The HuffPo's Douglas A. McIntyre writes a hatchet piece on Ron Paul ... Then Gary North goes ahead and rips his argument apart, with both hands tied behind his back.
So sit back, and enjoy the fisking!
"No Right to Know": A Wall Street Financial Site's Attack on Congress and Ron Paul
Paul's amendment is part of a larger bill that intends to deal with the consequences that any future failure of large banks might have on the global credit markets. His program for the Fed may set a precedent that will serve as a model for the entire financial services industry.
To "set a precedent" means to begin a new era. H.R. 1207 is indeed a precedent. It marks the first time since 1914 that a branch of Congress has asserted its statutory authority over its own creation. The legal right to audit is an assertion of legal authority. The Board of Governors sees this.
The Fed's argument against Paul's proposal is simple and defensible. The agency keeps important secrets including which large banks need substantial amounts of money during hard times. The public cannot know these details because it would cause a national panic. What if it was common knowledge that Citigroup (NYSE:C) had borrowed $100 billion in emergency funds from the agency? Citi's stock could lose 90% of its value in a day. The Fed wants to keep secrets to prevent runs on major banks. The Fed, its defenders would argue, is the home to impartial financial minds that have the best interests of the nation's credit system at heart. The average person would not be able to stand the strain of watching the agency's daily high wire act up close, certainly not during a crisis.
Let me summarize. The Federal Reserve System has always had the right to conduct secret bailouts of big banks that are in fact insolvent, and whose senior managers are being paid millions of dollars a year to deceive depositors, shareholders, and creditors. This must not be changed.
Paul's logic, as it applies to the Fed, will probably end up being part of a banking system overhaul that will tempt Congress to have audits of private banks made public as well.
The bill implies no such thing. It says only that an agency created by the U.S. government is under the authority of the U.S. government. This is intolerable, says Mr. McIntyre. Secrecy is basic to all government. There is a fundamental right of selected government bureaucrats -- self-selected -- not to have their decisions supervised by Congress, audited by Congress, or in any way known by Congress.
Public companies and government agencies have a history of defending secrets that goes back to well before the founding of the modern Federal Reserve and SEC. This secrecy is based almost exclusively on the premise that a typical shareholder is too stupid to understand the complexity of balance sheets, cash flow statements, and profit and loss reports. The information has to be put through a sieve before it can be released beyond the CFO's office and the audit committee of the board of directors.
Mr. McIntyre has come to the defense of every government bureaucrat who ever wanted to hide a payoff, create a boondoggle for a company he was associated with, or run an illegal operation.
This position is the ultimate rejection of democracy: the public's right to know where the money extracted by taxes has gone. Mr. McIntyre faithfully represents the position of Ben Bernanke and all defenders of the Federal Reserve.
Mr. McIntyre is articulating the government's core operating assumption: the right to deceive the public without interference. Not many defenders of unrestricted government power ever go this far in full public view. We owe a debt of gratitude to Mr. McIntyre. He told it like it is.
The flaw in the thinking about an "open Fed" is that most elected officials and average citizens are too stupid to understand the Fed. They don't have an IQ problem, but they do suffer, in most case, from a lack of education about complex fiscal policy, macroeconomics, and game theories of John Forbes Nash who was himself schizophrenic. In other words, the Federal Reserve management and staff perform a function that most people cannot possibly understand in any detail. Citigroup may need $100 billion for a week. That does not mean it is going out of business, or, if it is, the Fed knows enough to call the Treasury Secretary immediately.
I suppose he would apply the same reasoning to the jury system, and draw the same conclusion.
Congress can hire economists to interpret the data. It does so with respect to NASA or any other government-funded operation. The point is this: the hired experts must have full access to the financial data in order to make their assessment.
Mr. McIntyre is not a skilled logician. He treats his readers as if they were idiots. He is contemptuous of them. He is trying to put the shuck on the rubes.
It is not entirely unfair to compare what goes on inside the Federal Reserve with what happens at the CIA, FBI, or some parts of the Defense Department. Secrets are not, in and of themselves wrong, if they protect something in the national interest.
So, the Federal Reserve System is comparable to agencies that prosecute criminals and terrorists. But what if the FBI, CIA, or the Defense Department were in fact acting as the legal cover for criminals? What the FBI were actually putting up the money -- not as a sting operation, but as the money behind the operations? Would Congress have the right to know?
Mr. McIntyre has stated the case boldly and baldly. It is the case for a cartel of banks whose largest members can tap into the funds of the Federal Reserve, as well as receive T-bills in exchange for toxic assets at face value ...
Douglas A. McIntyre is not a skilled user of rhetoric. He is surely not aware of logical cause and effect.
Read the entire fisking here: "No Right to Know": A Wall Street Financial Site's Attack on Congress and Ron Paul.
