The Price Stability Act of 2008
Returning the Federal Reserve's Focus to Sound Money
The Federal Reserve’s legislative mandate, established in The Humphrey-Hawkins Full Employment Act of 1978, directs it to focus on two goals that are often at odds: short-term economic growth and long-run price stability.
Over the past few months, the dangers of this dual mandate have become apparent: as the Fed has slashed interest rates to lessen the short-term pain of the economic slowdown, its actions have spurred skyrocketing food and energy prices, and a sharp decline in the value of the dollar. The resulting inflation is eroding the value of Americans’ paychecks and savings, and the dollar’s collapse is causing global financial instability and threatening the greenback’s status as the world’s reserve currency.