Best-case scenario: Without the Fed pulling the strings, job growth would be paced and steady, good news for households struggling amid high unemployment and layoffs. "The history of the Fed has been that it has created boom-and-bust cycles in the economy ever since it began its existence," Thomas Diliorenzo, a professor of economics at the Loyola University's Sellinger School of Business, said during his testimony at the Congressional hearing. "And so, during the boom period, of course, it does create jobs, but the jobs that it creates, many of them are unsustainable jobs. I can recall hearing that Home Depot ( HD), when they laid off 7,000 people in one day, these were jobs that people had invested in, they invested their lives, their careers, and then the rug was pulled out from under them. That is the sort of thing that happens with what we call the artificial boom and bust created by the Fed's monetary policies." In terms of personal finance, inflation is a killer for anyone trying to save for retirement. Portfolios need to assume, and beat, at least a 4% rate of inflation. Paul's assertion that inflation is created by our current monetary policy could mean that a wholesale change will make it easier to save and invest for long-term objectives. Worst-case scenario: Without the guiding hand of the Federal Reserve, one that adapts to market conditions, a worsening of overall economic conditions would hurt average Americans far more than the temporary pain its policies might inflict. During a speech in Westport, Conn., on March 1, Sarah Bloom Raskin, a Federal Reserve governor, defended Fed policy as it relates to savers and consumers. "Critics of the Federal Reserve's accommodative monetary policy are correct that the low level of interest rates represents a strain on households who rely on income from interest-bearing assets; indeed, the flow of interest income that households earn on their savings has declined about one-fourth since the recession began," she said. But there's also a bright side: "Purchases of motor vehicles and other household durables can be financed more cheaply, and in many cases, households have been able to refinance their mortgages into lower-rate loans, freeing up income for other uses." Raskin also made the case that "interest-bearing assets represent only a modest portion of overall household assets." According to the Federal Reserve's Survey of Consumer Finances, less than 7% of total household assets are held directly in transaction accounts, certificates of deposit, savings bonds and bonds The bulk of household wealth is held in stocks, retirement accounts, business equity and real estate. "For these other types of assets, rates of return depend primarily on the strength of the economy and how fast the economy is growing," she said. "Thus, these returns should be supported, over time, by the accommodative monetary policy that we have in place. Moreover, the Federal Reserve aims to keep inflation low and stable over time, which limits the risk to investors that high inflation will undermine the value of their savings." Raskin doesn't believe that the extended period of low interest rates will discourage households from saving and, as a result, diminish the longer-run economic growth prospects of the U.S. economy. "Households have a number of reasons to save in addition to their desire to earn interest," she said. "They need to be prepared for unexpected expenses and to rebuild the retirement nest eggs that were depleted by losses in equity and housing wealth during the recession. In fact, the portion of disposable income that households are saving has risen considerably since the recession began." -- Written by Joe Mont in Boston. >To contact the writer of this article, click here: Joe Mont. >To follow the writer on Twitter, go to http://twitter.com/josephmont.