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MELISSA BLOCK, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

AUDIE CORNISH, HOST:

And I'm Audie Cornish. Mitt Romney's running mate, congressman Paul Ryan, has authored some provocative policy proposals that could drastically alter Medicare and Medicaid. We'll talk about Ryan's legislative record in a few minutes.

First, as NPR's John Ydstie reports, Ryan also advocates a different course for the Federal Reserve.

JOHN YDSTIE, BYLINE: For the past 35 years, the Fed has had a dual mandate from Congress: to set interest rates at levels that will one, foster maximum employment; and two, keep prices stable. Put another way, the Fed's goals are to get unemployment as low as possible, while keeping inflation in check.

But Paul Ryan wants to change that. He wants the Fed to stop trying to manage the unemployment rate, and focus like a laser on just one goal: stable prices. Earlier this year, at a hearing on Capitol Hill, Ryan told Fed chairman Ben Bernanke that he thought the Fed's focus on employment was a distraction from its effort to fight inflation.

REPRESENTATIVE PAUL RYAN: The result of this balanced approach is that higher-than-preferred inflation may be tolerated; not that it's desired, but that it will be tolerated. And I'll, simply, just quote Paul Volcker, who said in the late 1970s: Central bankers who are willing to tolerate a little more inflation usually end up getting a whole lot more than they expected.

YDSTIE: Chairman Bernanke responded that focusing on jobs as well as stable prices, is not a distraction for Fed policymakers.

BEN BERNANKE: The two sides of the mandate are generally complementary. I mean, we agree that low, stable inflation is good for the economy and it's good for growth, it's good for employment. And we think most of the time, that there's a complementary relationship between those two.

YDSTIE: At the heart of Ryan's argument is a concern about protecting the value of the dollar, which is eroded by inflation. In fact, Ryan has suggested that the country should return to sound money by pegging the value of the dollar to a basket of commodities, somewhat like the gold standard.

In another exchange with Bernanke, Ryan argued the Fed's response to the financial crisis - using extraordinary measures to inject more money into the economy, to keep interest rates low - has created the risk of massive inflation and dollar devaluation, and set the stage for another crisis.

RYAN: A lot of us believe that the Federal Reserve was too loose, for too long, in the 2003 to 2005 period. And that is what, in part, led to the asset bubble and the mal-investment that occurred, and the problems we have today. I know you don't agree with that. But because you don't agree with that, our fear is that you're just going to repeat these same mistakes again, but by orders of magnitude that we can't even comprehend right now.

YDSTIE: Bernanke's response is that so far, there's no evidence of accelerating inflation; and that the Fed has the tools, and ability, to remove the excess money from the economy once it begins growing again at a healthy rate.

Ryan supports legislation that would give the GAO the power to audit the Fed's interest rate decisions. Bernanke says that could politicize monetary policy. But Ryan also believes the Fed's low-interest-rate policy has made it easier for the Congress to avoid reducing massive federal budget deficits, because borrowing costs are so low.

RYAN: But that's not an excuse for the Federal Reserve to step in, and try and bail us out.

YDSTIE: While Ryan has sparred with the Fed chairman during hearings, he has not called for Bernanke to be replaced. However, the man at the top of the ticket, Mitt Romney, says if he's elected, he'll find a new Fed chairman.

John Ydstie, NPR News, Washington.

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