According to a recent Rasmussen Reports national telephone survey, 75% of Americans favor auditing the Federal Reserve and making the findings available to the public.
This is great news! Especially in light of the Obama Administration's desires to give the Fed even more power. Obviously, Fed Chair Ben Bernanke is strongly against an audit, but as David Moses of Spokane, Washington, told USA Today:
"My level of concern over Federal Reserve power and accountability rose considerably when Fed Chairman Ben Bernanke tried to prevent an audit of the central bank by Congress with his fear tactics ("Fed foresees jobless peak this year," Money, July 22)."
The bi-partisan support behind Rep. Ron Paul's (R-TX) H.R. 1207, and Senator Jim DeMint's (R-SC) S. 604, is truly amazing! Everyone from Senator John Cornyn (R-TX), to former Democratic Governor of New York Eliot Spitzer supports an audit, with Spitzer adding:
"The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous ... Let me tell you a dirty secret: The Fed has done an absolutely disastrous job ... Bubble after bubble ..."
"The most poignant example for me is the AIG bailout, where they gave tens of billions of dollars that went right through — conduit payments — to the investment banks that are now solvent ... this begs and cries out for hard, tough examination.
You look at the governing structure of the New York [Federal Reserve], it was run by the very banks that got the money. This is a Ponzi scheme, an inside job. It is outrageous ... And to give them more power now is crazy. The Fed needs to be examined carefully."
As to the increased banking regulations the Obama Administration desires, Spitzer calls them"irrelevant," because:
"Regulatory agencies already had the power to do everything they needed to do. They just affirmatively chose not to do it."
The Tea Party of Northern Colorado convinced Rep. Betsy Markey (D-CO) to co-sponsor H.R. 1207 too! A bill that has Glenn Greenwald asking:
What possible arguments exist against this bill? Who opposes an audit of the Fed's activities and why?
But there are those, who oppose an audit of the Federal Reserve, most notably ... the banks! As Senator Dick Durbin (D-IL) recently noted:
"And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
The Washington Post jumped in to defend the Fed, proclaiming:
In the name of open government, it would subject the Fed's decisions to a full-blown audit by the Government Accountability Office, the investigative arm of Congress. Though the bill has attracted 276 co-sponsors in the House and 17 in the Senate, it is wrongheaded in the extreme. By opening up the Fed's most sensitive interest rate and credit policies to public second-guessing, the bill would create a risk -- real and perceived -- of monetary policy bent to suit congressional overseers. This would destroy financial markets' faith in the Fed and, by extension, the value of the U.S. dollar, just as surely as a political "audit" of the Supreme Court's deliberations would undercut public faith in the justice system.
Of course, the Post's argument (above) has no merit! For one, H.R. 1207 doesn't open "up the Fed's most sensitive interest rate and credit policies to public second-guessing." Bernanke has been saying the same thing too, but it's a LIE. It's just an old statist fear tactic, to justify more central planning.
Second, the Post claims that "the bill would create a risk," that "would destroy financial markets." Really? Maybe the Post hasn't noticed the $8 trillion housing bubble and the current depression we're in - possibly the greatest financial crisis in history - that was brought to us by, you guessed it ... the Federal Reserve!
The Fed's policies are directly responsible for the U.S. economy heading towards double-digit unempolyment rates, while millions of Americans lose their homes, and even more lose their life-savings.
Considering the country could lose more than $6 trillion in output ($20,000 per person) thanks to the Fed, warning that "the bill would create a risk," is almost laughable (if it weren't so stupid)!
But then the Post lays on a real doosey ... that H.R. 1207 would destroy "the value of the U.S. dollar!" What? Are they referring to the dollar that's lost 96% of its value since the Federal Reserve was instituted?
I'll give Ron Paul the last word here ... Fed Up:
One of the fallacies of modern economics is the idea that a central bank is required in order to keep inflation low and promote economic growth. In reality, it is the central bank's monetary policy that causes inflation and depresses economic growth. Inflation is an increase in the supply of money, which in our day and age is directly caused or initiated by central banks. All other things being equal, inflation results in a rise in prices. A so-called "mild" rate of inflation of 3% per year leads to a 56% rise in prices over a 15-year period. Even a "low" rate of inflation of 2% per year leads to a 35% rise over that same period. How is that conducive to long-term growth?
A common misconception is that the Fed is completely independent of political pressures. While the Fed has far too much authority to make agreements with foreign governments and central banks, or create temporary liquidity facilities, the governors and--more important--the chairman, are appointed by the president.
... and he must be reappointed by the president every four years, with the advice and consent of the Senate. Thus, his job security as chairman is dependent on keeping the president and the Senate pleased ...
According to current federal law, the Fed's agreements with foreign governments and central banks ... are exempt from an audit by the General Accounting Office. As the GAO observed in the 1970s ... "We do not see how we can satisfactorily audit the Federal Reserve System without authority to examine the largest single category of financial transactions and assets that it has." The Fed has such broad power to intervene in the economy and to engage in agreements with foreign governments and central banks that it is unconscionable that such actions are exempt from oversight.
The Fed's open market operations are not at all neutral ... The Fed creates new balances out of thin air and uses those new balances to purchase Treasury bills from banks. Thus the banking sector is the first to get the use of the new money created ... As this new money circulates through the economy, prices rise, and individuals further down the chain experience a higher cost of living before their salaries rise.
The fact that a single entity, the Federal Reserve, engages in and has a monopoly on monetary policy has detrimental effects on the economy. As long as we try to keep up this fiction, that the Federal Reserve has a long-term focus, 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 booms and busts of the business cycle ...
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Sorry for my cynicism, but this looks like an exercise in futility. 90% of the population would be unable to interpret the results of an audit of a barber shop. Public corporations are audited and sophisticated investors disagree on what conclusions to draw from the auditors' report.
What standards is the Fed supposed to meet? If an audit found that it failed meet some standard the only result would be a furious political debate over the validity of the standard.
I'm not against an audit. But don't expect that any unambiguous truths about the Fed will emerge. The only result will be a lot of acrimonious debate, about audit standards and the proper role of the Fed, driving 99% of Americans to throw up their hands in dismay, because they can't figure out what the audit means.
One more thought: The poll says 75% favor an audit. Yet we know that far fewer than 75% understand what the Fed is or does. In recent weeks I've heard even TV news "experts" say that the Fed is spending tax revenue when buys government or corporate bonds or makes loans to banks.
If the pollster asked everyone who favors an audit what they hoped to learn the answers from most would be incoherent.
I recently discovered that Intelligent members of my family who are in their 30s, and earn way above average incomes doing high level work for major corporations are clueless regarding the Fed. They don't have the slightest idea what the Fed does, except that somehow their adjustable mortgages are affected. But if a pollster asked them if they Fed should be audited they'd most certainly say yes. Then if you asked them what the audit report might disclose they'd have no idea.
Boomer,
You're right that 90% don't know or understand what the Fed does, but I think the reason so many support an audit, is in large part due to the fact that they do not know or understand.
If an audit were to occur, the information that resulted would be summarized in a manner most people could understand. Just like most government reports, you can look up the details, but most people simply rely on summary reviews.
An audit is not about meeting standards of any kind, but about finding answers to where trillions of dollars went. However, the dirty little secret in a Fed audit ... is that in fact, it's actually an audit of the State!
I imagine even many members of Congress who support an audit, don't quite realize the pandora's box it will open. And far from acrimonious debate, an audit of the Fed would profoundly change debate forever, altering American politics towards freedom and liberty, and breaking trust in government.
In no uncertain terms, the Federal Reserve is a racketeering con-game. It feeds the State at the expense of every individual. It's the Fed that makes possible most of the government programs you despise. Absent the Fed, American Big Government as we know it, would collapse.