The letter that Republican leaders sent to the central bank is nothing to worry about
Politicians like to exert their influence on issues they care about. If you find this shocking, then you might be appalled to hear that Congressional Republican leaders sent a letter to Federal Reserve Chairman Ben Bernanke on Monday urging restraint on additional monetary stimulus. Anyone who finds this action unprecedented must not follow politics very closely. In fact, both sides of the aisle do what they can to try to shape Fed policy. But luckily, this political reality is nothing to worry about.
What the GOP Wants
The gist of the letter can be understood through its first paragraph:
It is our understanding that the Board Members of the Federal Reserve will meet later this week to consider additional monetary stimulus proposals. We write to express our reservations about any such measures. Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people.
Republicans are concerned that additional monetary stimulus could weaken the dollar. They're also unconvinced that additional intervention will have a meaningful positive impact on the economy. Unfortunately, the statistics back them up: despite a $600 billion monetary stimulus launched from November 2010 through June 2011, U.S. economic growth in the first half of the year was just 0.7%. And for most of that period, job growth was weak to nonexistent.