The recent spike in inflation rocked financial markets. After more than a decade of modest price increases, April's 4.2% figure caught many commenters and policymakers by surprise.

But inflation is the least of our problems. By focusing too much on the purchasing power of the dollar, we lose sight of the fact that U.S. monetary policy has become lawless. It's time to rein in the Federal Reserve.

We really shouldn't be surprised by this inflationary uptick. First, price hikes were proportionately large because the economy was significantly depressed a year ago. The COVID-19 contraction, from which we're still recovering, created an abnormally low baseline. Second, the Fed engaged in major expansionary policy for more than a year. It continues to purchase large quantities of assets.

Furthermore, it cut interest payments on excess reserves, meaning banks have little incentive to sit on idle liquidity. Third, significant supply-side bottlenecks remain, which slow the expansion of productive capacity. There's comparatively ample money chasing comparatively few goods. The textbook result of these combined factors is inflation.

Inflation could be just what our money doctors ordered. Since the Fed switched to an "average" inflation target last summer, the U.S. central bank has been willing to tolerate higher-than-usual inflation to make up for lower-than-usual inflation. In theory, this is sound policy. By committing to stabilize long-run price changes, the Fed can make predictable the dollar's purchasing power, even over very long time horizons. Perhaps the central bank deserves the benefit of the doubt.

Then again, perhaps not.

Obsessing over inflation is a classic case of fighting the last war. This isn't 1979, and Jimmy Carter isn't president. Then-Fed Chairman Volcker had the guts to hit the brakes and bring inflation down. If that's all we need today, we have little to fear. But the real problem with monetary policy is much more subtle and insidious.

As I argue with my coauthors Peter Boettke and Daniel Smith in our forthcoming book, "Money and the Rule of Law," the Fed has become a law unto itself. The central bank operates with minimal congressional oversight. When the people's representatives do get involved, it's usually to rubber-stamp whatever the Fed asks for. This is unacceptable. In a representative democracy, the goals of monetary policy are properly the prerogative of citizens. Yet in the name of economic stability — an otherwise worthy goal — we've ceded the Fed the right to be a judge in its own cause and to determine the limits of its own powers.

We watched the Fed grow too big for its britches over the past year. Even before inflation picked up, the Fed strayed far beyond its mandate. When the Fed started direct credit allocation — loans to large corporations as well as state and local governments — we should've resisted fiercely. This is fiscal policy, not monetary policy.

The latter is the Fed's job, but the former is Congress'. It's shameful that crucial decisions about scarce resource allocation are now vested with an unelected technocracy. If we looked the other way because we feared the economic fallout from the pandemic, so much the worse for us. Now we're stuck with an activist central bank that meddles in climate policy and social equity issues. We the people authorized no such thing.

There's something far more important than economic stability at stake: self-government itself. The American experiment is founded on the rule of law: the ideal that governed and governors alike are equally bound by the rules of the game. Instead, the Fed declares its "right" to make and interpret the rules for economic policy. It's high time Congress fought back. Inflation is a red herring. Instead, the people's representatives should curb the Fed's powers to pick winners and losers in the market. These essentially fiscal powers should be deliberated in the House and Senate.

As my colleague Joakim Book at the American Institute for Economic Research puts it: "Insanely-sized government packages, decades-long Fed activism, central bank credit footprints, and a pricing mania in every sort of asset — those are our more immediate macroeconomic concerns." Just so. Inflation is a distraction from what really matters. We must not lose our nerve and demand the Fed save us yet again. It's time to demand the rule of law in monetary policy.

• Alexander William Salter is an associate professor of economics in the Rawls College of Business at Texas Tech University, a research fellow at TTU's Free Market Institute, a senior contributor with Young Voices, and a senior fellow with the American Institute for Economic Research.