The ‘Audit the Fed’ Debate
Digg 
Stumble Upon 
Newsvine 
Slashdot 
Mixx 
Diigo 
Delicious 
Reddit 
Facebook
Ron Paul’s HR 1207 “Audit the Fed” bill, about which the House Financial Services Committee held a hearing last week, is being widely dismissed on the Right as a dangerous exercise in kookiness. Bruce Bartlett, the reformed Reagan-era supply-sider, says it is “abundantly clear that this is a crackpot idea.”
Whatever one thinks of the Fed’s policies in recent years–and there certainly are grounds for criticism–there is no reason whatsoever to believe that undermining its independence and putting the Congress in control of monetary policy–Ron Paul’s goal–would improve matters at all.
Or as Barry Ritholz, a longtime Fed critic, puts it,
If the Fed is Wall Street’s bitch, then Congress is the Street’s whore.
This seems like a good point. Yet Tom Woods, who spoke to the Senate committee on Friday, rebuked the argument that, under the terms of the legislation, Congress would be able to “influence or even dictate monetary policy” as a “red herring.”
The bill is not designed to empower politicians to increase
the money supply, choose interest-rate targets, or adopt any of the rest of the Fed’s
central planning apparatus, all of which is better left to the free market than to the Fed or
Congress. It seeks nothing more than to open the Fed’s books to public scrutiny.
Congress has a moral and legal obligation to oversee institutions it brings into existence.
The convoluted scenarios by which merely opening the books will lead to an inflationary
catastrophe at the hands of Congress are difficult to take seriously.
At the same time, as we hear this objection repeated time and again, we might
wonder just how independent the Fed really is, what with its chairman up for
reappointment by the president every four years. Have these critics never heard of the
political business cycle? Fed chairmen have been known to ingratiate themselves into the
president’s favor close to election time by means of loose monetary policy and the false
(and temporary) prosperity it brings about. Let us not insult Americans’ intelligence by
pretending this phenomenon does not exist.
Woods is surely right to say that the bill is not “designed to empower politicians to increase
the money supply, choose interest-rate targets, or adopt any of the rest of the Fed’s
central planning apparatus.” But design, or intention, is not always enough. It might in fact be helpful if the Bill’s supporters were to make Woods’ point more often and with greater clarity, and perhaps explain what steps can be taken to ensure that congressional auditing of the Fed does not mutate into congressional direction of monetary policy. Otherwise these “better the devil we don’t know” objections to HR1207 seem to make sense. Worse, if the bill somehow were to pass without a clear understanding of its limited intended function, we might indeed end up with a monetary system even more destructive than the current one. If that’s possible …
Filed under: Uncategorized
The Fed is already audited in every area except two: monetary policy and dealings with foreign central banks. The only possible reason to have the GAO, a congressional agency, audit the Fed in those areas is to assert congressional control over them. Keep in mind that Ron Paul has made clear that his ultimate goal is to abolish the Fed. If it were to be abolished it follows, as the Constitution dicates, that the control of monetary policy would fall to the Congress unless the Fed is replaced with another institution.
“congressional auditing of the Fed does not mutate into congressional direction of monetary policy”
This is to assume that politicians don’t already exhort influence on the fed, or that the fed does not make decisions for political reasons.
Last I looked securities from FNM and FRE, which do not have the full backing and faith of the US Gov’t, were purchased by the Fed which is illegal! I think you have Murray N. Rothbard to read my friend.
By Mr. Bartlett’s reasoning, no oversight whatsoever is warranted for a private banking cartel to create any amount of money it wants to bailout whomever it wants for as long as it wants for any reason, good or bad. If this isn’t a justification for an audit, nothing is.
The fact that Dr. Paul wants to abolish this evil agency is hardly a secret, as he has been openly calling for its elimination since the 70’s. This fact is irrelevant. Either the audit is necessary or it isn’t.
Not that you’ve actually stopped to ponder this question, but who gets to pick up the tab for this outrageous act of grand theft, Bruce? In case you haven’t quite figured that out, that would be you and me. How about I send you the bill for my portion, since you think giving Bernanke carte blanche with our money supply is a super idea?
Or maybe you’re like a bunch of others that cynically hope that the entire fiat dollar ponzi scheme holds together while you’re still around, while leaving the economic destruction for others to experience. It’s plainly immoral to pass along one’s debts to future generations. It is time for Americans to live within their means and pay their bills. And that’s rather impossible to do when the money they’re using is backed by nothing but the honesty and integrity of politicians and bankers.
The way I see it, Congress can hardly do worse than the Fed has, and, now that Ron Paul and people like him are creating specific, informed public outcry on the issue, they might be forced politically into doing much better.
Rationally, I think all of this is a longshot, but everything’s a longshot until it happens, and if it’s the right thing to do (it is), then it’s worth working for no matter what the odds of success are.
Bruce can have my share of the inflation tax, too.
I came across this article while googling for the latest on HR1207, and am disappointed to find such rubbish coming from an author for an entity that calls itself “The American Conservative”. Funny how every Republican in the House is co-sponsoring this, or are the democrats now the conservatives? Which family, the Rockefellers or Rothchilds, does this entity owe its allegiance to?
Every time those thieves turn on the printing press or add zeros to bank accounts, our grocery bills goes up and the value of our homes goes down. It may take awhile to trickle down, but it is inevitable. I refuse to tell my children they have no hope at the American Dream, and that Dream is NOT a constantly devaluing dollar, nor is it being born into unconquerable debt. As Thomas Woods so kindly pointed out to the Financial Services committee on Friday, the cat is out of the bag. We know, and we will not stop until the shackles of this evil is thrown off us forever.
Let’s get it over with and audit the criminals. Then after the American people see exactly how their country sold them out to international bankers in 1913, we’ll proceed with eliminating the central bank (again).
So what we don’t know makes us stronger? Wow!
Seriously though, accountability is over due. Let’s see what who all is under the sheets. Let’s see who is really who’s b**** and who’s w*****.
Dismissing this seems to be the only kooky or crackpot idea I can think of. Let’s face it, these arguments are based off of fears constructed by Ben Bernanke and his lawyer.
Doesn’t every American tax payer want to know where and to whom those trillions of dollars in Fed Res foreign investment in the last 12 months went to, what collateral was supplied in exchange and what we, the US tax payer, are getting in return? I’m surprised the answer is no and I question the motives of those who oppose this audit.
To borrow from TR, I say BULLY to you Dr. Paul and BULLY to you Rep. Grayson.
I think that the FED should have complete secrecy. After all, who are we to interfere in the deliberate contraction and expansion of the economy for personal financial and totalitarian power gain. The FED knows what they are doing and it is definitely in the people’s best interest. We, the people, must be kept in a constant state of ignorance and uncertainty.
For if we actually acted as if we had a stake in the actions of our government and it’s crony quasi government institutions, then who knows what might happen in this country. Imagine the horrors of a true free market supported by sound money. I get shivers just thinking about it. There would be an increase in honesty and a decrease in rampant consumerism. Inflation would cease to exist and people’s saving would actually stay valuable.
I don’t know about you guys but I definitely think that a fiat currency controlled by oligarchy and tyranny is the wave of the future. I anxiously await the day that my entire life savings is stored on a chip that is implanted in my neck and the value of it is completely controlled by bureaucratic fat cats in DC. For if I commit a thought crime I should be punished. Down with HR 1207, progress is meaningless. “War is Peace; Freedom is Slavery; Ignorance is Strength.”
Bartlett’s arguments are a side show. Dr. Paul’s ultimate objective is to restore a sound, honest, commodity based money that cannot be manipulated for ill purpose by any government or quasi governmental entity. Honest money could make an honest woman of the whore that is the U S Government.
I find it strange that people promote the Fed “indepedence” as if it were a good thing for the American people. Is there anyone out there that thinks the Fed is working for We The People instead of the banks? What we have here is an unconstitutional 4th branch of government, with control over our money, not answerable to the citizens of this country and they are desperately fighting to maintain their “independence” in order to continue the practice of creating inflation for their own profit.