U.S. House Republicans Continue Drumbeat Against Fed's Role

DECEMBER 7, 2010, 1:04 P.M. ET
By Michael R. Crittenden 
   Of DOW JONES NEWSWIRES 
 

WASHINGTON (Dow Jones)--Top members of the incoming GOP majority in the U.S. House of Representatives continued to level broadsides against the Federal Reserve Tuesday, questioning its proper role in shaping U.S. economic policy.
Reps. Paul Ryan of Wisconsin and Indiana's Mike Pence both repeated calls for an end to the central bank's dual mandate to promote jobs and maintain price stability. Members of Congress aren't trying to encroach on the Fed's independence, Pence said, but may have to take legislative action to change the Fed's responsibilities.
"It's time that the Fed focus solely on price stability and the dollar," Pence said. He said the Fed's plan to buy $600 billion in Treasury securities to stimulate the economy--generally known as QE2, for the second round of quantitative easing--is an example of the central bank overstepping its bounds.
"QE2 is an example of what happens when the Fed involves itself too much in macroeconomic meddling," Pence said.
The comments are the latest in a growing drumbeat of criticism leveled against the Fed, which has come under fire for its response to the financial crisis, continued high-levels of unemployment, and general economic uncertainty.
The Fed has increasingly sought to combat some of the criticism, with Fed Chairman Ben Bernanke giving a rare television interview on Sunday evening in an effort to speak directly to the American people. In the interview, featured on CBS' "60 Minutes" news program, Bernanke warned that the economic recovery "may not be" self-sustaining, but pledged his "100%" confidence he could prevent runaway inflation.
But that appears to have done little to sway the opinion of key House Republicans such as Ryan and Pence. Ryan said the Fed has misplaced confidence in its ability to maintain price stability and solve the economy's current woes by "running the printing presses on overtime."
"It's a fatal conceit," Ryan said. "We're undermining the precepts of sound money."
Both lawmakers questioned whether the U.S. dollar would remain the world's reserve currency if the U.S. remains on its current fiscal path. Pence said he supports comments made by World Bank President Robert Zoellick last month that global leaders should reconsider gold's place in the global monetary system.
"The time has come to have a debate on the role of gold," Pence said.

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; michael.crittenden@dowjones.com