This is the Cato Daily Podcast for Tuesday, November 23rd, 2010.

I'm Caleb Brown.

The Federal Reserve is charged with a dual mandate, maintain full employment,

and maintain price stability.

Few people believe that the Federal Reserve ever worries the same amount about both obligations.

Is that mandate in any way reasonable?

Gerald P. O Driscoll Jr. is a senior fellow at the Cato Institute and a former vice president at the Federal

Reserve Bank of Dallas, he comments.

A popular criticism of the Federal Reserve is that it has two jobs to do, maximize employment and maintain price stability.

So how is it done since 1913?

Well, that's a good question.

It hasn't been a good record.

Certainly it wasn't a good record in the interwar period.

There was an inflation associated with World War I,

then... Very quickly. And then there was a period of expansion in the 1920s followed by the

Great Depression. Post-war many people feel that it's done a better job

but there are some critics that say it actually even in the post war period hasn't

done that great a job and one thing that actually complicated

uh... its performance was the requirement that's been there since nineteen seventies

the legal requirement

to maintain both price stability or low inflation uh... to maintain full employment.

And this is like the maintaining full employment is like imposing godlike responsibility on them.

...