The Fed’s dual mandate in song: it’s ‘harder than you’ll ever know’


Editor’s Note: As the Federal Reserve’s Open Market Committee meets Wednesday to fully wind down their asset purchase program, Making Sen$e is thrilled to debut econo-crooner Merle Hazard’s new ballad about the central bank, “Dual Mandate.”

The real mastermind behind this new music video is Nashville money manager Jon Shayne (Merle is his stage name). We’ll let him explain in the post below how he came up with the idea for this song, and why fulfilling a dual mandate is such an impossible job for a central bank. (Read the full lyrics of the song below, too.)

Merle is no stranger to this page. He’s crooned his way through the recession and recovery, and Making Sen$e has been proud to debut his releases on this page, most recently last summer, when Merle put out the chart-topping “The Great Unwind.”

But we, and Merle, think this new music video is his best yet. Later on this page, we’ll hear from economists like Paul Krugman, Justin Wolfers and Arthur Laffer for their reactions. And Wednesday on the NewsHour, after the Fed has made their policy announcement, Paul Solman takes a closer look at that dual mandate with Krugman and Columbia economist Charles Calomiris.

— Simone Pathe, Making Sen$e Editor

As readers of this page may recall, I’m a money manager in Nashville with a hobby: I sometimes put on a cowboy hat and record country songs about the economy.

Lately, I have been thinking about how difficult the job of our central bank, the Federal Reserve, is. The Fed has tried to help us get over the lingering effects of the 2008 financial crisis by keeping interest rates extremely low. They have also printed trillions of dollars to buy bonds, including mortgage paper. The job market is still not robust, however.

Fed governors must feel like crying in their beers every now and then.

Here in Nashville, we are best known for recycling tragedy into hit recordings. So this summer, with memories of songs by Hank Williams Sr. and Patsy Cline in my head, I hired some ace Grand Ole Opry sidemen, went into the studio, and cut my own 4/4 country shuffle, “Dual Mandate.”

The mandate that Congress gave our Fed, most recently amended in 1977, is nearly impossible to fulfill, as I see it. The Fed has to keep prices stable, and at the same time, maximize employment. It is hard to serve two masters, but that is the Fed’s job, by statute.

When someone has to do something difficult, or maybe even impossible, you have heartache and woe. In other words, you have the substance of which great country music is made.

But, will I have a hit with my new central banking song? I’m not sure Hank done it this way, as Waylon Jennings put it in 1975. Economics is maybe not the best choice of subject matter, but a writer is supposed to write what he or she knows. Perhaps I can have a critical success, then? I’d be OK with that.

In the music video, I appear under my nom-de-guitar, Merle Hazard. Don’t confuse me with the great Merle Haggard, the Okie from Muskogee. If a song is about inflation or central banking, that’s going to be me. If it’s about turning 21 in prison doing life without parole, that’s the other Merle.


Dual Mandate
By Merle Hazard

It’s awfully hard to be a central banker
Rich folks like to see the currency strong
But the average Joe’s not overjoyed if he’s destitute, and unemployed
Seems like every time I choose, I’m choosin’ wrong

The right says I should tighten up on credit
To keep the risk of inflation nice and low
But the left, and many economic scholars, are urgin’ me to print more dollars
I’m torn between the two ways I could go

I’ve got a dual mandate
Dual mandate
I gotta keep prices stable
While giving jobs to those who’re able
Dual mandate
Dual mandate
My job is harder than you’ll ever know

Unlike here in the U.S., the Bank of England has it pretty easy
And so, I hear, does Europe’s ECB
Their goal is for stable price
That’s pretty simple, must be nice:
A single mandate. Unlike poor, unlucky me

‘Cause I’ve got a dual mandate
Dual mandate
I gotta solve labor’s troubles
Without creatin’ financial bubbles
Dual mandate
Dual mandate
It’s tough for me to make the economy grow
My job is harder than you’ll ever know