Are European central banks free from government influence? The Humphrey-Hawkins Act mandated that the goals of the Federal Reserve system were to promote maximum output and employment at the same time as promoting stable prices. AKA The Full Employment and Balanced Growth Act of 1978, which expired in May, 2000. Quite a remarkable document - and if you remember Hubert Humphrey, he was quite an interventionist and rather of a fool. I don't remember Hawkins. I will just inflict the Congressional findings on you here, and will link the mandates to the Federal Reserve in a later post. This is why I always laugh when people claim that the Federal Reserve is independent of the US government. The US government doesn't own the banks but Congress calls the shots.
>>Section 3101. Congressional findings
(a) The Congress finds that the Nation has suffered substantial
unemployment and underemployment, idleness of other productive
resources, high rates of inflation, and inadequate productivity
growth, over prolonged periods of time, imposing numerous economic
and social costs on the Nation. Such costs include the following:
(1) The Nation is deprived of the full supply of goods and
services, the full utilization of labor and capital resources,
and the related increases in economic well-being that would occur
under conditions of genuine full employment, production, and real
income, balanced growth, a balanced Federal budget, and the
effective control of inflation.
(2) The output of goods and services is insufficient to meet
pressing national priorities.
(3) Workers are deprived of the job security, income, skill
development, and productivity necessary to maintain and advance
their standards of living.
(4) Business and industry are deprived of the production,
sales, capital flow, and productivity necessary to maintain
adequate profits, undertake new investment, create jobs, compete
internationally, and contribute to meeting society's economic
needs. These problems are especially acute for smaller
businesses. Variations in the business cycle and low-level
operations of the economy are far more damaging to smaller
businesses than to larger business concerns because smaller
businesses have fewer available resources, and less access to
resources, to withstand nationwide economic adversity. A decline
in small business enterprises contributes to unemployment by
reducing employment opportunities and contributes to inflation by
reducing competition.
(5) Unemployment exposes many families to social,
psychological, and physiological costs, including disruption of
family life, loss of individual dignity and self-respect, and the
aggravation of physical and psychological illnesses, alcoholism
and drug abuse, crime, and social conflicts.
(6) Federal, State, and local government budgets are undermined
by deficits due to shortfalls in tax revenues and in increases in
expenditures for unemployment compensation, public assistance,
and other recession-related services in the areas of criminal
justice, alcoholism and drug abuse, and physical and mental
health.
(b) The Congress further finds that:
(1) High unemployment may contribute to inflation by
diminishing labor training and skills, underutilizing capital
resources, reducing the rate of productivity advance, increasing
unit labor costs, and reducing the general supply of goods and
services.
(2) Aggregate monetary and fiscal policies alone have been
unable to achieve full employment and production, increased real
income, balanced growth, a balanced Federal budget, adequate
productivity growth, proper attention to national priorities,
achievement of an improved trade balance, and reasonable price
stability, and therefore must be supplemented by other measures
designed to serve these ends.
(3) Attainment of these objectives should be facilitated by
setting explicit short-term and medium-term economic goals, and
by improved coordination among the President, the Congress, and
the Board of Governors of the Federal Reserve System.
(4) Increasing job opportunities and full employment would
greatly contribute to the elimination of discrimination based
upon sex, age, race, color, religion, national origin, handicap,
or other improper factors.
(c) The Congress further finds that an effective policy to
promote full employment and production, increased real income,
balanced growth, a balanced Federal budget, adequate productivity
growth, proper attention to national priorities, achievement of an
improved trade balance, and reasonable price stability should (1)
be based on the development of explicit economic goals and policies
involving the President, the Congress, and the Board of Governors
of the Federal Reserve System, with maximum reliance on the
resources and ingenuity of the private sector of the economy, (2)
include programs specifically designed to reduce high unemployment
due to recessions, and to reduce structural unemployment within
regional areas and among particular labor force groups, and (3)
give proper attention to the role of increased exports and
improvement in the international competitiveness of agriculture,
business, and industry in providing productive employment
opportunities and achieving an improved trade balance.
(d) The Congress further finds that full employment and
production, increased real income, balanced growth, a balanced
Federal budget, adequate productivity growth, proper attention to
national priorities, achievement of an improved trade balance
through increased exports and improvement in the international
competitiveness of agriculture, business, and industry, and
reasonable price stability are important national requirements and
will promote the economic security and well-being of all citizens
of the Nation.
(e) The Congress further finds that the United States is part of
an interdependent world trading and monetary system and that
attainment of the requirements specified in subsection (d) of this
section is dependent upon policies promoting a free and fair
international trading system and a sound and stable international
monetary system.<<
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