Our Dream Come True … or Hasty Campaign Posturing?
At first, the headline read like a Christmas present …
It seemed like we’d already won. Like the Sound Dollar Campaign’s goals were already being met — so we could cancel our massive, multiyear campaign and just head on home.
I’m talking about the “Sound Dollar Act of 2012” — a new piece of legislation introduced by Rep. Kevin Brady (R-Texas). In his presentation, he romantically evoked the name of Alexander Hamilton, stating:
“As for monetary policy, the American experience from the First Bank in 1791 to the modern Fed is that the economy operates more efficiently when the central bank, managed by competent individuals, operates independently with a rules-based approach.”
It seemed, for once, like we might still have a few politicians left with some sense in their heads.
Naturally, however, we weren’t eager to make that assumption.
So we did the same thing George Lambert did with the new “Stop Trading on Congressional Knowledge (STOCK) Act” — we gave it the third degree.
The Wall Street Journal may think this bill “makes it clear that legislators are finally giving serious attention to a much-needed reform of the Federal Reserve System,” but we still have our doubts.
So let’s dig down into the actual wording of the bill, and take a quick look at what each section really means …
What Would this Bill Really Do?
The short answer to that question is “surprisingly little.” At least, for something with such a bold name and impressive editorial backing.
- Single Mandate for Price Stability — The first few sections of the bill are designed to reshape the Federal Reserve, but they’re unspecific and relatively wishy-washy in doing so. They approach the issue at a level of philosophy, not balance sheets, and are little more than compelling window-dressing.
- Financial Stability … Act — This is a dreadfully long section that specifies a new committee and designs a simple disaster plan.
- Titles 4 and 5 — deal with imposing a deadline on Fed publications, and liquidating an esoteric government fund. (After renaming it.) The resulting proceeds would be used to pay down the federal debt. But don’t get too excited; we’re talking about less than $60 billion … a drop in the bucket.
- Title 6 — gives the Fed power to “authorize any Federal Reserve Bank… to buy and sell… bills, notes, revenue bonds, and warrants” that mature within six months. This is by far the most-concerning aspect of this bill, as it seems relatively open to interpretation, up to and including autonomy for the individual Federal Reserve Banks. That could effectively put a Ben Bernanke-brand printing press in each of the 12 Fed banks.
- Title 7 — gives Congress very limited oversight over Fed operations, only when deemed unrelated to “the safety, soundness and smooth functioning of the nation’s banking and payments systems.” Again, very unspecific definition, which means it’s likely just window-dressing.
And that’s it, ladies and gentlemen.
Yep, the whole “Sound Dollar Act” amounts to a minor adjustment in the existing rules. No hard deadlines or new limitations … just another layer of bureaucracy and a token payment of the federal debt.
I suppose we shouldn’t be surprised … especially when you consider the fact that it’s an election year, and it won’t be an easy one for the bill’s author in particular …
Meet Sound Dollar Champion Kevin Brady
Kevin Brady spent most of his career working at the local government level with various Chambers of Commerce. His big moment didn’t even come until he was 42, when he won Texas’ 8th Congressional Seat from longtime incumbent Jack Fields.
Since then, Brady’s career has been something you might call “pleasantly uneventful.” He was a reliable conservative, author of that one “Obamacare” chart we all remember from the healthcare debates a few years ago, and everything was going pretty well for him.
That is, until 2010 …
Because in 2010 — after seven terms and seven unchallenged wins in the Republican primaries — Brady met his first Republican challenger since 1996. Three of them, to be exact. He defeated all three challengers in the March primary, taking the majority of the vote with him.
But now, he’s up for re-election in November.
Oh, it gets better …
To be clear, I’m not implying that he’s afraid of losing his job here. But at the same time, Brady’s acutely aware of just how easy it would be for someone else to take that job if they wanted it …
You see, that’s because Brady was a bit of an underdog during his first major election in 1996 — winning a paltry 22% of the vote in his first primary.
But his election district was one with surprisingly complicated rules … and he was facing a number of competitors. So, after three different run-off elections and something called a “jungle primary,” Brady went from 22% of the Republican vote to winning the general election and representing the whole district in Washington.
After finding his way into such a hard-won seat in Congress, Brady doesn’t seem like the type to have any illusions about his “job security.” I wouldn’t be surprised if this guy was willing to work overtime solidifying his reputation.
With that in mind, the “Sound Dollar Act’s” window-dressing and romance makes much more sense.
In relation to the long-term health of the dollar and our economy, this bill is almost certain to have no direct effect. But in relation to Mr. Brady’s career … well, the P.R. alone is priceless. But I’ll be the first to admit these assumptions may be wrong.
So here’s my offer:
If Kevin Brady keeps putting pressure on the Fed in December — after the big election — then I owe him a pancake dinner.
But I’m not holding my breath.
In the meantime, the real path to a sound dollar remains the one we’re on here. I encourage you to sign the petition and tell your friends to join us in our collective crusade to make a REAL difference on Capitol Hill!