 Fed Independence or Fed Secrecy?
Rep. Ron Paul
Texas Straight Talk
Jul 14, 2009
Last week I was very pleased
that hearings were held on the independence of the Federal Reserve
system. My bill HR 1207, known as the Federal Reserve Transparency
Act, was discussed at length, as well as the general question
of whether or not the Federal Reserve should continue to operate
independently.
The public is demanding transparency
in government like never before. A majority of the House has
cosponsored HR 1207. Yet, Senator Jim DeMint's heroic efforts
to attach it to another piece of legislation elicited intense
opposition by the Senate leadership.
The hearings on Capitol Hill
provided us with a great deal of information about the types
of arguments that will be levied against meaningful transparency
and how the secretive central bankers will defend the status
quo that is so beneficial to them.
Claims are made that auditing
the Fed would compromise its independence. However, by independence,
they really mean secrecy. The Fed clearly cherishes its vast
power to create and spend trillions of dollars, diluting the
value of every other dollar in circulation, making deals with
other central banks, and bailing out cronies, all to the detriment
of the taxpayer, and to the enrichment of themselves. I am happy
to challenge this type of "independence".
They claim the Fed is endowed
with special intellectual abilities with which to control the
market and that central bankers magically know what the market
needs. We should just trust them. This is patently ridiculous.
The market is a complex and intricate thing. No one knows what
the market needs other than the market itself. It sends signals,
such as prices, that should be reacted to and respected, not
thwarted and controlled. Bankers are not all-knowing and cannot
ignore the rules of supply and demand. They might act as if they
are, but their manipulation of the market just ends up throwing
it wildly off balance, which gives us the boom and bust cycles.
They claim the Fed must remain
apolitical. No organization is apolitical that relies on the
President to appoint the Chairman. In fact, it is subject to
the worst sort of politics power to create trillions of
dollars and affect the value of every dollar in the country without
the accountability of direct elections or meaningful oversight!
The Fed typically enacts monetary policy that is favorable to
particular administrations close to elections, to the detriment
of long term considerations. They do this partly because of the
political appointee process for the Chairmanship.
The only accountability the
Federal Reserve has is ultimately to Congress, which granted
its charter and can revoke it at any time. It is Congress's constitutional
duty to protect the value of the money, and they have abdicated
this responsibility for far too long. This was the issue that
got me involved in politics 35 years ago. It is very encouraging
to finally see the issue getting some needed exposure and traction.
It is regrettable that it took a crisis of this magnitude to
get a serious debate on this issue.
Jul 13, 2009
Rep. Ron Paul
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