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tv   Future of the Federal Reserve  CSPAN  May 13, 2012 2:05pm-3:15pm EDT

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the priorities that the house is taking in this matter by basically going after all these domestic programs in order to provide increases in defense and to deal with sequestration on the defense side. it's not balanced, it's not fair, and ultimately the senate isn't going to accept it either. so all we're headed for right now is further gridlock, and that's what bothers me. >> mr. panetta, this week the family of sergeant bergdahl spoke out, calling for a swap or transfer or exchange to be made to send taliban prisoners to afghanistan and start these talks and get their son home. have you reconsidered your -- has there been any change in your concerns with the transfer of guantanamo detainees to
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qatar? do you think that there's any possibility of restarting these talks with the taliban on confidence-building measures? >> well, look, first and foremost, our heart goes out to the bergdahl family. we certainly understand the concerns of the family, and we share the concerns about bergdahl and the importance of getting him returned. and we're doing everything possible to try to see if we can make that happen. and -- but on the issue related to guantanamo transfers, my position hasn't changed. i would only take those steps in accordance with the law and the requirements of the law, and at this stage, frankly, there are no decisions that have been made with regards to that. >> mr. secretary, can you both respond as a follow-up to the budget issue. the house has added a hundred
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million dollars for missile defense into the budget. do you think that the east coast needs a missile defense system? do they need to do this survey that will cost a hundred million dollars that the pentagon didn't request, or is this politically motivated? and the second question is related to the intelligence leaks related to the revelations about the underwear bomber this week. do you think that we need an investigation into that leak? are you concerned that it actually may turn out that that leak either came from this
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building, and therefore was it helpful, was it hurtful that the -- that the information came out about that plot? >> i'll address the last question. >> okay. >> and then i'll let marty speak to the first question. as a -- as a former director of the cia, i have to tell you that those kinds of leaks are very harmful to the efforts of the intelligence community. our whole effort is to try to be able to get individuals that can provide intelligence and that can work with us. and to be able to do that and do that effectively, you have to protect these people, and you have to protect the confidence that -- and the classification and the covert nature of this kind of work. and when these leaks take place, i can't tell you how much they damage our ability to be able to pursue our intelligence efforts. and so i am fully in favor of a full and thorough investigation of this matter, and i understand that the director, the dni will do that.
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>> on the ballistic missile defense, as you know, we went through a strategic review back in the fall, and then we mapped our budget to it. and what i can tell you, jennifer , is i'm -- in my military judgment, the program of record for ballistic missile defense for the homeland, as we've submitted it, is adequate and sufficient to the task. and that's a suite of ground- based and sea- based interceptors. so i don't see a need beyond what we've submitted in the last budget. >> questions. on yemen, by any measure, anyone you speak to will tell you that al-qaida in yemen is now stronger since 2009, more fighters, controls more territory, has more capability. so how is it, number one, that al-qaida is facing strategic defeat when they seem to be growing stronger, especially in yemen?
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my other question is to follow onto bergdahl. can i ask whether either of you, since you've taken these jobs, have spoken to the bergdahl family? why has the president not called them? and fundamentally, are doing as much to find bowe bergdahl as you did to find osama bin laden? >> how about if i take the latter and i forget what the former was, so maybe you'll remember. >> i think i'll remember. >> yes. i've had the bergdahls in my office. i've corresponded with them several times. i've -- i understand their concerns. and i can assure you that we are doing everything in our power using our intelligence resources across the government to try to find -- locate him and that -- i mean, i'll give you one vignette. if you go to the centcom command center where -- you know, their conference room, there's a four- by-six foot poster of bowe bergdahl sitting in front of the podium to remind them, and therefore us, every day that he remains missing in action. i can assure you of that. >> with regards to yemen, our
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efforts have been directed at the leadership of al-qaida and those that have been involved in trying to plan attacks on the united states. and with regards to our -- you know, our efforts and our operations, we have been very successful at going after the leadership and those that are directly involved with regards to trying to make those kinds of plans. and i think -- i think the fact that, you know, we continue to be successful with regards to these kinds of threats is an indication of the effectiveness of the operations that we have there. there is a larger tribal operation called aqap. and the yemenis are dealing with them. there are -- i mean, i will say that, you know, they do represent a threat in yemen, and the yemenis are the ones that are pursuing the -- that tribe, aqap, and trying to make efforts to reduce their influence as well.
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but you know, they are a threat. no one -- no one in any way underestimates the fact that all of them represent a concern for the united states in terms of our national security. but i do believe that we are making effective progress at going after those specific targets that represent real threats to the united states. >> my apologies, can you just clarify one thing, sir? you talked about aqap just now as a tribe. and i want to make sure i didn't misunderstand you. you are talking about al-qaida in the arabian peninsula -- >> yeah. >> -- al-qaida in yemen, not a separate tribal organization? >> yeah, that's correct. that's correct. >> i would like to ask you, on syria, mr. chairman, to -- how do you assess the current situation in syria? as you may know, two suicide attacks took place this morning in damascus.
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do you have any indications if al-qaida could be behind those attacks? >> i have no information to that effect, as to whether or not they're involved there. obviously, the situation in syria remains of great concern. this -- you know, the cease-fire does not appear to be working. and annan himself has indicated concerns about whether or not parties are abiding by the cease-fire. we continue to urge assad to step down, that there must be a change there. they've lost their legitimacy by the huge number of deaths that are taking place in syria. and again, we are working with the international community to try to make sure we take all
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steps necessary to try to do what we can to implement the necessary political reforms to have assad step down and to try to return syria to the syrian people. this is not easy. there are no easy courses here. but i think the most important thing we can do now is to continue to work with the international community to bring pressure on syria to do the right thing. >> i -- >> -- follow-up on this? >> yeah, let me because joe asked me as well. i haven't seen any intel to suggest that aq was responsible for those attacks, although we do know that there have been extremist elements that are trying to make inroads in syria. that is to be distinct from the opposition. i'm not tying those together. you know, there is -- whenever those kind of situations occur, there will be violent extremist organizations try to take advantage of it. i'd just add one thing, and that is, two weeks ago i was in jordan. today my turkish counterpart is
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in the building, and we're trying to gain a common understanding of where we think we are and where we think we might want to go. >> if i could also follow up on syria. in addition to the annan comment you had, senator kerry talked about u.s. involvement in helping to create humanitarian no-fly zones or humanitarian corridors, about arming the syrian opposition and arming the rebels. have either of your positions changed in terms of supporting the rebels with arms as opposed to nonlethal aid; that they haven't -- since, as you indicated, the annan plan doesn't appear to be working, why shouldn't the u.s. do more than diplomacy? >> well, i think as we've expressed before, that the most effective way to deal with the situation in syria is not unilaterally, but working with all of our international partners to work together to bring as much pressure as we can, diplomatically, economically and every other way, to try to get syria to do the right thing; that that -- that is the -- you know, we
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believe, the most effective way to address that situation. as far as what we do beyond that, as i've made clear, we at the department of defense continue to make all kinds of plans with regards to, you know, possible approaches in syria. and if the president of the united states asks us to respond in particular ways, we're prepared to do that. >> yeah -- >> can i follow on -- >> let me just add i don't provide positions, i provide options. >> general, do you expect -- in your conversations with your turkish counterpart, since they've spoken about this themselves, do you expect these specific ideas to come up? >> absolutely. and it's because -- that each of the countries in the region have a different concern or a different set of their own interests. in some cases -- for example, jordan is very concerned about the potential for increased refugees, and you know, there's
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400,000 palestinian refugees in and around damascus. so you know, that's a concern that an individual country might have that wouldn't necessarily be ours, but it's important to understand the complexity of the situation. >> if i may follow up from bob's question regarding the course being taught at the joint forces staff college, can i confirm that there's an investigation, but the individual lecturer is still in place, currently holding his position? and does it seem surprising that an officer could speak to a room of o-5s and o-6s and say things regarding target civilian populations, and yet it took a while for this to come out? he spoke several times. this course was taught for several years. >> there is an investigation ongoing. the individual instructor is no longer in a teaching status. he is not in a teaching status. and are you asking me am i surprised? yeah. i'm surprised. and i was actually quite thankful that the young man who
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did find the course material offensive spoke up. >> we have time for two more questions. >> a follow-up -- just to follow up on that issue, if i may? >> sure. >> so should we -- should we understand that this elective course is not being taught anymore at the -- for the officers? >> that's right. that's correct. >> and the second question, which is on -- secretary panetta, if i may, on al-qaida in syria, you've said that we don't have any indication of al-qaida in that -- those double explosions that took place in damascus. but what kind of assessment do you have on al- qaida activity in syria? because the syrian government confirms that al-qaida is active in syria. do you have an indication to say that al-qaida is actually active, how big it is, and is it a concern for you? >> al-qaida anywhere is a concern for us. and we do -- we do have intelligence that indicates that there is an al-qaida presence in syria. but frankly, we don't have very good intelligence as to just exactly what their activities
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are. and that's the reason we can't really indicate specifically what they are or are not doing. but they are a concern. and frankly, we need to continue to do everything we can to determine what kind of influence they are trying to exert there. >> last question. >> mr. secretary? >> last question, yeah. >> this is actually to you both. president obama recently gave his personal opinion on gay marriage. in your personal opinion, should gay service members be allowed to get married on military bases in those states where gay marriage is legal? >> you know, i'm not going to render a personal opinion on that. as secretary of defense, i'm responsible for enforcing the law and for giving the best defense advice we can to the president of the united states. i think that's true for both marty dempsey and myself. there are two laws that we are enforcing in this area right now that are of note.
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one is the repeal of "don't ask, don't tell." we just got a report that i received yesterday that indicates that that's going very well and that it's going pursuant to all of the planning that was done before that went into effect. it is -- it's not impacting on morale. it's not impacting on unit cohesion. it is not impacting on readiness. and so because it was prepared -- and i give tremendous credit to the military for having laid the groundwork for that going into effect. as a result of that kind of effective planning, this is working well. and very frankly, my view is that the military has kind of moved beyond it. it's become part and parcel of what they've accepted within the military. the other law that we do have is the doma law, the defense of marriage act. and the defense of marriage act obviously does have some impact with regards to the benefits
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that are provided to same-sex couples. and so we continue to review the benefits. but those have to be provided consistent with doma. and until doma is either rejected by the courts or changed by the congress, that's the law we abide by. >> yeah, personally, i follow the rule of law that governs the issue you just described. when asked for my military advice to the secretary of defense and the president, we -- i form it with the joint chiefs, and we provide it privately. >> the marriage -- on the marriage -- >> as a military officer, in the idea that everyone in the services be treated equally, does it concern you that some service members are allowed to get married on military bases; other service members are -- do not have that right? >> there's three -- if i could, sir, there's three -- so there's three bins of things we're -- this is under review, has been
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since "don't ask, don't tell." there's three bins into which these privileges and, as you describe them, rights -- that one is self-declared. so a young man or woman can self-declare, for example, who's going to get their insurance benefits. then there's policies. and we control that, the secretary. the secretary controls it. those are under review. but then there's the law, and we don't control that. and so those three bins, if you will, are each rather clear in how we approach it. >> and with regards to, you know, the question on marriage, i mean, in that instance it's very clear that state law controls in that situation. so, you know, where state law provides for that, then obviously that kind of marriage can take place. if the law does -- prohibits that, then it cannot take place on a military base. >> and just a quick follow-up to general dempsey. have you discovered any
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negative impact as a result -- on good order and discipline as the result of repeal of "don't ask, don't tell"? and if not, what was everybody so afraid of all these years? >> to the first part of your question, no, i have not found any negative effect on good order and discipline. to your second, what were we afraid of, is we didn't know. and i think that the way -- we were given a year to make this assessment, to educate ourselves, to collaborate, to build a sense of trust on this issue. and given that time to do it, i think it worked out well. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> the house armed services committee spent 16 hours scrapping the annual defense authorization bill. rick mays is a reporter with "the military times." what are some of the key issues they will be debating when it comes to the floor this week?
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>> they will be talking about afghanistan. at the end of the day, there's not much they can do about it. there will be fighting once again about detainee's in guantanamo bay, cuba. will we ever have trials for them in the united states? tricots cuba down altogether? -- do we close cuba down? some detainees are going to be returned for some peace agreements in the middle east. there has been a debate on how much money to spend on defense. by amendment, there's not much they can do about it. there are popular programs and
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they spent money for example to try and get this increasing on retirees. >> democrats this week said the bill has billions of dollars for weapons systems did not need. how do they respond? >> it's a very simple disagreement. >> what about the overall bill in one of the authorization bill does verses the pentagon authorization bill? >> needed to start new programs or continue programs are going to expire. there are 30 that will expire. is mostly for the changes, upgrades, a raises. it was a 56-5 vote in the end in
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this is one of the few committees, even though there's partisan bickering, this is one of the only ones can get a bill done on a bipartisan basis. >> the must have been some contention in those 16 hours. >> that means you spend a lot of time boating on things without a lot of very many votes. fighting over the $100 million missile defense survey and the possibility of sometimes a country like iran in the future. $100 million is not very much in terms of a $650 billion budget. this is committing you now to something that could save. >> this would take place in 2013 because of the debt bill.
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does this make any accommodation for that? >> it's not separate. there's nothing they can do that would change that. >> what do you see looking ahead? when is the senate likely to take this up as it passes the house. >> it will happen the last day of may or in committee. when they may pass a bill in the floor is a big question. they have had trouble getting a bill considered out all. it will be a while after the election. >> thank you for the update. >> monday, the bipartisan policy center will hold a discussion about talks with iran. including the former undersecretary of state nicholas burns live at 10:00 p.m. eastern on c-span. then live at the atlantic council at 4:00 p.m. to talk
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about the future of nato on steps that the largest members must take to ensure nato stability. both are tomorrow on c-span. >> cutting back in an age where time is global in ways it was not 10 years ago. by that, i mean organized crime, whether it be cyber crime, white-collar crime, gangs, ms13. there globalized and the entity that has the best chance for dressing globalized criminal activity is the fbi. if you cut us from doing this at a time when much of this crime is globalized it hurts. >> on political correctness and
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the foreign intelligence surveillance act. pocket online. one of the many committee briefings recovered this past week. all online. you can select portions for email or to blog. c-span.org/videolibrary. >> now i subcommittee hearing on the future of the federal reserve looking at several bills including the federal reserve board abolition act introduced by republican presidential candidate ron paul. this is just over one hour. >> this hearing will come to order. without objection, all opening statements will be made part of the record. they may have additional questions which they may submit in writing.
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without objection, this will remain open for 30 days for them to submit questions and to paes their responses in the weicker -- and to place their responses in the record. i asked that they asked to be recognized to get statements. i now recognize myself for five minutes for an opening statement. i want to thank our colleagues for being here today. they will be recognized shortly. as many people know, this is something i have been interested in for a long time. with regard to a healthy economy. today be will be discussing the various proposals to address some of the shortcomings of the
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monetary system. what has happened in these last five years is that it has been recognized by many that monetary policy has a lot to do with the creation of some of our problems and their shortcomings when it comes to these problems. the federal reserve has been around for 100 years. it has gone and generally under the radar, and not too many people talk precisely because it was always said that it should not be interfered with by 80 executive branch or the legislative branch. lately there has been more concerned. lacher we were able to get some transparency to the fed. -- last year we are able to get some transparency to the fed. we still have more to do on that. it is very clear how we decide
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what constitutional money is. i do not think many people reject the idea that the congress does have responsibility of oversight and figuring out exactly how to handle that. but the crisis that came about, this is the reason that we had strong support in the last session. more information has come out because of the lawsuits. the way i see the monetary policy is most people realize how big the economy is. generally they do not talk about the other half of their equation. that is the monetary issue. it is one half of all the transactions.
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to duck the issue, i think it has been a mistake. i believe over these many decades if we had good times, they have the credit. something had to be done. they would get the credit out of the slump. i think that has changed. they say how global it is. one of the consequences has been this excess of debt. then the bailing out that occurred. for this reason so many people want to know a lot more about what is going on. a lot has been done about particular policies. one thing we should not forget about is the nature of money.
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if we are trying to describe how managing monetary system, it seems to be most difficult that you have to be able to define money and the dollar. that has that been done for a long time. we use the federal reserve note as the unit of account. there is no legal definition of a federal reserve note. that is a pledge to play something. a note being precise and then you have to have management that does not work, and then we think we need more regulations and everything will work out smoothly. i have a lot of reservations.
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i have a lot of some stability and prices. the prices are rather stable. they ignore that this is going up significantly. the price of energy goes up. the price of education goes up. even when the cpi and ppi may be revealing comment there is a lot for the value of money. we have been in a decade where real wages have not been able to catch up. that is the bottom line. keeping up with the cost of living and real wages, i am very pleased to discuss what i
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consider an important issue. i like to yield to the prime minister. -- mr. clay. >> thank you. >> thank you for holding this on an improving the federal reserve system. one piece is to abolish the federal reserve sponsored by our chair then and another one will make the federal reserve an arm of the treasury. the other deals would make various changes either to the mandate or to the federal market committee's governance. as ranking member, i want to focus on the federal reserve dual mandate of maintaining stable prices.
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the growth act of 1970 a, better known as the humphrey- hawkins act, says benchmarks, growth, and price stability, and the balance of trade. to monitor progress, it mandated that the board of governors at the federal reserve presents semiannual reports to congress on the state of the u.s. economy. the humphrey-hawkins charges charges a dual mandate both maintaining stable prices and full employment. currently the unemployment rate is 8.1%. since president obama took
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office in january of 09, the unemployment rate has gone from 7.8% to around 10% as the impact of financial crisis spreads. i do believe the u.s. economy is heading in the right direction. as of march, at the consumer price index was 2.7 and%. over the past year a decline of 2.9 term. during the same time, energy has risen 4.6%. the food index has increased 3.3%. both increases are smaller than last month. the index for all items means less food and energy, which was 2.0% in february. all of these factors play a very important role in getting america back to economic growth and prosperity. i look forward to the witness's
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testimony. i will yield back. >> thank you. i yield five minutes to dr. heyward. >> thank you. it is with great pleasure that i anticipate the testimony. we have a great challenge before us. a central bank, the federal reserve has cherished the independence and implementing monetary goals. we have the power to coin money. there is a dynamic tension between the independent of the fed and the accountability to
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us. it is going to be very interesting to see your proposals as to how we make that balance. in specific regard to the door mandate, chairman bernanke has said many times that he does not perceive an inherent conflict in the dole mandates. serving the goal of price stability works favorably toward having an economy that will work and enhance the employment projects.
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we see his warning regarding our fiscal policy having implications for monetary policy is that it cannot overcome forever and ever by accommodation. we see that his warning seem to be borne out and that several years have not resulted in the kind of enhancements that we would like to see. i look forward to your testimony. thank you for all the work you have done. >> i think the lady. >> i would like to ask unanimous consent that the gentleman from minnesota be allowed to speak.
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>> if the gentleman would like to make and an opening statement, he can do so. >> thank you. thank you for addressing this important topic. i do not have as much as i do have some questions. my question is, and the dual mandate isn't the problem. to the degree it had challenges, have they been responsible? if not, why are we by the focus? i'm wondering if anyone can point to an instance when the dual mandate requirement required the fed to downplay their preferred anti-inflation approach. the dual mandate has been working. if not, i would be curious to know when it is because of plot
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monetary policy. how how we've been doing with the dual mandate? have we really been pursuing both to the degree the statute will call for? has unemployment gotten the short trip that i am concerned we live in a time when when we are getting used to and unemployment rate of 10%. this is an outrage. our country needs to do more to pursue both prongs of the dough mandate. i am concerned that unemployment has not been getting its full do. these are some questions i have, some concerns of like to see addressed. i am grateful to be allowed to be on the committee today. i hope we can explore these important topics. thank you. >> i think the gentlemen.
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i yield the time to arizona for an opening statement. >> i will try to do this quickly. this has been an area of great interest. one of the ones you're trying to get your head around is with what the fed does in regard to monetary policy. has it allowed those in congress have the fiscal policy? in many ways is it an institution in its action that allows us to get away but that? even though this is a one off, and the discussion the fed is heading toward $2.90 trillion. what is the plan?
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when did they move back to the normalization of the portfolio of? what is the potential cascade effects? >> i want to move to our first panel. i went to first introduced kevin brady from texas as a republican congressman. he is representing the eighth district. he is the sponsor of the sound dollar act and the vice president of the joint economic committee. barney frank is a 16th term democratic congressman. he is the sponsor of hr342a. i will now recognize congressmen brady. greg thank you.
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i would like to it the knowledge the work he has done on the subcommittee. long-term member. he is bringing sound dollar to the public debate. americans understand the monetary policy that devalues sour on currency. we agree on preserving the value of the dollar, economic growth and prosperity, and the government must not be allowed to monetize the debt. the financial system should serve all americans. i've lived like to thank you for your commitment to bring these issues to the forefront of the public debate. i am pleased to testify on behalf of the sound dollar act. i want to thank the members who have co-sponsored this
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legislation. the problem today is that according to some, the 1800's as the bridges century. the 1900's was the american century and the 21st may well be china's century. not so fast. for america to continue its pre-eminence, it is important that we get the role of the federal reserve right. the federal reserve and veered from the policies and adopted an intervention to help the housing bubble. in lead to a global economic crisis. this intervention justifies that by the employment half of
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the mandate continues today. the intervention policies are felt by the single mom who goes to the grocery store in find her paycheck does not go as far as inflation is dropping the value of for dollar. she finds the same thing as she fills her gas pump. it is also fell by the unemployed. the uncertainty is discouraging business investment in building equipment and software. if you look at the fact that government spending is where it was before the recession. business investment is not. the fed has played a role in that. for america to remain the leadier, congress must give a mandate for price stability, and sure it is in a panic from political pressure and held accountable for its own.
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they're focusing on a sound dollar. it implies the fed will ignore this. they are wrong. americans can only maximize our real output with long-term price stability. protecting the power of the dollar over time. it provides the strongest foundation for economic growth. critics react as if it is a shocking proposal. this is not a fundamental part of our constitutional fabric. while it may be pitifully -- politically appealing, and this is something they cannot do. ben bernanke has testified that in the long run the only thing the fed can control is inflation.
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low inflation is the best thing we can do for growth. the maximum level of employment is largely determined by non- monetary factors. using this to speed the growth may harm the economy in the long run. let me skip to the end. among the other provisions, the grant a vote because as important as new york in washington is, there is much more to america as the economy. they should better reflect our geographic diversity. we speed the release of the transcripts to create more accountable for hard-working americans by funding the same way that other agencies do. i have concluded my full testimony for the record.
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-- i have included my full testimony. >> mr. frank is recognized. >> i appreciate your acknowledgement of the work we did together. one of your colleagues was a pioneer in forcing the reserve to be opened. he made the information he claimed did not exist. one thing that ought to be noted, in every instance, the work we did as the information has increase, it has been beneficial. there has been no negative attacks. -- effects. it does dispel the notion that
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there are nefarious things going on. we have a lot of information out. there'll be no transaction. this was reflected well on what they have done. i filed legislation to remove the regional presidents from the voting power that they have. this would have a problem of diminishing geographic representation. i cannot think of another element in american government where there is formal buying power to the representatives that is in question. i do not think the american people are aware of the undemocratic nature of this. to have been setting the policy seems to be mistaken.
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you we get to appointments without diminishing geographic diversity. that is what we have done. i do feel compelled to come to the defense of the bush administration. the single most important appointment was chairman bernanke. he has been his adviser and then he became head of the fed. i think people have been unfairly critical of mr. bernanke. he has been reconfirmed by the senate. there have been predictions borne out.
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these are problems we have from the financial crisis. inflation is not at the point sort it has become a serious problem for people. the loans that they have made have actually made money for the federal government. they have not cause problems in terms of any conflict of interest. we did make some changes. we repealed the part of the law but said that the fed could give money whenever they thought it was important to do so. the best example of that was
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aig. we still have money. we have a place that was some other ways to go. i think it'll be a grave error to appealed the dual mandate. in the long run monetary policy means what people said. as we know, it does not mean that that is the only one. there are times when a balance is necessary. i can make a procedural point. i would be consent to see this put aside. we have a bill that my colleague has put forward. i will agree with him when he said the dual mandate is not in the constitution. i agree. neither is the federal reserve. alexander hamilton tried to put in there and got beat out. there are a very big differences. partisan differences can be carried too far. they're also at the heart of democracy. it is legitimate to have different groups with different views. many things unemployment is a serious problem that deserves being addressed explicitly. i would urge you, let's take the bill and put it out there.
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let's have a committee markup. let the debate that one before the election. the american people can take away concern after the election. >> thank you. i think both members for their opening statement. i ask consent to include written statements for the sponsor of legislation. i will now yield myself by minutes for questions. the first is for congressman brady. i love the title of your bill, and the sound dollar. that is something i think is so important.
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it seems to get a sound dollar we need to have something we can define. the deal have a definition in order to give us an idea what our goals are? how do we define the unit of account? it was defined for a good many years. until 1971 it always had a precise definition. do you have a definition for a sound dollar? >> right now the fed has defined a two% inflation. it seems reasonable over time. the truth is that we want a role space inflation target. we what the fed to stop policies and intervention and to focus on things within the lines of both inflation and deflation.
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that is the strongest foundation for economic growth. this is not an either or. the fed cannot do a good job by job creation as the chairmen and their members agree. over time, preserving the purchasing power it does create the opportunity for strong job increase. there is not an explicit target itself. >> you sign the dollar by achieving a price level or price stability. >> we choose a sound dollar appeared quite there are many free-market economists you do not concentrate on that. they want a flexible pricing level. some said there is no inflation because prices were stable there are distortions in the market. their lead to the 1930's.
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the concentrate on prices. rather than looking at the total picture, if you did mention about not monetizing debt. how would you adjust to the fact that the price level does not give you the information? a lot of prices going down like an electronics. how would adjust for that task i have long ago learned to never discussed fed history with you. looking a little closer, what we saw in 1970 is a great
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lesson. we were told we cannot have high unemployment and high inflation at the same time. it actually treated very volatile economies with very deep and frequent recessions. when the fed focus back on anote fed intervention actually created very volatile economy with very deep and frequent the sessions. when the fed focused on a simple mandate for responsibility, that changed. we had stronger economic growth but a very short, very shallow recession. we saw the benefits of that in price stability. in 2000, we saw the fed keep interest rates too low for too long. it helped to create a credit fueled housing bubble.
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it helped to create a global financial crisis. to wrap that up to your immediate question, within the sound dollar pact, not only do we focus on rules based targeting, we require the monitoring of the price of gold, commodities, equities, bonds, parts of real-estate agriculture, real estate industrial as well. we do not force them to act on that. we want to, to your point, make sure that the price index and potential asset bulls will not only be demonstrative, but reported to you, i, and the public as well. >> i have a question, but i am out of time.
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i think there will be a second round, so i hope i can give my question asked. >> let me ask both witnesses, currently the unemployment rate, according to the labor department is 8.1%. what can the federal reserve and congress do to put americans back to worked? mr. brady, do you have any thoughts and views on that? >> i do. i think the fed is trying to do too much. they are trying to make up for some failed economic policies from the white house. i also believe they are like the doctors and gives you a feel every five minutes and asked how you're feeling? take another one. they are creating uncertainty. i believe the more the fed does the more responsibility congress is taking. bidding their right tax policy
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and balance regulation, ensuring the right spending levels and entitlement reforms that actually creates that uncertainty. i believe congress is doing more. in the long term, that slows the recovery. >> don't you think that congress could be doing something now as far as passing the transportation bill which would be a job a starter? >> it is important to get our policy right. that would be helpful. at the taking of this discussion of higher taxes, the health-care plan in mind you is a real deterrent for job creation. there is a lot of thing congress can do there is a reason the fed said in the interim not
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setting an employment target. in the end we cannot control its. guides what you think the federal reserve and congress is doing to america? >> i think they have been very helpful. i think the greatest bill would prohibit this. we would be worse off. i think the intervention has been helpful. it is been helpful in providing the funding that has helped our economy. secondly, there's a difference between the policies. it would work in the european central bank. it has been helpful and avoiding
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the serious downturn in europe. i think the federal reserve is great. >> with the european central bank? >> they have been very helpful. to have done the federal reserve, it would have been a very grave error. as far as congress, we have a major economy. the unemployment rate is higher than what had been if we had not forced state and local governments to fire 600,000 firefighters. many are financed by the property tax. property values went down. it is important for us to reduce the deficit long term. my colleagues thinks the present was to get out to quickly. i think he was to stay there.
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i think there is a great deal of room for reduction. i think we should be, and will be fighting about this. to cut the military that they cut our medicare and medicaid? i would be for an increase in stimulus. the give money to the states and they will hire some people. as for taxes, i heard the argument that higher taxes will kill the economy. in the years afterward, we have a very good economy. i do not have to claim that the higher taxes a marginal rate increases are unfair and small amount. the talk about people making more than a million dollars a year for every thousand dollars, it is inconceivable to me that and no negative effect.
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>> thank you so much. >> ideal time in its suit him from arizona. >> would you like me to yield this? >> thank you very much. >> i would rather be grilled by him than yourself. >> i say this one for the ranking member. >> the big argument is still mandate. i am pretty much a skeptic on what we get from the fed. i think they generally can find an excuse to do what ever. i know this will go on for a while. i am not hopeful that will solve the problem.
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i think they are rather independent than what they do. i wanted to ask you a question. the appointees, whether they are approved by the senate are not, a lot of people that i talk to are interested. they are concerned that this is not a government operation. they do not like the private. it you think he fully answer that? to partially answered by saying people have to be approved? does this become less private and lessen mr.? >> i will not say sinister. i do not think the people when they pick a president, that is
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not sinister. it has an obvious bias. i diminished this by not having them vote. there's another thing we can do. otherhave a couple of things on your mind. there was a proposal to subject the consumer financial protection bureau. it would seem to be another step that could be taken. i am not for and myself. i would think consistency would say why not do the federal reserve including the original entities. i think if he said there was an alternative, it would have the senate confirmed. that might be worse. i diminish the private sector.
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except for people who are concerned about it more than me. >> i do not want to use all of this time. i yield back my time. >> seized a sorry he was not here. -- he is a sorry he is not here. one thing i'm trying to get my head around, would still mandates, does it ultimately, here we are chasing inflation. through the back door does that also allow us to avoid tough decisions?
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i do not see how it does. i reject the notion that we should be blaming the fed. i do not think we are avoiding those. we have very different views about to do it. some people want to raise this on the wealthy. others wanted to others. i do not see the fact that there is a responsibility somewhere else allowing us to avoid anything. >> i did say one truism. that is it is our response ability. i find that we tried to push it off to regulators. you do the board. we have this plausible deniability. >> i think that is a case with regard to military activity. it has not been so much
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executive overreach as congressional ducking. i am going to agree with you on that. >> there are not doing a good job. the weakest recovery since the great depression, the lowest number of workers in the workforce, despite the stimulus it is close to the class for come hours -- cash for clunkers. at the end of the day it is our responsibility. >> thank you for yielding back. >> i think the gentleman. i get five minutes to congresswoman maloney. >> i would like to ask mr. brady to respond to a statement from the argued that the federal reserve's actions in the area of monetary policy during
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the economic crises were more powerful and effective than anything that congress did escalate through the stimulus. i would argue that the pursuit of a dual mandate contributed to avoid being in all out of economic collapse and helped fuel our economy. i specifically but like to ask my colleagues, can you cite any example of how the demand day in any way hinders their recovery? most believe that it was helpful and recovery. >> i think there are a couple issues. the actions in the mid-2000's, keeping the interest rates too long help bring about crisis
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that they later intervenes. >> that happened during greenspan. >> often the fed as it is today is over the decades >> we are discussing it. we're looking at the recovery, the actions that took place by bernanke and others. you're saying the interest rates were too low. with keeping it high to avoid inflation have been a sensible policy during the crisis when we were looking for recovery? that is the time that we were looking at, how they still mandate responded to the crisis. i would argue that it is helpful. >> i wanted to give you a yes. >> 0 yes? >> they helped fill this -- >> they helped fill this -- they

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