Saturday, November 21, 2009

Ron Paul Audit the Fed Bill Advances

Given the current state of the US economy and the high level of debt in the country, it is hard to argue that the Fed under Greenspan had done a good job. The main argument against his bill was that the Fed should be kept independent so they shouldn't be audited. In the book Greenspan's Fraud, Ravi Batra's analysis of Fed policy showed that Greenspan wasn't independent at all anyway and supported irresponsible fiscal policies such as those of George Bush in 2001 which put country back on the path of rising govt debt. It just doesn't make sense in a democratic country to have such a powerful institution shrouded in so much secrecy.

Ron Paul explains why he thinks why the Fed has to be 'ended':


November 19, the House Financial Services Committee advanced a bill that calls for the General Accounting Office to conduct a comprehensive audit of the Federal Reserve by the end of 2010.
A 43-26 committee vote rejected a substitute proposal offered by North Carolina Democrat Mel Watt. Its provisions would have sanctioned retention of the long-standing ban against congressional scrutiny of the Fed’s monetary policies.
Despite opposition from committee chairman Barney Frank of Massachusetts, the measure written by Texas Republican Ron Paul survived its first test. Success came because of 313 House cosponsors and a huge outpouring of citizen backing. Yet Frank claimed that the proposed audit would “be seen as weakening the independence of monetary policy with consequent negative implications."Frank’s opinion has regularly been buttressed by Fed chairman Ben Bernanke who urgently favors retention of the Fed’s independence. Practically all opponents of the Paul measure pointed to the need for the Fed to continue operating without oversight. Former Fed research specialist Michael Feroli, now an economist with JPMorgan Chase, urged the Fed to “do whatever it takes to stop this from going forward and eroding confidence in the Fed’s independence."But it is precisely a loss of confidence in the Fed that has generated unprecedented support for opening up the central bank’s books and supplying the American people with heretofore hidden information. The Fed certainly had a role in bringing on the current economic downturn. Chairman Bernanke’s refusal to answer questions about the Fed’s role has added more muscle to the growing demand for scrutinizing the Fed’s books. If the Fed has nothing to hide, detractors ask, why do its leaders and supporters fear scrutiny?Should the measure gain full House and Senate approval and a presidential signature (surely steep hills to climb!), the Fed will have to bare details about its emergency lending programs, bailouts of financial institutions, dealings with like institutions in foreign capitals, and the process it employs in setting interest rates. Chairman Frank has sought to calm the fears of Fed supporters by indicating that the Paul measure will be “revisited” when the full House considers the bill. Piggybacking the measure onto another bill, such as the proposed Financial Stability Improvement Act, might be one tactic to undo it. Without doubt, roadblocks will be erected to gut the bill, and the big guns seeking to preserve the Fed’s vaunted “independence” will surely be trotted out as the measure proceeds through the legislative process.Few supporters of our nation's central bank care to note that the creation of the Federal Reserve parallels a call in Marx’s Communist Manifesto for “centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.” The Fed was actually pushed toward creation in 1913 by President Wilson’s powerful and manipulative guru, Edward Mandell House, who earlier had written of his desire for “Socialism as dreamed of by Karl Marx."But note that Marx sought a central bank “in the hands of the state.” Those who created the Fed in 1913 went a huge step further and made it a private institution free of congressional scrutiny. Fed creators actually out-Marxed Marx by shielding it from examination. The result? Under its management, U.S. currency has lost 95 percent of its value, a trend that continues. The American people are being cleverly divested of their wealth. And power over what happens in our nation sits more with the Fed than it does with Congress. The American people need to know what the Fed has done and continues to do.Congressman Paul has also introduced a measure to abolish the Federal Reserve outright. His recently published bestseller End the Fed provides reasons why management of the nation’s economy should be terminated, fiat currency should be discarded, and commodity money reestablished. His efforts over many years, long considered extreme or even absurd by the establishment, have attracted enormous popular support as evidenced by the audit measure’s 313 cosponsors.What will happen as the audit bill moves through the congressional process is unknown. But the awakening of a large number of Americans to the secrecy and power of the Fed should already be considered a stunning victory for Constitution-minded Americans.


xl said...

Hi Lucky,
Hard to read the pasted article. No paragraphing & too long. Would be helpful to summarise in a few points.

My view of the Fed was shaped by what i read in Kiyosaki's latest book. Basically Fed is for richest people. A bailout is taking from the masses & rewarding the rich & their mistakes. (socialism for rich)

Didn't read any of Ron Paul's book. What i know about him is he's against the Fed.

As for Greenspan, come to think of it in hindsight, is like a few of LKY's failed policies. 20 years later pay the price.

I pity Jimmy Carter. Speech of warning to Americans but few listen. Threw him out of office & elected Reagan. Greenspan then started his policies to make US citizens feel shiok that partly contributed to current financial mess.

Anonymous said...

this is welcomed news. For years, the "conspiracy theorists" have been saying that the Fed shld be abolished.

looks like everyone has woken up. who is in Sec Treasury now?...Timothy Geithner (ex Fed).

U cant make this up.

*shakes head*

DanielXX said...

Some people just love conspiracy theories and having tunnel vision.

Anonymous said...

FED is to America what PAP is to SIngapore.

Powerful and continue to be powerful. No one can mount a challenge to them now or in future.

Anonymous said...

“I do know that if prosperity is my goal, the freer the society is the better it is for us, I understand that. But my biggest concern of course when I see what’s happening is the threat to our personal liberty, and I have always argued I would argue the case for liberty because for me it’s a moral issue, it’s not a pragmatic issue. I would argue the case for liberty because I just want to be left alone.
What do you want to do? Well, you want to preserve liberty, you want to preserve the greatness of this country, and in the meantime we will protect the prosperity of this country. But if we concentrate on that ideal of liberty, I believe that we can find all our answers.”

PAP take note. Liberty and prosperity are not mutually exclusive but complement each other. The absence of one always diminishes the other.

Ghost said...

Hindsight is a beautiful thing but it's also wrong. When Greenspan was in charge, he was seem as one of the best Fed chief in history.
Main thing for me is that Greenspan wasn't in charge when the crisis blew up and it's stupid tho blame him for the crisis when he was retired for about a year when it happened.
That's like blaming Bill Clinton for the crisis event though he left office 8 years before the crisis. Wrong!

Anonymous said...

Smart cunning people quickly vacate a hot seat when they see shit coming in one or two years time. Don't forget, these are the people who have the 'vision'. Helicopter view.

Anonymous said...

and the unfortunate guys who took over bears all the blames for the shits which their predecessors have created. That is what is happening in Sinkapore also.

Anonymous said...

Greenspan's crime was pushing back against regulatory reform during his tenure at the Fed such as Brooksley Born's push to regulate derivatives and keeping interest rates too low for too long, allowing adjustable mortgage rates to remain deceptively low to entice homeseekers.

At the same time I can't bring myself to support the Audit the Fed bill. Take a good look at this picture comparing industrial output in the 1930s and now:

As Krugman noted, the world started out by tracking the Great Depression in its first year, but within a year we had pulled the world back from the edge of the abyss. Monetary policy wasn't well understood in the 1930s. If it weren't for Bernanke's massive quantitative easing efforts and emergency lending windows to Wall Street the US economy would have slumped even more. The Great Depression itself started out like any recession. What turned it into the worst slump the world has seen was the inaction of the Fed, who for some reason refused to bail out the Bank of United States, whose bankruptcy triggered a series of bank failures and closures throughout the country, plunging into Depression. I wouldn't credit the stimulus package for such an early turnaround; it needs more time to work.

If we allow intrusions into the operations of the Fed we may see it become even more unlikely to take steps which spur populist outrage but which may be economically necessary for the country.

DanielXX said...

bernanke can't wait to be sacked man..... why should he get paid peanuts saving the world at the fed and then be forced out by a bunch of ungrateful fools? he'd be immediately snapped up by goldman or jp for 50million a year if the Pubic fools at the Senate or Congress decide to abolish the Fed. Or Geithner if he is forced to resign, for that matter.

DanielXX said...

this ron paul is an idiot and i have heard him talk and he is just like one of those grandfather tale-tellers who will tell you everything is bad but cannot build a house to save his life.

Anonymous said...

Plenty of easy money going round the world.

Commodities prices are starting to escalate.

US unemployment is still at record high.

Who can solve this problem,Nil.

Who created this problem mainly,one man,who starts by Alan.

Of course I may be wrong but thats my humble view