more than 
2.5 percent without more inflation and that we couldn't go below 6 
percent unemployment without more inflation. He has been wrong on both 
counts. We have been below 6 percent unemployment for 5 years, and 
inflation has gone down. We have had more than 2.5-percent economic 
growth for some long while, and inflation has gone down.
  At some point, the American people, through this Congress, ought to 
ask the tough questions of this Federal Reserve Board: How do you 
continue to justify this? How do you justify this at a time when there 
is no evidence of real inflationary trouble in this country, risking 
ruining our economy, ruining continuous economic growth for some while 
and imposing on the backs of the American citizen, on the backs of the 
average families in this country, such a significant penalty? It is 
wrong, wrong, wrong.
  I will have more to say about this tomorrow, after the Federal 
Reserve Board meeting.
  Madam President, I guess that ends the business for today.
  I yield back my time.

                          ____________________