The Limits of Monetary Policy
• uphold its constitutional duty to maintain the purchasing power of the dollar by enacting legislation that makes long-run price stability the primary objective of Federal Reserve monetary policy; • recognize that the Fed cannot fine-tune the real economy but can achieve monetary stability by following a rule that confines nominal growth of gross domestic product to a noninflationary path; • hold the Fed accountable for achieving zero expected inflation over a reasonable time frame; • abolish the Exchange Stabilization Fund, since the Fed's role is to achieve zero inflation, not to stabilize the foreign exchange value of the dollar by intervening in the foreign exchange market; and • offer no resistance to the emergence of digital currency and other substitutes for Federal Reserve notes, so that free-market forces can help shape the future of monetary institutions.
History has shown that monetary stability—money growth consistent with a stable and predictable value of money—is an important determinant of economic stability. Safeguarding the long-run purchasing power of money is also essential for the future of private property and a free society. In the United States, persistent inflation has eroded the value of money and distorted relative prices, making production and investment decisions more uncertain. In the early 1970s, wage-price controls were imposed that attenuated economic freedom and increased government discretion, thus undermining the rule of law. Although those controls have been removed and inflation appears to be under control, there is no guarantee of future price-level stability.