Policymakers and politicians love to flex their muscles. They actively try to boost or slow down economic activity based on their perceptions as to whether the economy is “too hot” or “too cold.”

It’s unfortunate; Americans are better served when the federal government remains neutral on economic matters. This rule applies to monetary policy as well, but the U.S. remains far from achieving a goal of monetary neutrality.

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Part of the problem was on display earlier this month when Sen. Elizabeth Warren, Massachusetts Democrat, sent open letters to Stephen Moore and Herman Cain, who then were prospective Federal Reserve Board nominees (Mr. Cain withdrew his name from consideration Monday). The letters pointedly asked the nominees whether they believe the Fed should have a mandate to pursue full employment.

To answer this question, the nominees should rely on the Fed Board’s own statements: “the maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the job market. These factors may change over time and may not be directly measurable.”

Despite this admission, maximum employment remains part of the Fed’s Congressional mandate…. (Read more Click Here.) (Excerpt from Norbert J. Michel article in The Washington Times.)