Abstract

In an effort to fight inflation, the Federal Open Market Committee raised interest rates to 20% over the course of 1980 and 1981, triggering a recession that threw more than 4 million Americans, many in well-paying manufacturing jobs, out of work.

As it continues to do today, the committee met in secret and explained its rate decisions in a handful of paragraphs.

None of the millions of Americans thrown out of work—or the many businesses driven to bankruptcy—sued the FOMC. No one argued that the FOMC’s power to disrupt the American economy was an unconstitutional delegation of legislative authority. No one argued that, in adopting its rate decisions, the FOMC had failed to comply with any of the notice-and-comment procedures required by the Administrative Procedure Act (APA).

They were wise not to sue, because they would have lost.

Document Type

Commentary

Publication Date

5-4-2022

Notes/Citation Information

Ramsi A. Woodcock, Making Rules vs Ruling, Truth on the Market: Scholarly Commentary on Law, Economics, and More (May 4, 2022), at https://truthonthemarket.com/2022/05/04/making-rules-vs-ruling/.

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