As the GOP’s presidential hopefuls formulate their national economic agendas, one question looms large: What are they going to do about the Federal Reserve? 

America’s central bank has gone off the rails. Its monetary mischief in the wake of COVID-19 caused the largest inflationary surge in 40 years. Its regulators have systematically failed to keep the banking system stable, as exhibited by recent bank failures. And its agenda-setters have waded into policy areas totally irrelevant to its mandate, such as racial justice and climate change. Any serious Republican candidate must have a strategy for reining in the Fed.

Three contenders have weighed in on the Fed in a significant way: financier Vivek Ramaswamy, Senator Tim Scott, and Governor Ron DeSantis. Each of them has articulated, in word or deed, the beginnings of a Fed reform program. But none of them have devised a comprehensive plan to bring the rule of law to monetary policy. Voters need much more detail.

Ramaswamy came out swinging with a Wall Street Journal op-ed proposing considerable changes to Fed operating procedures. He wants the Fed to focus on stabilizing the dollar’s purchasing power by targeting a basket of commodities. There are several ways to do this, each with its costs and benefits. 

While Ramaswamy deserves credit for his ambition, there’s much in his opening salvo that’s unsatisfactory. Particularly worrying is his disavowal of economic stabilization policy by the Fed. In fact, smoothing out undesirable macroeconomic fluctuation is pretty much the only thing the Fed can do. That Ramaswamy doesn’t seem to understand the link between dollar stabilization and recession fighting is concerning.

Scott’s positions on the Fed must be inferred from his actions in the Senate. Promisingly, he has called out Fed Chairman Jerome Powell for presiding over skyrocketing inflation and demanded firings over the Fed’s failures to prevent Silicon Valley Bank’s collapse. These are valid positions, but they are tailored to specific issues. A skeptic could accuse Scott of Monday morning quarterbacking. It doesn’t take any great degree of political prescience or courage to condemn obvious blunders. To distinguish himself from the increasingly crowded Republican field, Scott needs to use his Senate record as a springboard for broader central bank reform plans.

Last but not least is DeSantis. The Governor has called out Fed mischief before, making the usual inflation-hawk points. In his Twitter Spaces announcement, he went a step further, explicitly condemning Fed experiments with a central bank digital currency (CBDC). This is an important issue. If the Fed ropes the economy into a government-monitored and enforced payments system, it would gain unprecedented power over families’ and businesses’ finances. DeSantis promised to quash the Fed’s nascent CBDC activities if elected. (To be fair, Ramaswamy has been good on this issue, too.)

Things get more complicated when we consider DeSantis’s views on how monetary and fiscal policy affect each other. In a Fox News interview, he said government spending rather than funny money is the cause of dollar depreciation. “Of course, the overspending is driving inflation,” he claimed. Usually, increased government spending changes the composition of total spending, but rarely affects the volume of total spending. To get economy-wide spending (and hence inflation) to rise, you need expansionary monetary policy.

Uncle Sam’s profligacy since 2020 certainly pressured the Fed to go easier than otherwise, out of a misguided desire to prop up the market for government debt. Central bankers sometimes react to heavy political spending by trying to generate seigniorage—essentially raising revenue via the printing press. DeSantis’s remarks might make sense as part of a political economy story, but only if we remember the Fed—not the fiscal authority—is the main culprit.

It’s still a year and a half until the 2024 election. We’ve got a long campaign season ahead of us, during which positions will undoubtedly shift and solidify. Yet, when it comes to the Fed, GOP hopefuls can’t afford to wait. The central bank is, unfortunately, the single most important economic institution in the country. Its operatives will fiercely resist any effort to rein it in. Republicans have to form a game plan, engage policy consultants, and decide on a public message as soon as possible. 

Tax cuts and deregulation are all well and good. But without Fed reforms, monetary technocrats could stifle an American economic revival any time they want. There’s no time to lose. Aspiring Republicans must get serious about fixing the Fed.

This article was originally published in AIER, and is republished here with permission.