Remember “Audit the Fed”? It was the call that united populists of the right and left (and quite a few terrified centrists) around the cause of congressional investigators poking around the inner workings of the Federal Reserve, including its setting of interest rate policies.
And it’s back, with a new campaign from Senator Rand Paul (whose father led the earlier version) to push for a bill to do just that in a now-Republican-led Congress. But to make sense of the debate, here’s the simple fact you need to keep in mind: When people say they want to audit the Fed, what they really mean is “The Fed is doing things I disagree with.”
It’s easy to say that the Fed is a very secretive, mysterious institution. That has certainly been true historically, and in some respects remains true today. But in most of the ways that matter, the Fed is actually more transparent about what it decides to do, why and how it carries those policies out than almost any other institution in government.
…You can go to the New York Fed’s website and see the Fed’s securities holdings down to the individual exact bond holding. That’s how I know, for example, that as of Feb. 4 the Fed owned precisely $449.94 million worth of United States Treasury notes that mature April 30, 2015. The CUSIP code is #912828MZ0, in case you happen to know what a CUSIP code is (it is a numbering system to identify a particular bond or other security.)
Perhaps you don’t believe that information, and assume that the banksters at the New York Fed are lying to us all. Well, O.K., but keep in mind that those financial statements are audited already, in 2013 by Deloitte & Touche, one of the giant accounting firms that verify the books of virtually all major companies in America. Oh, and checking up behind them are the Fed’s inspector general and the Government Accountability Office, the same agency that Senator Paul would like to give greater powers to look into the Fed’s business…
After a monetary policy meeting, the central bank immediately releases a statement of several hundred words announcing what it has done, why and which of its officials voted against the action. Four times a year, the chairwoman, Janet Yellen, stands up immediately thereafter and takes questions from reporters for an hour or so. You may not like the answers, and she can duck a question as effectively as any public official, but she at least faces them.
Also four times a year, the Fed releases a bunch of details of Fed leaders’ forecasts, telling you what they expect to happen in the future with growth, inflation, unemployment and their own interest rate policy…
This legislation pressed by Republicans, Blue Dog Democrats and their lying subalterns has only one purpose. They want to corrupt the independence of the Federal Reserve and put control of monetary policy into the dirty hands of Congress.
Can you imagine Congress – especially a version like the present crop of do-nothings – trying to construct monetary policy to drag our sorry butt out of the Great Recession? The recession resulted from Congressional refusal to lead oversight of the financial industry. The Fed had to construct what little rescue they could because our elected representatives were afraid to do anything useful on their own.
Now, they want to end the Fed’s political independence. And they lie – again and again – and call this an “audit”. Humbug!