WND EXCLUSIVE
DOOR OPENS FOR SCRUTINY OF FEDERAL RESERVE
Voters give GOP pathway for former Rep. Ron Paul's audit plan
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The new Republican majority in the Senate opens a door for a new level of scrutiny of the Federal Reserve, the quasi-public organization that largely controls U.S. monetary policy behind closed doors.
“Will we finally get a vote on audit of the Fed in the Senate?” asked Julie Borowski in a column on the website of the conservative and libertarian lobbying group FreedomWorks.
“The GOP-led House overwhelmingly passed bills to audit the Fed in 2012 and 2014. Back in September, it passed with a bipartisan vote of 333-92. Yet, it was basically dead on arrival in the Senate,” she wrote. “For reasons unconfirmed, Harry Reid refused to allow a vote on the bill – even though he cosponsored audit legislation in the 1990s. The Senate companion bill, introduced by Sen. Rand Paul, R-Ky., has 31 cosponsors but never even made it out of committee.”
But with Harry Reid no longer in charge of the Senate, she said, “we’re far more likely to get a vote on audit the Fed.”
The fight for the audit dates back years. Paul’s father, Rep. Ron Paul, R-Texas, repeatedly introduced bills calling for an audit that were adopted in the House but went nowhere in the Senate.
The argument against the Fed centers on Article 1, Section 8 of the Constitution, which assigns to Congress the power to coin money. There is no mention in the Constitution of a central bank, and it wasn’t until the Federal Reserve Act of 1913 that the Fed was created.
Ron Paul previously has said: “Throughout its … 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy.”
He proposed repeatedly the idea of auditing the Fed to determine exactly what it has been doing and then begin making corrections. With a book titled “End the Fed,” he’s made no secret of his ultimate goal.
In the book, he argues that the Fed “is both corrupt and unconstitutional.”
The book described the Fed as “inflating currency today at nearly a Weimar or Zimbabwe level, a practice that threatens to put us into an inflationary depression where $100 bills are worthless.”
He contends the Fed, created by private interests, is at fault for much of America’s financial woes over the years.
That the Fed is at least partly to blame for the financial problems that have developed in the U.S. seems not to be in dispute.
It was longtime Fed Chairman Bernanke who admitted as much.
Bernanke said it was the Fed that caused the Great Depression. It was the longest and worst depression ever experienced by the industrialized Western world. While originating in the U.S., it ended up causing drastic declines in output, severe unemployment and acute deflation in virtually every country on earth.
At a Nov. 8, 2002, conference to honor economist Milton Friedman’s 90th birthday, Bernanke, then a Federal Reserve governor, gave a speech at Friedman’s old home base, the University of Chicago.
After citing how Friedman and a co-author documented the Fed’s continual contraction of the money supply during the Depression and its aftermath – and the subsequent abandonment of the gold standard by many nations to stop the devastating monetary contraction – Bernanke said:
Before the creation of the Federal Reserve, Friedman and [Anna] Schwartz noted, bank panics were typically handled by banks themselves – for example, through urban consortiums of private banks called clearinghouses. If a run on one or more banks in a city began, the clearinghouse might declare a suspension of payments, meaning that, temporarily, deposits would not be convertible into cash. Larger, stronger banks would then take the lead, first, in determining that the banks under attack were in fact fundamentally solvent, and second, in lending cash to those banks that needed to meet withdrawals. Though not an entirely satisfactory solution – the suspension of payments for several weeks was a significant hardship for the public – the system of suspension of payments usually prevented local banking panics from spreading or persisting. Large, solvent banks had an incentive to participate in curing panics because they knew that an unchecked panic might ultimately threaten their own deposits.
It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon’s infamous “liquidationist” thesis, that weeding out “weak” banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks – which would have intervened before the founding of the Fed – felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view.
In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn. …
Incoming Senate Majority Leader Mitch McConnell, R-Ky., already is on record in support of investigating the Federal Reserve.
Just last year, he said: “The Fed has never been audited and I think, you know, transparency is important. … And there’s a number of Senate Democrats who maybe don’t want it to come up but wouldn’t want to vote against it if it did. So Rand Paul and I are both going to be looking for ways to get that voted on in the Senate.”
The latest push came only weeks ago, when the House passed the bill again.
“Let’s hope that the Senate will finally vote on ‘Audit the Fed’ in the upcoming session without any changes to the legislation that could water it down,” wrote Borowski. “While it won’t solve all of our monetary problems, an audit would be a good step in the right direction to increase transparency at the central bank. I’d like to see a true ‘Audit the Fed’ bill land on Obama’s desk and see how he reacts.”
In recent months, and in support of the Obama administration’s policies, the Fed has been buying some $85 billion in bonds each month, simply injecting the cash into the nation’s economy, giving it an artificial stimulation that otherwise would be lacking.
See Ron Paul’s criticism of the Fed:
And see Greenspan’s comments:
Rep. Paul Broun, R-Ga., was a staunch ally of Ron Paul’s legislation to audit the Fed. He has said it’s remarkable that the public knows virtually nothing about an institution with so much power.
“Congress has basically abdicated its duty to control money and the monetary supply and control of our money supply as a nation over to this semi-governmental agency that’s not really governmental,” he said. “In reality, we have had no auditing. We have absolutely no idea what they’re doing over there.”
Broun said the Fed housing policy was partly to blame for the housing bubble and crash.
“They’re still managing our monetary supply,” he said. “They’re creating more and more dollars that have no or very little value behind them. Our dollars are becoming worth less and less. As time goes on, they’re going to be worthless.”
Read more at http://www.wnd.com/2014/11/door-opens-for-scrutiny-of-federal-reserve/#MDjeA8JPYVCH2e1O.99
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