This is supposed to be a serious discussion? Inflation is at 1,5% and republicans are trying to restrict FED's freedom of setting the threshold for the inflation target that, roughly, allows for respecting the employment target, "because they need to make sure inflation will not exceed 2%" ?????



This is just making employment a "secondary-target" (in fact a non achievable target), canceling the current mandate, just not calling it that.



The basic problem that democrats have to address is that the current mandate does not specify who (e.g., which body or institution) *and how* should define "maximum employment" for the current state of the economy, and if it the target value of interest is a medium term average or a threshold. To make this reflect targets set by government (leaving instruments to the FED), the institution defining "maximum employment" should be part of the government. In my opinion, the "how" of defining "maximum employment," should be set by legislation and not under Treasury control.



At the same time, the FED should be allowed short-term biased targeting of inflation against employment and the other way round, in difficult times (i.e., if only the economy is -already- in a weak state; such states need to be defined and the FED should report on them).