Audit The Fed!
It has been an interesting week indeed for the Federal Reserve. Earlythis week, it was announced that President Obama intends to reappointFed Chairman Ben Bernanke to a second term in January, signaling a voteof confidence in him. Bernanke seems to be popular with the administration and with Wall Street, and with good reason. His lending policies have left big banks flush with newly created cash that covers up old mistakes and allows for new ones.
Bybuying up mountains of Treasury debt he has also enabled spending tosoar to ridiculous levels that should startle any responsibleeconomist, and scare any American concerned about the value of thedollar. However, these highly sensitive decisions about our money are not made by economists, they are made by politicians. Bernanke, like most of his predecessors, is the politician’s best friend. However,there is no reason to believe any other central planner would behaveany differently, considering the immense political pressure on the Fed.
Fedpolicies have been as bad for the economy as they are good forpoliticians and bankers, as the recently released numbers on the debtand deficit demonstrate. For the first timesince World War II the annual budget deficit is projected to be over 11percent of the nation’s gross domestic product. It is also projected that by 2019 the national debt will be 80f GDP. Our path, if unchanged, is completely untenable.
The administration claims that it inherited a dire situation from the last administration, which is absolutely true. However,that hasn’t stopped them from accepting all the policies and premisesthat got us here, and accelerating those policies to rapidly make a badsituation much worse. The bailouts started with the last administration. They have gotten bigger with this one. The last administration gave us expanded government involvement in healthcare with a new prescription drug benefit. This administration gave us a renewal and expansion of SCHIP, and now the current healthcare takeover attempts. Inreality, we can afford none of this, but shady monetary policy allowsWashington to continue along its merry way, aggravating all oureconomic problems.
Not everyone in government finds it acceptable that the Fed wields so much power and privilege in secrecy. Lastweek, a federal judge ruled against Fed secrecy, compelling them torelease under the Freedom of Information Act information regardingwhich banks received emergency loans, and under what terms. The Fed will, of course do everything in its power to fight this ruling and it is certainly not the last word on the issue. Still,it is encouraging to see that the interests of the taxpayers weredefended victoriously in court, while the Fed only sees the plight ofits big banker friends.
MeanwhileHR 1207 and S604, legislation to open up the Fed’s books to a completeaudit, continue to gain momentum in Congress as the people continue toinsist on real transparency of the Federal Reserve. One way or another, the days of Fed autonomy are coming to an end, as well they should. No one should have the power to debauch the currency and gut the economy as they do. Itis time they answered for their actions, so the people can understandthat we truly are better off with freedom instead of Fed tyranny.
Posted by Ron Paul (08-31-2009, 12:35 PM) filed under Monetary Policy