Ralph Lee Abraham: “Although I agree with the economic case for lower interest rates made by the Senator from Iowa, I must vote to table…”

“Although I agree with the economic case for lower interest rates made by the Senator from Iowa, I must vote to table this amendment. While Members of Congress and Senators certainly have the right to express their opinions about the conduct of monetary policy, it is highly inappropriate for the Congress as an institution to take formal legislative action designed to influence decisions made by the Federal Reserve board members. To do so would undermine the political independence of the Fed and thus the stability of our financial and monetary system. Having said this, Mr. President, I am concerned about the volatility and uncertainty enveloping worldwide financial markets and the role that U.S. monetary policy is playing in our global financial system. There are proliferating signs of deflation that many economists suggest are at least partially responsible for the recent market turmoil. Gold prices have fallen by more than 30% since early 1996, commodity prices have fallen to 21-year lows, the yield curve has now inverted and real interest rates remain very high. Chairman Greenspan himself has said in the past that these indicators were important signals of the direction of inflationary pressures. Nonetheless, rather than focusing on these market indicators, some members of the Fed appear to have placed more focus on the unemployment rate, rising stock prices and wage growth.”