Paul Ryan believes the dollar’s value should be tied to commodities. He thinks monetary policy should never, ever aim to lower unemployment. He worries that inflation is always right around the corner. And he’s said he believes these things in part because he read Ayn Rand. Those views are pretty far outside the scope of mainstream economics, so they’re getting a lot of ink. But would these views have any bearing on monetary policy under President Romney? We don’t really know.
Vice Presidents don’t set monetary policy. Heck, Presidents don’t set monetary policy. But the President gets to pick the person who does, which will next happen when Federal Reserve Chairman Ben Bernanke’s term expires in 2014. And here’s what we know about Mitt Romney’s views on monetary policy, which will inform his choice: He won’t nominate Bernanke for another term and he opposes a “massive” new bond-buying program right now because he doesn’t think it would help the economy. That doesn’t really tell us much.
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It was probably politically unviable for Romney to support another term for Bernanke, who’s become a monetary boogeyman on the right in the wake of the financial crisis. But just because he opposes a third term for Bernanke does not mean he opposes Bernanke’s broader approach to monetary policy. (Romney has said Fed easing in 2009 was “effective to a certain degree.”) On the same note, just because he opposes “massive” easing right now doesn’t mean he generally opposes the Fed’s mission to foster employment. (The Romney campaign didn’t immediately return a request for clarification on his position.) Even the Fed’s doves voted for no new action at the last Federal Open Market Committee meeting and there are a lot people who think further easing wouldn’t make much difference.
Sure, Romney has now associated himself with Ryan’s views by adding him to the ticket. But there’s also the Romney campaign’s economic team, which probably disagrees with much of what Ryan believes about monetary policy. Through the magic of the Internet, here’s Harvard Economist and Romney adviser Greg Mankiw expressing skepticism at a 2010 Ryan op-ed on ending the Fed’s mandate to address employment. Oh and here he is defending Bernanke’s term in 2011 and calling for negative interest rates in 2009.
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There are other holes in Romney’s monetary policy platform: He’s said he generally backs more congressional oversight of the Fed, but hasn’t divulged whether an “audit” should make deliberations on interest rates public, as recommended by anti-Fed crusader Ron Paul. It’s yet another populist conservative cause that Romney advisers have criticized in the past. Inference by association only goes so far. Where the candidate stands is a mystery. And just as he needs to do a better job explaining how he differs from Ryan on fiscal policy, Romney needs to lay out where he stands on monetary policy.
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