Why aren't GOP candidates blaming the Fed?

When Republican presidential candidates meet for the next GOP debate on Wednesday, they will surely have to address the issue of income and wealth inequality. Unlike the Democrats, though, whose main remedy is to condemn Wall Street "greed" and seek retribution through redistribution, the Republicans need to bring up the role of monetary policy in skewing financial outcomes.

It won't be an easy task – it's not sound-bite material – but it's vital to counter the narrative being put forth by leading Democratic candidates Bernie Sanders and Hillary Clinton that attacks "millionaires and billionaires" for racking up big profits in financial markets. Let's hope that someone on the Republican dais on October 28 will have the courage to wade into the role of the Federal Reserve as a major contributing factor to the 2008 global financial crisis – the one that devastated our economy and pitted citizens against each other.

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Republican presidential candidates (L-R) U.S. Sen. Ted Cruz (R-TX), Ben Carson, Donald Trump and Jeb Bush participate in the presidential debates at the Reagan Library on September 16, 2015 in Simi Valley, California.

And GOP candidates should unite in pointing out that the Fed's remedy for recovery, which has served to channel low-cost funding to affluent investors and big corporations while starving small business, has yet to enable the real economy to grow at a decent pace. Living standards for a broad swath of the nation have not improved over the last three years, while those at the top have been able to finance the accumulation of assets by leveraging their access to cheap credit.

It's time to make the case to Main Street: If America's economy has been rigged in favor of Wall Street and the wealthiest 1 percent, it's because of monetary policy decisions made by our nation's central bank.

Republicans need to call out the Fed for its failure to anticipate the 2008 crisis – despite its own complicity in providing easy money – and for its ill-conceived efforts in the aftermath of that financial debacle to emphasize regulatory overkill over fundamental monetary reform. Otherwise, it will be difficult to challenge the alluring pitch of Democrats who seek to punish those who have benefited from the Fed's mistakes, rather than prevent the next meltdown.

Sanders thinks an income-tax rate over 50 percent for America's richest class isn't too high, and is vowing to make Wall Street "pay a tax on speculation,whether they like it or not." Clinton, who claimed at the Democratic debate that she fought against wealth inequity as a New York senator – "I went to Wall Street and said, 'Cut it out'" – now promises to step things up. Under her administration, regulators would be given more authority to go after big banks and "would have the potential of actually sending the executives to jail."

There's no time to waste in setting the record straight about how our nation's central bank facilitates the boom-and-bust cycles that periodically kneecap the economy's prospects for productive growth.

Former Fed Chairman Ben Bernanke has been promoting his newly-published book "The Courage to Act: A Memoir of a Crisis and Its Aftermath" with comments that dovetail nicely with Mrs. Clinton's new found aggression toward Wall Street. In an interview with USA Today earlier this month, Bernanke lamented that individuals, versus financial firms,were not adequately punished for their role in the financial crisis. "You can't put a financial firm in jail."

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To which the Republican riposte should be: Where were you, sir,when the credit bubble was brewing prior to the 2008 meltdown? When over inflated house prices were creating a glut, when government-backed mortgages were becoming toxic assets, and when confidence and trust in the financial system was vaporizing? Answer: At the helm.

Bernanke joined the Board of Governors of the Federal Reserve System in 2002 and served as its chairman from 2006 to 2014. So it seems a trifle ingenuous to suggest that banking and investment firm executives should beheld criminally culpable for financial irresponsibility while proclaiming the heroism of Fed officials who oversaw the entire set-up and its consequences.

But the goal for GOP presidential candidates should not be to emulate Democratic opponents in demonizing individuals – whether on Wall Street or ensconced behind the wood-paneled doors of the Fed's board room in Washington, D.C. The task for Republicans should be to explain to the American public how monetary policy alters private sector risk-reward considerations for allocating financial capital. When our central bank manipulates the interest rate on borrowed funds through the buying and selling of government debt obligations, it distorts financial markets and causes anomalies within the real economy.

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We have seen that the Fed's decision to keep interest rates at zero these past seven years has not accelerated economic growth. Instead of financing capital investment to expand production, companies used the cheap money to buy back their own shares and pursue mergers and acquisitions at a blistering pace. Great for boosting stock prices and enriching investors, but hardly productive when it mostly amounts to window dressing and dubious synergy claims.

Guess who has been subsidizing Wall Street's deal making? Thanks to the Fed's repression of interest rates, people with ordinary savings accounts are forced to contend with pitiful returns from their own efforts to be financially responsible. At the end of 2006, the average yield on a one-year CD was 3.8 percent, according to Bankrate.com; currently, the average yield for a one-year CD is 0.28 percent.

If the GOP presidential field rises to the cause, Americans might readily embrace reforms that would constrain the Fed's power to use monetary artifice to reward one sector of the economy over another. As Jack Kemp,conservative icon, astutely observed: "In my experience, honest, sound, stable money is a popular, blue-collar, bread-and-butter, winning political issue."

Republican candidates should take Kemp's advice and make the issue their own.

Commentary by Judy Shelton, a Sound Money Project Co-Director which strives to engage and collaborate with organizations to raise awareness about the inherent problems of our current monetary system. Follow her on Twitter @judyshel.