This is must reading, and ties much of the current political economic thinking: http://en.wikipedia.org/wiki/Milton_Friedman Milton Friedman believed that the second mandate of the FED, employment, that expected changes in monetary policy can have no effect on output and employment - only on inflationary expectations. They even awarded him a noble prize EXACTLY for this work.
It is time to come up with a new agency that can affect employment through market dealings. What exactly it would target is not clear to me yet. Longer term rates?
Doesn't the fed influence the long term rates through QE? Observe the 2s30s curve moves, for example.
My biggest gripe about the Fed is that they're always late to the game. Had they stayed ahead of the curve, the housing mess could have been easily avoided. Why the hell must they wait until the economy is a bubble before raising rates and wait until recession before cutting rates? The morons who run the Fed are no better than average traders.