Humphrey-Hawkins Full Unemployment Act of 1977 (Full Employment and Balanced Growth Act)

During the 1970s unemployment and inflation levels began to rise, creating fears of an economic recession. In the past, the country's economic policy had been defined by the Employment Act of 1946, which encouraged the federal government to pursue "maximum employment, production, and purchasing power" through cooperation with the private sector. Some Congressmen, dissatisfied with the unclear wording of this act, sought to create an amendment that would strengthen and clarify the country's economic policy…

The Act's sponsors embraced conventional Keynesian economic theory (our country’s favorite theory of economics), which advocates forceful government spending to increase economic demand by impacting GDP. In particular, Keynesian theory asserts that the government can minimize the distress of business fluctuations by compensatory spending, intended to sustain or inflate investment levels by government spending and promote long term growth with the economy.

Consistent with Keynesian theory, the Act provides four measures to create temporary government jobs to reduce unemployment, as was attempted during the Great Depression.

1.     Full employment

2.     Growth in production

3.     Price stability

4.     Balance of trade and budget.

Somewhat contradictorily, the Act also encouraged the government to develop a sound monetary policy, to minimize inflation, and to push toward full employment by managing the amount and liquidity of currency in circulation.  Overall, the Act sought to formalize (and to expand Congress's role in) the economic policy process, as governed by the Federal Reserve and the President.

- Unfortunately inflation and deflation of the money supply and manipulation of interest rates are the Federal Reserves only options to try to meet these strict requirements.  I’m not sure but these options don't sound like there meeting the long term goals of promoting consistent growth for the economy...