It's Time to Audit the Fed - Ron Paul

[kg_veteran]

It's time to drag the Fed out from the shadows and open its books to auditors.

Ron Paul is an 11-term Republican congressman from Texas and honorary chairman of the Campaign for Liberty (www.campaignforliberty.com)

The Federal Reserve's unprecedented intervention into the U.S. economy has inflamed more Americans than almost any other issue in recent memory. More than 75 percent of Americans now support an audit of the Federal Reserve system, and it's no wonder.

The most conservative estimates place the potential cost of the Federal Reserve's bailouts and guarantees at about $9 trillion. That is equivalent to more than 60 percent of the U.S. economy, all undertaken by one organization, and almost all of those transactions are exempt from congressional oversight and public scrutiny.

The Fed and its apologists are using bogeymen to deflect criticism. If the Fed were audited, they argue, monetary policy would be compromised as Congress tries to direct the Fed's actions, and the Fed's record of economic stability and low inflation would come to an end. Nothing could be further from the truth.

Legislative proposals such as my bill H.R. 1207, the Federal Reserve Transparency Act, merely remove all exemptions from audits of the Federal Reserve and call for a full audit. Every intervention, every bailout, every credit facility would be subject to an audit.

Nothing in this proposal would call on Congress to involve itself further in monetary policy, as that is completely unnecessary. Article 1, Section 8 of the Constitution already grants Congress the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures." Also, Congress already dictates monetary policy to the Federal Reserve through the mandates of full employment and stable prices.

Arguments that tout the Fed's ability to stabilize the economy or keep inflation low are similarly misguided. The Fed's mismanagement created the Great Depression, the stagflation of the 1970s, and now our current economic crisis. Over the nearly 100 years of the Fed's existence, the dollar has lost nearly 95 percent of its purchasing power. A "mild" rate of inflation of 2 percent per year means that a baby born today will see the dollar's purchasing power erode by a further 75 percent over his lifetime. If this boondoggle is the Fed's definition of stability and sound management of the dollar, I would hate to see what instability looks like.

Yet that is exactly what we face today and in the near future with a federal government and a Federal Reserve working hand in hand to bail out favored Wall Street firms with sums of money that have quickly reached absurd proportions.

We have a national debt approaching $12 trillion, Social Security and Medicare costs skyrocketing, and an economy in worse shape than at any time since the 1930s, and yet our leaders continue to put taxpayers on the hook for trillions of dollars.

The Federal Reserve has used all the tools in its toolbox to try to stave off the inevitable economic collapse caused by its decades of loose monetary policy, all to no avail. Despite all of this mismanagement, we are counseled to keep our faith in the Fed, to trust in the wisdom of the policymakers, and to continue to exempt the Fed from any serious oversight.

The fact that a single entity, the Federal Reserve, has dominated monetary policy for so long has been detrimental to the economy. As long as we try to keep up the fictions that the Federal Reserve works to benefit the American people, that attempting to fix interest rates will not distort the economy, and that the Fed can end a recession by injecting liquidity, we will never free ourselves from the boom and bust of the business cycle.

A necessary first step to restoring economic stability in this country is to audit the Fed, to find out the multitude of sectors in which it has involved itself, and, once the audit has been completed, to analyze the results and determine how the Fed should be reined in.

Proposals to push the Fed back into the shadows, or to give it an even greater role as a guarantor of systemic stability, are as misguided as they are harmful. The Federal Reserve is a creature of Congress, and it is the responsibility of Congress to oversee it. If we fail in this endeavor, we will have only ourselves to blame as our economy sinks deeper into depression.

[alexamenos]

very high popular and congressional support...more than 250 congressional co-sponsors last time I checked...this bill would fly through in a transparent, open government democracy.

yeah, I'll believe it when I see it.

[Mavdog]

I'll support the audit, for the purpose of having a credible balance sheet produced, but ron paul contradicts himself.

first paul writes "Nothing in this proposal would call on Congress to involve itself further in monetary policy, as that is completely unnecessary".

yet paul also states "once the audit has been completed, to analyze the results and determine how the Fed should be reined in".

those statements contradict each other.

it is certainly the later which ron paul intends to accomplish, and having misguided congressmen such as paul dictate policy would be a mistake.

a huge mistake.

[alexamenos]

I think you kinda miss the point there...

Nothing in this proposal would call on Congress to involve itself further in monetary policy, as that is completely unnecessary. Article 1, Section 8 of the Constitution already grants Congress the power "to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."

he's saying that Congress is the boss when it comes to monetary policy, and it's time to remind the fed of this.

but he's wrong, the banksters at the federal reserve are in charge and they won't be audited unless they want to be audited....and they don't want to be audited.

[Mavdog]

when congress passed the federal reserve act they created a system which would oversee monetary policy but not be subject to the political whims of an elected body.

it's proved to be a positive decision for over a century, and ron paul wants to stop having an independent body operate going forward.

paul did contradict himself, and he shows exactly what he seeks by his last comment.

if congress wants an audit, there will be an audit.

[92bDad]

Meanwhile without an audit the spending is out of control.

How about a fair and balanced panel.

1 Republican congressman
1 Democratic congressman
1 Reporter from FoxNews
1 Reporter from MSNBC
1 Liberal Hollywood Elite
1 Conservative Hollywood Elite
1 Citizen from the recent Tea Party/Medical opposition debaters
1 Citizen from the recent Anti-War movement

Better yet, let's just post the numbers on DM.Com and let us posters do the auditing. I'm certain we would find all the problems within the budget and that we'd be able to fix the spending crisis in America.

[Arne]

Originally Posted by Mavdog

I'll support the audit, for the purpose of having a credible balance sheet produced, but ron paul contradicts himself.

first paul writes "Nothing in this proposal would call on Congress to involve itself further in monetary policy, as that is completely unnecessary".

yet paul also states "once the audit has been completed, to analyze the results and determine how the Fed should be reined in".

those statements contradict each other.

it is certainly the later which ron paul intends to accomplish, and having misguided congressmen such as paul dictate policy would be a mistake.

a huge mistake.

His quote just plain and simple states that once the bill is used to find out what the Fed is doing, we can abolish the Fed. The bill itself doesn't abolish it at all.

How would a misguided Ron Paul monetary policy look like in your opinion?

This misguided congressman saw the housing bubble coming in 2003. Where was our overlord Bernanke at that point?

http://www.lewrockwell.com/paul/paul128.html

[Mavdog]

Originally Posted by Arne

His quote just plain and simple states that once the bill is used to find out what the Fed is doing, we can abolish the Fed. The bill itself doesn't abolish it at all.

an audit shouldn't focus on "what the fed is doing", an audit should be done in conformance with GAAP protocol which will produce an independent analysis of the federal reserve's assets and liabilities.

that is what I've said is reasonable to ask for. the rest of what you and paul are seeking is political, and the federal reserve should not be subjected to political whipsawing such as paul is wishing to do.

How would a misguided Ron Paul monetary policy look like in your opinion?

paul wishes for no active monetary policy, he wishes for a total free market void of oversight. that would be a disater imho.

This misguided congressman saw the housing bubble coming in 2003. Where was our overlord Bernanke at that point?

http://www.lewrockwell.com/paul/paul128.html

"overlord"??? gee, do you think he is karellen?

I think in 2003 bernanke was transitioning from being the chair of princeton's economics dept to being a member of the fed board of governors.

it is ridiculous to solely blame the fed for the housing bubble.

[mcsluggo]

Originally Posted by Arne

His quote just plain and simple states that once the bill is used to find out what the Fed is doing, we can abolish the Fed. The bill itself doesn't abolish it at all.

How would a misguided Ron Paul monetary policy look like in your opinion?

This misguided congressman saw the housing bubble coming in 2003. Where was our overlord Bernanke at that point?

http://www.lewrockwell.com/paul/paul128.html

Arne, you kinda sound like a fanatic standing outside the bus-stop with a clap-board sign of doom and a megaphone here....


EVERYONE saw a housing bubble, the difference was that Alan Greenspan (who was at teh helm at that point, not Bernanke) THOUGHT that the "pop" of the bubble wouldn't be so bad, and that the fed would be able cushion the aftermath of the (relatively small) bubble crash. Turns out ole greenspan was very wrong about the scale of the bubble pop, and the absolute strength of monetary policy in the face of a crisis.... but EVERYONE saw high housing prices.

[kg_veteran]

Originally Posted by mcsluggo

Arne, you kinda sound like a fanatic standing outside the bus-stop with a clap-board sign of doom and a megaphone here....


EVERYONE saw a housing bubble, the difference was that Alan Greenspan (who was at teh helm at that point, not Bernanke) THOUGHT that the "pop" of the bubble wouldn't be so bad, and that the fed would be able cushion the aftermath of the (relatively small) bubble crash. Turns out ole greenspan was very wrong about the scale of the bubble pop, and the absolute strength of monetary policy in the face of a crisis.... but EVERYONE saw high housing prices.

Let's call it like it is. Everybody knew that prices for housing were artificially high, but there were quite a few people who thought it would carry on indefinitely (see, for example, the now-famous Laffer v. Schiff debate).

Contrary to what Laffer suggested, monetary policy was not spectacular, and we know who controls monetary policy...

[alexamenos]

Originally Posted by mcsluggo

Arne, you kinda sound like a fanatic standing outside the bus-stop with a clap-board sign of doom and a megaphone here....


EVERYONE saw a housing bubble, the difference was that Alan Greenspan (who was at teh helm at that point, not Bernanke) THOUGHT that the "pop" of the bubble wouldn't be so bad, and that the fed would be able cushion the aftermath of the (relatively small) bubble crash. Turns out ole greenspan was very wrong about the scale of the bubble pop, and the absolute strength of monetary policy in the face of a crisis.... but EVERYONE saw high housing prices.

Arne may sound like a fanatic standing outside the bus-stop...but he's objectively correct in his understanding of the bill as well as Paul's intent (shed light on the Fed and we won't have to abolish it, all of the federal reserve peeps will flee the country).

EVERYONE saw high housing prices? Big effing deal. Of course EVERYONE saw high housing prices....because housing prices were very high. It was kind of hard not to notice that housing prices were very high. Even keynesians recognized that housing prices were very high because housing prices were so very high.

The relevant questions are: who understood that these high housing prices were not an indication of economic prosperity? and who had the best explanation for the cause of the housing bubble before the pop?

inasmuch as alan greenspan is still blaming the chinese and the free-market....I'd suggest that not EVERYONE is equal when it comes to addressing the relevant questions.

[alexamenos]

Originally Posted by Mavdog

if congress wants an audit, there will be an audit.

there's no 'if' congress wants an audit....congress wants an audit.

HB 1207 has nearly 300 co-sponsors, nearly 2-3rds of the house.

My guess is it will get blocked somehow or watered down to the point of uselessness (ie, this bill gives the GAO authority to audit all activities of the federal reserve except for those activities the federal reserve deems off-limits for whatever reasons may suit the federal reserve's interests).

I hope I'm wrong.

[alexamenos]

Originally Posted by alexamenos

HB 1207 has nearly 300 co-sponsors, nearly 2-3rds of the house.

My guess is it will get ... watered down to the point of uselessness (ie, this bill gives the GAO authority to audit all activities of the federal reserve except for those activities the federal reserve deems off-limits for whatever reasons may suit the federal reserve's interests).

^^^ like predicting heat in Texas during the month of august....

Barney Frank, G-Massachusetts, plays the willing bottom to Ben Bernanke's top.

...when he [Bernanke] sat down shortly after 8 a.m. on Oct. 1 at the Rayburn House Office Building for coffee and muffins with Representative Barney Frank, the rumpled and wisecracking chairman of the House Financial Services Committee, he took in some blunt advice.

Voters had become suspicious and unnerved by the Fed because of its trillion-dollar efforts to bail out the financial system, Mr. Frank warned. If the Fed really wanted to survive the disgruntlement in both parties, he continued, Mr. Bernanke would have to step back and let him devise a compromise....

...Representative Paul E. Kanjorski of Pennsylvania, a senior Democrat on the financial services committee who is sympathetic to the Fed, said the popular anger became too deep to ignore.

By mid-July, Mr. Frank had begun to agree. Meeting privately with the Fed chairman that month, Mr. Frank warned that he might have to embrace a version of Mr. Paul’s bill. By September, he had begun exploring possible compromises.

Fed officials say they were alarmed, but focused on making their case in private rather than in public. Mr. Bernanke met privately with dozens of House and Senate members, even taking calls at home on weekends, and won praise for his willingness to listen and answer their questions.

Government of the banks, by the banks and for the banks...no doubt the banks will get what they want in the end...

...aided by the pledge of help from Mr. Frank and backing from the administration, Fed officials cautiously predict they will get what they want. What Mr. Bernanke insisted on, and what Mr. Frank vowed to prevent, was Congressional interference in Fed deliberations over monetary policy.

But whenever discussion got more specific, Fed officials insisted that monetary policy extended to many if not most of the Fed’s emergency credit programs...

...details matter, and Fed officials say they are quietly confident details will break their way.

There ya go....the "audit" will be allowed to look under nooks and crannies yet not into "monetary policy deliberations"...."monetary policy deliberations" will include anytime the Fed hands someone a big wad of cash and calls it an *emergency*. Effectively, the GAO will have authority to audit all activities of the federal reserve except for those activities the federal reserve deems off-limits for whatever reasons may suit the federal reserve's interests.

[kg_veteran]

Prophetic indeed.

[alexamenos]

I just read a blurb saying Paul's amendment made it through the finance committee, meaning it will be voted upon, an event I thought unlikely in the extreme.

Don Quixote may bag a windmill before it's all said and done.

[Mavdog]

Originally Posted by alexamenos

I just read a blurb saying Paul's amendment made it through the finance committee, meaning it will be voted upon, an event I thought unlikely in the extreme.

Don Quixote may bag a windmill before it's all said and done.

pulling an alex...

yes, as I said, if congress wants an audit, there will be an audit.

[alexamenos]

Actually I was prematurely exuberant. The bill hasn't made it out of committee, but instead yesterdays finance committee vote attached the Paul-Grayson to another bill which was scheduled for a vote right after thanksgiving.

Barney Frank (finance committee chair and ben's lil bitch) postponed the vote on that bill, so as of now there's still no certainty that the fed audit legislation will ever come to a vote. I'd watch for Barney and friends to try to kill the entire legislation, probably in the interests of national security or for the children.

[aquaadverse]

Originally Posted by alexamenos

Actually I was prematurely exuberant. The bill hasn't made it out of committee, but instead yesterdays finance committee vote attached the Paul-Grayson to another bill which was scheduled for a vote right after thanksgiving.

Barney Frank (finance committee chair and ben's lil bitch) postponed the vote on that bill, so as of now there's still no certainty that the fed audit legislation will ever come to a vote. I'd watch for Barney and friends to try to kill the entire legislation, probably in the interests of national security or for the children.

Fox, Hen house. Simple. Bread, Circuses. Or New York 9-11 trials. How we can trust a man with such responsibility who doesn't even know what a pot plant looks like despite an alternative lifestyle and living in a State that isn't Utah or an Amish community is beyond me.

We've become a Nation of morons addicted to government cheese.

[alexamenos]

Government of, by and for the banks

http://www.victoriaadvocate.com/news...ews&local-news

[dude1394]

This made me sad because it's become so true.

http://spectator.org/archives/2010/07/02/hot-dog-anyone

And yet the challenges we confront today, as World War II veterans fade into history all around us, seem monumentally complex and difficult. Only 65 years ago the United States could find the resources and resolve to defeat Hitler and Hirohito simultaneously, and do it in only four years, but now we can't find the courage to trim even a few percentage points from the growth rates of our entitlement programs. Our grandparents gave their lives to liberate Europe and crush Imperial Japan, and we can't sacrifice the National Endowment for the Arts to save our own country from financial collapse.