In an email to supporters this morning, presidential candidate and former House Speaker Newt Gingrich (R-GA) tried to revive his troubled campaign by delving into monetary policy. “In a speech this morning in Atlanta,” he wrote, “I called for the repeal of the Dodd-Frank legislation and dramatic reforms in the operation of the Federal Reserve, starting with a full-scale audit of its activities.” Gingrich might be interested to learn that the Dodd-Frank legislation he wants to repeal already mandates an audit of Federal Reserve activities as well as featuring important governance changes to reduce privately owned banks’ influence over monetary policy.
But beyond the contradictory premise to audit the Fed while repealing Fed-auditing legislation, Gingrich also dove deep into the current conservative fad for inflation hysteria, tight money, and higher unemployment:
At a time when a dollar today only has 76% of the value it did 10 years ago, it’s vital that Congress return the Federal Reserve to a sole focus on its original mandate — protect the value of the dollar — in order to protect every American from the hidden tax of inflation.
It’s true that the dollar’s value has declined substantially over the past 10 years. Gingrich might have noted that all of the net decline happened during George W Bush’s presidency. But this has little to do with the actions of the Federal Reserve, and much to do with America’s large trade deficit with China and with oil exporting countries. A further decline in the value of the dollar would boost America’s net exports and create jobs. So would the sort of measures to curb America’s oil consumption that drilling has observed, the intention of the Fed’s 1913 founders was precisely “to channel credit preferentially to productive uses” and certainly not to further entrench the interests of the rentier class of high-income bank executives.