Don't Punish Fed With Audit
Is the Federal Reserve hiding the identities of banks who received up to $2 trillion in loans in the last year? Representative Ron Paul (R:TX) and now Representative Barney Frank(D: MA) think the Fed should be audited to reveal the names of these foreign and domestic banks. Federal Reserve Chairman Ben Bernanke opposes Paul's audit bill, saying it would make it seem like the Fed was no longer setting interest rates independently of political oversight. This perception alone would increase inflation. However, the real threat is even worse than that.
The Federal Reserve has acted quickly and creatively to pull the economy back from the brink of a major depression. It did so because of its ability to act swiftly without going to Congress for approval. Secrecy was needed last year to allow banks to apply for liquidity from the Fed without fear they would be tagged as failing banks. Congressional auditing ability would seriously hamper the Fed's ability to act at a time when this creatively and innovation is needed the most. The economy is still on the brink of a falling back into serious recession. Now is not the time to tie the hands of one of the few institutions with the ability to quickly inject needed liquidity into the financial system.
Coincidentally, the bill is expected to pass the House in October, the same time Paul's book, End the Fed, will publish. Representative Paul has always wanted to do away with the Fed. Perhaps he now sees the weakened economy, and the Fed's innovative and timely actions during the crisis, as his chance to get his wish.
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Comments
I suppose Obama became President just so he could sell his books.
In other words, trust the financial establishment who got everything wrong over the heroic and economically correct Dr. Paul. No thanks.
Who caused the housing bubble?
The Fed did it!
Ms. Amadeo,
The “Federal Reserve Transparency Act of 2009″ would not require the Federal Reserve to seek nor gain Congressional approval, which you seem to imply.
With regards to Chairman Bernanke’s belief that
“it would make it seem like the Fed was no longer setting interest rates independently of political oversight” I will point out that he and his predecessors have acted on behalf of sitting Presidents during election years by adjusting interest rates to lend an impression of economic prosperity. This hardly seems apolitical.
Additionally, perhaps Chairman Bernanke should explain how increasing credit and the money supply (which the Federal Reserve is currently doing in unprecedented amounts) creates inflation, rather than speculating on a possible future where “… perception alone would increase inflation.”
Given that Representative Paul has been advocating us abolishing the central bank for decades, I fail to see the logic of your last paragraph, where you suggest that “Representative Paul’s motives are suspect.” Would you prefer him to not publish a book arguing his case to abolish the Federal Reserve until… after it is abolished?
Best regards,
Charles
“This perception alone would increase inflation. However, the real threat is even worse than that.”
It’s not the perception of what the Fed does that causes inflation but rather what the Fed actually does, which is institutionalized counterfeiting.
If the public perceives this counterfeiting then Ron Paul may actually acheive his goal of abolishing the Fed.
Robert Mugabe President of the Republic of Zimbabwe
Dear president Obama
Dear friends at the Federal Reserve.
Today I have immense pleasure congratulating you on having chosen the glorious path of the Zimbabwe School of Economics.
As a firm believer in the correctness of central planning and printing money “out of thin air” I can assure you of the many successes our beloved country attained.
For example: one can purchase a long distance bus ticket using not only our Zimbabwe dollar but also great number of different currencies such as Ron Paul silver dollar and live organic chicken.
Our country does not produce many things anymore which is healthy for family life bonding of parents with their children and church attendance as well as enviroment.
Our cities don’t waste money on garbage collection which results in people taking matters in their own hands and burning garbage in their own cooking stoves.
Now that is cheap fuel we can believe in.
There are many other victories in our land.
I will be proud to list them in my future letters.
But there is one thing left I would like to add.
We envy that your country can borrow so much from other wealthy nations and use it to bomb poor ones.
We would love to be able to borrow and print as much money as you can and use it to take oil from other countries.
It would be my dream if I could put 500.000 of my soldiers in foreign nations and be able to pay for the cost.
Unfortunately China and other wealthy nations do not want to pay for Zimbabwe to have this opportunity at expanding our Republic.
I shall end this letter with a symbolic cyber embrace.
You are all well loved by me and all my happy citizens.
your friend in prosperity
Robert Mugabe
THE ANSWER IS GOLD & SILVER NOT FIAT PAPER
To have a working currency, you need to have adequate total exchange value to cover all the transactions in the economy at any given moment. Does all the gold and silver in the world currently have enough exchange value to replace all existing fiat currency? No. But here is why that doesn’t matter – THE EXCHANGE VALUE OF GOLD AND SILVER WILL RISE IN RESPONSE TO INCREASED DEMAND AS A MEDIUM OF EXCHANGE UNTIL IT REACHES THE NEEDED LEVEL.
Think of it another way. Imagine that you now need to pay your employee one ounce of gold a month for him to do his job. The increased demand for gold will drive up its exchange value (remember the law of supply and demand) because it will be in demand for use as money. So then you only have to pay your employee half an ounce of gold. The same amount of gold goes twice as far. It is as if the supply of money has increased to meet the demand without causing a loss of value the way inflating a fiat currency does.
The market will adjust the exchange value of gold and silver to meet demand.
The Federal Reserve Bank who controls the supply and movement of FRNs has everybody fooled. They have access to an unlimited supply of FRNs, paying only for the printing costs of what they need. FRNs are nothing more than promissory notes for U.S. Treasury securities (T-Bills) – a promise to pay the debt to the Federal Reserve Bank.
There is a fundamental difference between “paying” and “discharging” a
debt. To pay a debt, you must pay with value or substance (i.e. gold,
silver, barter or a commodity). With FRNs, you can only discharge a debt.
You cannot pay a debt with a debt currency system. You cannot service a debt with a currency that has no backing in value or substance.
In rhetoric, America is the land of the free and the generous, enjoying the fused blessings of a free market tempered by and joined to accelerating social welfare, bountifully distributing its unstinting largesse to the less fortunate in the world. In actual practice, the free economy is virtually gone, replaced by an imperial corporate-state Leviathan that organizes, commands, exploits the rest of society and, indeed, the rest of the world, for its own power and pelf. -Murray
If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, and give the earnings of fifteen of these to the government for their debts and daily expenses; And the sixteen being insufficient to afford us bread, we must live, as they do now, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account; But be glad to obtain subsistence by hiring ourselves to rivet their chains around the necks of our fellow sufferers; And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for a second, that second for a third, and so on ’til the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering…and the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression. — Thomas Jefferson
He who will not reason,is a bigot; he who cannot is a fool; and he who dares not,is a slave. ~Sir William Drummond
When no man is safe when freedom fails the best men rout in filthy jails why those who cry appease appease are hung by those they tried to please
The evils of tyranny are rarely seen but by him who resists it. – John Hay
“Sometimes it is said that man cannot be trusted with the government of himself. Can he, then, be trusted with the government of others? Or have we found angels in the form of kings to govern him? Let history answer this question.” Thomas Jefferson: 1st Inaugural, 1801.
In the name of patriotism, we have participated in a planned deception to create a state of permanent war. In the name of profit, America has been sacrificed on the altar of the god of war, to create a global empire based on the mass-marketing of death. JFK
The danger is not that a particular class is unfit to govern. Every class is unfit to govern
Lord Acton.
The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in Government.Thomas Jefferson
If tyranny and oppression come to this land it will be in the guise of fighting a foreign enemy. Thomas Jefferson
Anyone who would sacrifice freedom for security deserve neither”. Ben Franklin
“The real rulers in Washington are invisible and exercise power from behind the scenes.” — Supreme Court Justice Felix Frankfurter,1952
With the exception only of the period of the gold standard,all governments of history have used their exclusive power to issue paper to defraud and plunder the people. Friedrich Von Hayek
Dickens wrote: “Credit is a system whereby a person who can’t pay gets another person who can’t pay to guarantee that he can pay.”
Alexander Pope:
“Blest paper-credit! last and best supply!
That lends corruption lighter wings to fly.”
The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the government of the U.S. ever since the days of Andrew Jackson. History depicts Andrew Jackson as the last truly honorable and incorruptible American president.
I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. Thomas Jefferson
Paper is poverty, it is only the ghost of money, and not money itself.” Thomas Jefferson to Edward Carrington, 1788
President FDR (on Fascist rule in a letter to corporate con man “Colonel” Edward M. House, a founder of the Council on Foreign Relations and political fixer for the ruling class. House also handled President Wilson for the foisting of the privately rigged “Federal Reserve” Corp bank monopoly. 11/21/ 1933)
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” Thomas Jefferson, Letter to Treasury Secretary Albert Gallatin (1802)
Ms. Amadeo,
To sell a book you say? Dr. Paul has been sponsoring bills to abolish The Federal Reserve for decades. Their policies have caused repeat cycles of recession, depression, and inflation.
The Federal Reserve demanded money to stimulate the economy. They should have let home prices continue to fall. That is what happens when the economy is undergoing a market correction. They want to take us instead to a point of no return.
Thanks to The Federal Reserve, we have massive debt and artificially low interest rates. We can’t grow our way out of this debt.
“Representative Paul has always wanted to do away with the Fed. Perhaps he now sees the weakened economy, and the Fed’s innovative and timely actions during the crisis, as his chance to get his wish.”
What is so creative about accelerating the printing press so that we can continue to spend borrowed money and put future generations into an insurmountable debt? Of course Congressman Paul is being opportunistic, what congressman wouldn’t be opportunistic in his situation. He has a great opportunity to bring sound monetary policy into the public debate. For the sake of my children and grandchildren and so forth, I hope he succeeds in exposing the power of this institution and the people running it. These people are accountable to no person or entity unless Congress has the will to audit it. It is incumbent upon all of us to make sure they do.
The title “Don’t Punish Fed With Audit” is so dubious. It assumes auditing the institution which is in sole control of our nation’s money supply and economic/financial stability is somehow evil. The intent of an audit is not to “punish” the institution it examines. It’s supposed to ensure efficiency, accountability, and purity of the thing it assesses by a standard or code. Otherwise, the institution could do whatever it wants by its own whims, for good or for ill. Of course, the Fed is doing the latter.
In general, there is nothing wrong with an audit. But the economy is still on the precipice of sliding back into recession. I would wait until things returned to a more stable situation before tampering. The Fed’s innovative and quick response to the crisis was all that stood between us and a more complete financial ruin. The second thing was TARP. The third was the Stimulus Package. Instead of thanking Bernanke for doing a great job, he is being audited.
Kimberly
” In general, there is nothing wrong with an audit. But the economy is still on the precipice of sliding back into recession. I would wait until things returned to a more stable situation before tampering. The Fed’s innovative and quick response to the crisis was all that stood between us and a more complete financial ruin. The second thing was TARP. The third was the Stimulus Package. Instead of thanking Bernanke for doing a great job, he is being audited.
Kimberly
“
You are being audited too, Kimberly. The folks at Daily Paul are laughing at how you change the article in response to comments that do not make it by the moderator. It’s a moving target.
I will now reload.
If we wait for the crisis to be over before auditing the Fed, we might wait forever. This is not your Great Grandpaw’s Great Depression. The US is in far worse shape than it was when the Fed was created in 1913 or when it caused the first Great Depression with monetary expansion in the Roaring 20’s.
What people must realize is that the Fed is the very institution that makes the crises possible – inevitable even. Millions of Americans are saddled with mortgages they cannot pay on houses that they paid far too much for, precisely because of the Fed’s reaction to the previous two economic downturns. If the Fed is allowed to save us from this one with even more reckless money-creation and lending to the most incompetent failed banks and businesses, this crisis could very well be the Big One.
This article is preposterous. The Fed is a problem masquerading as its own solution. The very idea that allowing failing banks to conceal their failure from the public will somehow benefit the public is nothing short of outrageous. By advocating continued secrecy, Kimberly, you aid and abet fraud.
-jcr
Thanks for approving my last comment. Perhaps the others were lost for some technical reason.
I have a suggestion. Will you read Ron Paul’s End the Fed? It might be a real eye-opener. It is available for pre-order now on Amazon.
After that, you may discover that you want to read the books and essays that caused Ron Paul to leave a thriving and happy practice as a baby doctor to engage in a long, hard fight against the Money Masters in Washington DC. His patience and equanimity through decades of dismissal and ridicule is awe-inspiring. Now may it prove worth it.
Eventually you will learn. The Federal Reserve will be abolished after the audit.
Thank Bernanke? For what? For debasing the currency, for creating evermore worthless fiat, for following the path of Alan Greenspan and leading the nation further into economic ruin?
Charges of theft and treason would be more appropriate. If you earn, spend or save Federal Reserve Notes, Helicopter Bernanke is stealing your wages through inflation, reducing your buying power and destroying your financial future!
Jeff W, the answer is “none of the above.” She is educated, not naive. Higher education has failed her. I think her heart is in the right place. Let’s have a discussion.
You and I are lucky to have found information that is not available in most colleges and universities. The internet is changing all of that. Kimberly does a great service by presenting her argument in a forum where others are invited to take issue and rebut in comments.
Let’s keep the dialog going. It’s great fun to wake up and smell the coffee. I know from experience. Kimberly, this is your wakeup call. Enjoy.
Kimberly had another hit piece on the Liberty movement during the election. You should read how wrong she was about the economy. I had a long 4 or 5 email exchange with her, but she ended up never answering me back. I see she’s back at it again, even misquoting the name of his book.
END THE FED!
I learned so much more from the comment section than from this trash article.
Please post your address, I have a book I’d like to send you!
Hi folks,
I changed the article when I read comments that made me realize some of my wording was unfair. Likewise, I corrected the name of the book.
I deleted some comments that called me names. I appreciate different points of view, but if it has nothing to add to the conversation and insults me, I will delete it. I would also delete any comments that insulted anyone else.
As for my position, anyone who has read my blog for the past three years will see I have a lot of respect for how Bernanke has handled this crisis. He has done a lot more than just print money. If the economy turns south again, as I believe it will, then we will need all the monetary tools available to keep it going. Fiscal policy is pretty much rendered null by the nearly $12 trillion debt.
Kimberly
Just want to also say that I do think Kimberly is smart enough to grasp the concepts from these comments and is probably a nice person who just doesn’t know what is going on.
Rest assured, soon she will!
Kimberly makes a good point: “Fiscal policy is pretty much rendered null by the nearly $12 trillion debt”
That’s precisely why the Federal Reserve must be audited now, and once the American people know how the Ben and the Wall Street banksters have allowed Congress to swell the debt through the printing of evermore worthless fiat, it will be time to abolish the Fed and push for a balanced budget based on sound money.
The Washington politicians and Wall Street bankers have been in bed together for decades to control wealth and retain power. It’s time to end the cozy relationship.
Kimberly,
You really need to read the history about Andrew Jackson and his problems with the Central Bank, the Federal Reserve of his time. The U.S. paid off the national debt for the first and last time right after he denied a renewal of their charter. This is historical fact. Don’t defend the vipers and snakes that caused this economic situation, join us that are really trying to return the country to the Constitution.
For the record, the comments I wrote that did not show up were respectful. I never engaged in name-calling. Perhaps there was a technical glitch. I am over it.
The $12 trillion in national debt would not be possible without the Fed standing ready to buy US bonds through the FOMC, and to finance the purchase of US bonds with loans and swaps.
Kimberly, I must disagree strongly about the job Bernanke has done. His only redemption is that he is attempting to do the impossible. But that is small comfort, given that the attempts to avert a more severe downturn will, inevitably and as it always has in the past, lead to a bigger crisis in the future. Mal-investment must be liquidated, mis-managed companies must be allowed to be restructured through bankruptcy, and new investment must come from real capital (savings), not from the printing press.
My fear is that through attempting to let this, admittedly severe, correction run its course, the government and Fed are setting us up for the Last Crash.
The fact that this man, who simply asks that a private bank that operates unconstitutionly outside of public scrutiny be asked to shine the light of day on its operations – be viewed as radical is a testament to how mainstream the and acceptable the corruption of our nation has become. A radical? I think not.
That our sons should toil to the pay off Citi mortgages, fannie freddie ponzi schemes, over market rate UAW auto labor contracts, Aig/Goldman derivative bets, TARP>TALF garbage, zero interest freebee loans to major banks, (the list goes on- help me if i omit anything) should nauseuate any American past words and into action.
Obama is the latest and the greatest but he’s not unique.
This mountain of public debt will put our sons and daughters into bondage via taxation. Wasnt this country founded by risk loving tax-hating pioneers? Servitude awaits you and your children should we fail to act.
I love this country. Please join the fight. Take your nation back.
[Edited for typos and grammar. Sorry about that.]
For the record, the comments that I wrote which did not show up were respectful. I never engage in name-calling. Perhaps there was a technical glitch. I am over it.
The $12 trillion in national debt would not be possible without the Fed standing ready to buy US bonds through the FOMC, and to finance the purchase of US bonds with loans and swaps.
Kimberly, I must disagree strongly about the job Bernanke has done. His only redemption is that he is attempting to do the impossible. But that is small comfort, given that the attempts to avert a more severe downturn will, inevitably and as they always has in the past, lead to a bigger crisis in the future. Mal-investment must be liquidated, mis-managed companies must be allowed to be restructured through bankruptcy, and new investment must come from real capital (savings), not from the printing press.
My fear is that through attempting to prevent this, admittedly severe, correction from running its course, the government and Fed are setting us up for the Last Crash.
Considering Ron Paul has been trying to end (or at least audit) the Fed for decades, it’s pretty disengenuous to claim he’s timing his bill to sell his book. More importantly, he doesn’t even have any control over the timing! Barney Frank has been shelving HR1207 for months, even while it’s had hundreds of cosponsors, and now there’s talk of watering it down or attaching it to a bill that will rubber stamp even more undeserved powers for the Fed.
Now, is Ron Paul wanting to audit the Fed as a first step towards ending it? Of course he is, but it’s not like he’s being secretive about his intentions. Besides, there’s only one reason why auditing the Fed would be a first step towards its demise anyway, and that’s if the Fed is neglecting its mission and instead operating for its own gain and the gain of its friends. After all, if the Fed were truly on the up and up and doing such a great job, an audit would only inspire greater confidence in it, correct?
Everyone opposing an audit is already presupposing that the Fed is behaving both competently and benevolently, assuming without cause that it should be given free reign over monetary policy. When it comes to unaccountable institutions with coercive power or special privileges, neither competence nor benevolence are good assumptions; after all, politicians and government bureaucrats (and people involved in quasi-governmental institutions like the Fed) have the same exact selfish incentives as the most cutthroat of capitalist CEO’s. The only real difference is, bureaucrats, officials, etc. don’t have any competition or consumer-based check on them limiting their power or the amount of damage they can do. Because there is not even a threat of competition (let alone actual competition), these people have no material incentive to do right by the public. In fact, incompetence and corruption are incentivized, partially [but not nearly entirely] because underperforming government agencies and quasi-governmental agencies are given MORE money and power when they’re performing poorly. Let’s not even get into the fact that these positions of power naturally attract and favor narcissists and psychopaths above all others. Anyone favoring the status quo – a never-ending grant of trust without any accountability – is relying on circular logic at best, or has a serious conflict of interest at worst.
You say, “Secrecy was needed last year to allow banks to apply for liquidity from the Fed without fear they would be tagged as failing banks.” News flash: They actually were failing banks, and they deserved to fail. They should have failed. We would all be ultimately better off if they had failed. That would have meant greater business for responsible banks in time, but instead, we’re killing ourselves to save banks run by idiots who don’t deserve our help. I’m sure THAT will encourage them to be more responsible in the future, won’t it? Have you never heard of moral hazard, and do you have no understanding of the way incentives work? “When you subsidize something, you get more of it.”
Anyway, it’s ridiculous to claim that the Fed “acted quickly and creatively to pull the economy back from the brink of a major depression.” Oh, so some of its buddy banks it spent all of OUR money saving are doing okay now (for now…). That’s just dandy. Does that really mean they saved the economy, or did they just save a few of their rich buddies’ hides? It goes without saying that spending trillions of dollars is bound to save SOMEONE, but that comes at the obvious expense of others. Real economic indicators are still horrendous. Just to start with, how’s unemployment doing? Sure, unemployment is among the last things to recover, but what about commercial property loans and rentals? How are they doing? (Hint: The Fed didn’t save anything worth saving, and the worst is most likely yet to come.)
On top of all that, let’s not even speak of the national debt. Just keeping up with the interest on our national debt is costing hundreds of billions in taxes annually ($412 billion last year, if I’m not mistaken), and we’re quickly approaching the point of no return. It was already likely to crush us, but it’s now becoming an inescapable doomsday scenario thanks to the last twelve months of utter insanity.
Besides, no matter who the Fed bailed out, its actions were the exact opposite of what the economy needed in the first place. We didn’t need to restart the credit bubble, because that’s exactly what got us into this mess: People and businesses are over-indebted to the point where they can’t pay their bills, and it’s the result of a pervasive inflationary monetary system and monetary policy that punishes saving and provides perverse incentives to borrow and spend incessantly. This pattern is completely unsustainable, and it leads to unnecessary and painful booms and busts. Sooner or later, the bills come due. Even if we managed to postpone that day of reckoning yet again (and we’re not out of the woods yet), we’re going to have the greatest financial crisis of all time on our hands next time, and that’s before factoring in the national debt.
…but yeah, you’re right, Ron Paul just wants to sell his book, and we should indefinitely let the Fed do whatever they want without ever holding them accountable, just like we have for the past ninety-six years.
That, mini-me, is da truth. Amen.
The current financial crisis has removed the blinders from much of the foolishly trusting public (myself included). The will to audit the Fed has become mainstream among a large educated base, thanks to the free flow of information on internet unrestricted by corporate filters and by the tireless efforts of those trying to educate the public on this subject. I am confident that knowledge on this subject has already passed a critical mass within the population that will result in prevalence of liberty over tyranny despite well funded efforts to the contrary. I only wish I’d seen sooner, better late than never. End the Fed and return to a constitutional monetary system! Thanks Ron Paul for the decades of effort you put into this issue, you are a great patriot and a gift to future generations.
This is OK. Kimberly Amadeo has officially stuck her flag on the side of the Fed and the financial establishment; NOT on the side of the people that are forced to pay interest on money loaned to their corrupt government by the Fed.
Nearly every portion of Ms. Amadeo’s article has flaws. For the sake of saving your time and mine, I’ll only point some of the major ones.
1) The Title: “Don’t Punish the Fed With an Audit”
This should instead read, “Don’t Punish the Fed with Accountability”, because that’s what an audit, an after-the-fact accounting, does. Imagine if we, the taxpayers, told the IRS not to punish the People by auditing them. We have to show them how our books but they don’t have to show us theirs? And to say that auditing the Fed is involving Congress in monetary policy is a total farce. The audit would occur many weeks, if not months, after the Fed’s actions.
2) “The Federal Reserve has acted quickly and creatively to pull the economy back from the brink of a major depression.”
By “creatively” do you mean artificially lowering interest rates, or FOMC operations with other nations and central banks? What the heck else were they supposed to do? Keep rates at least partially lower than they should be? Raise them higher to save confidence in the dollar? Heck no! These are long-term problems and too complicated for our short attention spans. So the Fed reduces interest rates to nothing and presses on the printing press gas pedal.
3) “Secrecy was needed last year to allow banks to apply for liquidity from the Fed without fear they would be tagged as failing banks.”
The words “secrecy” and “open-market capitalism” are opposite of one another. I just thought I’d throw that one out there. You can’t have true free market capitalism if you have certain major sectors operating under “secrecy” as ordained by the government, mainstream media, and so-called “expert” bloggers such as Kimberly Amadeo; and others that have to own up to the regulations of the market itself.
Secrecy is needed to protect those that apply for credit, lest they be seen as less than credible? Is that not what the free market is about in the first place? For investors to make judgments on where to invest their hard-earned capital based on the best information available? Why would they want to invest it in a bank or other institution that over-leveraged itself and can no longer function? Kimberly Amadeo, a spokeswoman of the Fed, is saying is that she wants investors to keep investing in a lie! Don’t look at the books of your investment! You don’t want to know where they are allocating their resources! Moreover, if you try to press us on how we operate, we will threaten you with higher interest rates, ala Nicholas Biddle (http://www.buyandhold.com/bh/en/education/history/2002/a_jackson_pt_4.html)
Ms. Amadeo,
You say “End the Fed” like that’s a bad thing. Why, is it because of their phenomenal record in meeting their mandates? Ha ha. Oh man, I crack myself up sometimes. Would you really have us believe on pure speculation that if it wasn’t for the Fed the economy would be in a perpetual state of chaos, as opposed to historical fact that since the Fed… we’ve lost 95%+ value of the dollar, been subjected to perpetual boom-bust cycles and the occasional major crisis?
Ummm… No thanks! I’ll take my chances with an honest money system, transparency and faith in the free market.
From my perspective it comes down to a very simple question;
Whom do you believe?
Dr Paul, or,
A group of international bankers.
The answer is obvious.
this artical is a joke, right?
The Fed didn’t prevent jack squat. This crap starts with bubbles they create. You lauding them is like lauding a drug dealer for first getting the junkie high and then keeping him high enough to avoid withdrawal symptoms for as long as possible before he inevitably dies from such solutions. You can’t have an economy that borrows mostly to consume products from the lenders! It creates a 100% dependency that will end badly when the lenders lend to themselves for products instead of paper, and the dependent is finally kicked to the curb.
Soon you will learn that it was the Fed that bailed out its buddies and screwed the citizens of the United States……
you will learn that because of credit default swaps, banks were able to make money writing bad loans and make even more money placing those loans in our nation’s pension funds
you will learn that by bailing out the banks, instead of making it easier on citizens to borrow, the Fed encouraged banks not to lend by paying interest on Fed deposits
not only are the banks not lending, but they are jacking up interest rates on existing loans on the same citizens that bailed them out.
you will also learn that Benny B’s buddies sold swaps they knew would fail to cities, counties and states destroying the savings of our citizens
you will learn because of swaps and the bankers having total control over whether they payoff or not and whether the loans default or not, many of our pension funds and municipalites are broke for playing a rigged game
to add insult to injury, Benny B is basically giving the banker buddies practically free money while they are loaning billions to our cities and states at much higher interest.
you will learn that there is absolutely no reason why a municpality shouldn’t be bailed out in the same or better fashion than the bankers who are screwing the citizens
ask yourself this, why can bankers lie about their finanicial condition and borrow and make loans but if you did the same thing you would go to jail???????
The bankers will not go down easy…..the people will get mad once they learn they are broke and hopes for retirement have been stolen.
The bill is designed to protect the FED, so the audits wouldn’t even take place until possibly 5 years after the FED makes any decision. How does that equate to the FED needing Congressional approval?
Also, you assume the bailouts were something that actually helped the economy. You, like so many others, still believe Americans will solve their debt problem by spending more.
What is “innovative” about printing and borrowing money? Regardless of the acronyms used, that is all the Fed’s actions amount to.
Perhaps Ms. Amadeo would like to enlighten us on how all of the borrowed money is going to be paid back. Or how all of the “liquidity” put into the system is going to be taken out without casuing an even worse downturn or massive inflation.
But then, I guess she hasn’t thought that far ahead.
As far as protecting insolvent banks, the Fed’s actions have merely assured that a “lost decade” Japanese style is in our future. Why should banks that are insolvent be allowed to hide that fact from
their customers?
” I have a lot of respect for how Bernanke has handled this crisis. ”
This of course demonstrates that you are part of the problem. Bernanke is merely delaying the measures that we will have to take, by opening the floodgates and creating trillions of dollars out of thin air. If he manages to re-inflate this bubble, the next crash will be far worse. It’s the same thing that Greenspan did when the dot-com bubble collapsed.
-jcr
It is people like you who have conned the sheeple to think that the Fed and our government actually care about us (the people).
Somehow even if Senator Paul’s bill passes the powerful elite banksters will not allow it and will block the audit at every level. They know if the truth comes out that Bernanke, Paulson and the men behind the curtain could be prosecuted and sent to prison. That will never happen.
America and the world have been swindled and there is not much we can do other than to END THE FED, stop the NWO and then try to get on with out lives.
Personally I am preparing for the Revolution.
I agree with The Economist which says:
“Since 2008 the Fed has lent to firms previously ineligible for its credit and bought up government bonds with newly printed money. Although almost certainly saving the economy from an even worse mess than it is now in, those actions have reawakened a long-dormant streak of scepticism towards the central bank. Americans and Congress are upset about reckless bankers, failed regulators and bail-outs. The Fed makes a proxy for all three.”
The banks who made the bad loans in the first place should have been audited more stringently years ago. Auditing the Fed now is like building a dam after all the water has run out.
Banks have received all this funding, and are still not lending. That is something that everyone seems to be overlooking in national debates. Until banks lend, the economy will not recover.
The economy had a cardiac arrest last year. It’s still not doing jumping jacks. Punishing the doctor because of the patient’s poor lifestyle isn’t going to help it recover.
Kimberly
Ms. Amadeo,
Ron Paul has been talking about ending the Fed for 3 decades but people like you, drunk at the punch bowl, haven’t bothered to listen. Then you write a piece like this to say he is just promoting a book? Do a little homework first before you choose to put your thoughts on the web.
Ron Paul:
1. Has never voted to raise your taxes
2. Ron Paul has never voted to take away your civil liberties.
3. Ron Paul follows the Constitution (what a concept)
How can a secretive monetary policy co-exist in a free country?
Oh ya, if you think the Fed pulled us out of dark times, I have a ocean in Egypt to sell you. Apparently there is absolutely nothing these idiots could do that would convince you that they screwed up. Do you even take the time to look at Bernankes track record? Has he ever been right?
—
This was priceless..
“In general, there is nothing wrong with an audit. But the economy is still on the precipice of sliding back into recession. ”
–
You really think things have IMPROVED?
Wow.
I would challenge you to watch Money Master (on google video) then come back and post your thoughts.
“The banks who made the bad loans in the first place should have been audited more stringently years ago. Auditing the Fed now is like building a dam after all the water has run out.”
..
The banks who made these loans did so because of a huge moral hazard. They knew they were going to get bailed out. No sane CEO would take these huge risks w/o a govt. guarantee. Ever heard of the Greenspan Put?
–
Banks have received all this funding, and are still not lending. That is something that everyone seems to be overlooking in national debates. Until banks lend, the economy will not recover.
..
No, That is the free market working. They shouldn’t be lending right now. That would simply keep inflating the bubble. The economy still has a ways to fall.
–
The economy had a cardiac arrest last year. It’s still not doing jumping jacks. Punishing the doctor because of the patient’s poor lifestyle isn’t going to help it recover.
..
How much research have you done on the Fed? Why do you think this? Saying The Fed is the doctor is preposterous. Why is it that the dollar was fairly stable for 100+ years and since the Fed’s inception (through inflation), has lost nearly 100% of it’s value. Do you think inflation is a magical force that exists in economics?
Kimberly,
In reponse to your most recent comment–the economy did not have cardiac arrest last year. It had, and still has cancer. That cancer being the bad debt that the Fed swept under the rug.
The banks have “received all of this funding and are still not lending” because they are insolvent. As I mentioned earlier, they are identical to the zombie banks that plauged Japan for a decade. They are in no position to lend. The Feds action did not save the economy, it merely prolonged the agony.
Auditing the Fed is a first step to forcing bad debt into the open so it can be defaulted. Yes, many large banks will cease to exist and that will cause short term pain. But it is necessary for a solvent financial sector which will be capable of supporting economic growth.
Lastly, the Fed has created a huge problem going forward by expanding the monetary base to the extent it has. The only reason we are not seeing inflation now is that the velocity of money is very low due to the lack of lending. If banks were to begin lending the Fed would very quickly have to get the liquidity it has created out of the system or risk massive inflation. Will this Fed have the courage to raise interest rates to do that? Or will they wait until unemployment goes down, which will of course be too late since unemployment is always a lagging indicator.
Ms. Amadeo,
You might visit http://www.webofdebt.com. Ellen Brown’s book, blog and articles are a great resource for those who dare to understand the secretive central bank and its shadowy operations. For most, the truth is too scary to contemplate.
Personally, I think the fed should be audited. And I support Ron Paul’s efforts to get to the bottom of this mess. However, I have to make a comment on some of the responses here, even though I agree with the opinions, people should have more respect for the author here. She is just stating her opinion, which we are all entitled to do. If you want to respond, make your response educated and don’t resort to name calling. I don’t agree with Kimberly, but I support her right to state her opinion here.
Winds of Change
Having read all of the contributing comments regarding the Fed, the overall theme seems to be to do away with it altogether. Based on these comments and some research, it became clear that the Federal Reserve is in essence a private company made up of, by, and for Banks, with the authority to control money supply. Their system is deep and globally entrenched. Abolishing the Fed would cause a number of ensuing problems, similar to pulling up weeds from a flowerbed – if not careful, beautiful flowers may be pulled up, too.
It seems to me that if we want transparency and a system that works for the people, then we need to install a change in leadership on the boards of the 12 regional Banks – leaders who know they were installed by us and therefore will listen to us. And this is how we can do it:
Some of the largest shareholders of the Federal Reserve, and institutions of particular interest to the Fed, are: American Express, Bank of America, Bank of NY Mellon, Citigroup, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, State Street, SunTrust, US Bank, and Wells Fargo. What should we do to get the Fed’s attention?
1) Dump these shares. If their market caps declines enough, they know they may become takeover targets;
2) If you bank with one of these companies, move to a bank not on this list, preferrably to a local unlisted bank. (1) and (2) will change the dynamics of power in their respective Fed region;
3) Stop borrowing. Banks make money from interest on loans. No loans, no income. Besides, what have they done for us lately, anyway;
4) Reduce credit card use by getting involved in or creating a barter community. There are so many good items in our possession that we can exchange for ones we want – even services: piano lessons for baby sitting, cutting grass for auto services, security services for meals, etc.;
5) Have your municipality organize yard sales in area rotation. In this way, everyone in town will know where to go for sales. This is a cheap way to find the things you need without using a credit card, thus, cutting in on Bank fees;
6) Retailer owners, let’s get back to the lay-away system. You still make the sale, and no credit card required.
Even if Banks raise interest rates on account of such measures due to declining revenue, we are smart enough to find collective ways to counter that, too.
If we cut into bank earnings and capitalization enough, we will eventually get their attention. We can keep in touch as to how it goes through this blog. Spread the word.
Any other thoughts or ideas?
Are you kidding me????? It’s the Fed that got us into this mess in the first place!!! I for one would like to know where all that money went. What would people do if we all found out that the Fed has been doing backroom deals with foreign entities without our knowledge? What then?
You have to be joking?? The fed is the most corrupt organization out there. They do not want to be audited becuase they are so corrupt. Our money is worth 90% less due to the fed. Our wages have not increased since the 1970s.The things you need to like a house,car, food, gas,insurance are so expensive for the poor and middle class due to fed meddling in the economy!Everyone has to max their credit card just to get by…..wake up!!!!!
Imagine, if you will, that a neighbor (Fred) knocks on your door and says, “I have been selected by the government to control how much money you get to spend, how much it’s worth, and essentially, what you get to spend it on. Now hand over your credit cards, wallet, cash, etc.”
After doing so, you discover a few years later that your savings, which you were going to send your children to college with, was gone. Not only that, but your credit was shot, as all your cards were maxed out, and some time ago you started missing payments. “To whom..?” you wonder. But you won’t know because guess who does all the talking? That’s right, Fred.
Curiously, you discover that your purchasing power has dwindled, for what used to cost $100 now costs $900, for the same product.
Finally, after all your savings, purchasing power, credit, and heck, reputation went out the window, you corner Fred and ask him, “Fred, what the heck is going on?”
Then suddenly someone hands you a piece of paper, entitled, “Don’t punish Fred…”
Kimberly Amadeo the Fed has not pulled the economy out of a depression, it is merely delaying the inevitable by creating YET ANOTHER ARTIFICIAL BUBBLE. If you knew actual economics and ignored the propaganda you would know that.
And Paul has been against the Fed for a very, very long time, he wrote the Fed Audit bill AND his book because he sincerely does wish to end the Fed. That was just a silly smear.
Just wants to sell his book, yeah? Yeah, the guy that rejects the congressional pension plan and returns a portion of his salary back to the treasury every year is clearly a profit-crazed entrepreneur, who hasn’t been on the Fed’s case already for decades?
I know an audit of the Fed will be the means to an end. I hope the good people like Ron Paul and others will start working on the legislation now to END THE FED. This way we can be ahead of the game. If the audit is done honestly then the truth will come out and americans will be ready to get out from under these criminals. We can get this done quickly. I am trying to think positively, but my gut is hoping the revolution will not be too bloody.
First and foremost, taxpayers have a right to know how their government is spending their tax money. And yes, price inflation is taxes, as the Federal Reserve chairman himself recently admitted.
But almost equally true, taxpayers also have a right to know whether the federal reserve is engaged in fraud.
If you give a mostly private organization a money printing press and say “we trust you guys will do nothing but good with this and we won’t look at what you do”, you are possibly off-the-wall insane. Anyone therefore who thinks the Fed needs to operate in secret about who is getting their money is off-the-wall insane such as the author of this article.
And lastly its so hypocritical I don’t know what to say in regards to the fact that the US government grants itself monopoly power over the money supply and post office while saying that monopolies are supposed to be illegal and to be avoided. The only thing we can trust our government about is that they will waste at least half the money they get!
Frank is not supporting Ron Paul; he is doing everything possible to oppose the legislation.
The Fed needs to be abolished. It is responsible for the 95% plunge in the value of the dollar since 1913 and feeds every boom/bust cycle with money and easy credit.
Well, this has been an interesting experience. I’ve written about the Federal Reserve for years, and this is the first time people have reacted so vehemently.
I just want to say that I respect everyone’s right to disagree. Say what you like about my article or my position.
However, I have and will continue to delete or edit comments that attack me, my intelligence or question my motives.
Civil discourse relies upon freedom to state differing opinions without fear of personal attack. This is what has made our democracy so great.
Kimberly
Kimberly, you’ve been misled.
In order to prevent the next economic collapse, we must first understand what caused this one. The housing bubble caused it. Yes, the banks inflated the housing bubble by lending too much. But the Federal Reserve shares just as much blame for the bubble, because they’re the ones who provided the money to the banks for lending!
The damage to our economy has been done. There is no fiscal policy that will undo the decade of mistakes that lead us to where we are today. What we’re concerned about is the next market correction. Current Fed policy is distorting the credit market today, which will inevitably lead to the next market correction.
Yes, the economy needs credit to function well. But real credit is based on savings. You can’t create real credit out of thin air. The fact of the matter is that we just don’t have enough savings to make our economy run as smoothly as we’d like. A credit contraction is inevitable, and it’s the only path to long-term prosperity.
Those of us who support an audit of the Federal reserve do so because we don’t want to go through this again. The American people have a right to know what the Fed is up to.
Don’t fall for this article! The writer obviously knows that Ron Paul gets tons of traffic on the Internet because of his popularity. The author coincidentally mentions his name after she’s been getting low hit count on any other article she has written.
She wants more traffic to her article and perhaps by slamming Ron Paul she will get her wish.
So what do you purpose we punish them with?
Tar and Feathers is soo 1776..
To Mark:
I agree with everything you said except for auditing the Fed, especially right now. Yes, it is adding liquidity, and yes, too much liquidity was the problem (you have Greenspan, not Bernanke, to thank for that).
We are experiencing massive deflation. The Fed’s actions are letting the air out slowly, not with a big, cataclysmic bang.
See Economy Deflating Like a Giant Balloon.
Kimberly
To Bill:
Not my motive. To say I wrote this article mentioning Dr. Paul just to get more hits is like saying he sponsored his bill just to sell more books. I retracted my statement.
To John:
I like your sense of humor!
Kimberly
Kimberly: “Well, this has been an interesting experience. I’ve written about the Federal Reserve for years, and this is the first time people have reacted so vehemently.”
The times, they are a’changin! Economics will no longer be relegated to the back pages and Keynesian macro-economics will no longer be accepted as fact. You can thank the financial crisis and the Ron Paul Revolution for that. Whether you are amiable towards free market – and more importantly, sound money- economics or not, I would suggest you read up on the new Ron Paul Constitutionalist idealogical and poltical movement. We are heere to stay.
It’s curious how the author deletes offensive comments about herself, when her original article was an offense to the honorable Congressman Paul.
In a rich and vibrant democracy, truth and falsehood, even if offensive, must be allowed to grapple, not be censored.
Bloggers who cannot endure harsh rebuttals should stay clear of the blogosphere!
Bernanke, “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”
Oops! We did it again! Getting there, anyway.
“You can’t solve a problem with the same mind that created it.” — Albert Einstein
Sadly, these two quotes are inclusive. It’s a shame only a repeat of the Great Depression seems to have the possibility to change the author’s mind. Unless I’m mistaken, then please address it, Miss Amadeo.
Regardless, I’ll leave with this quote.
“He that will not reason is a bigot; he that cannot reason is a fool; and he that dares not reason is a slave.” –William Drummond
There are too many skeletons hidden in the closet for this too happen. Too many people with too much to lose. I really can’t see this taking place.
People do have a right to know what actually is happening with their $$, but as i said above it’ll never happen.
To Nick,
I’m glad economics has become a front burner issue. If it had been in 2004-2007, we might be in this pickle today.
To Senglert,
I changed my comment about Rep. Paul when it was pointed out to me that it was a mark against him, not his ideas.
I don’t agree that the blogosphere has to be a place where people attack each other instead of arguing different points of view.
Kimberly
Kimberly,
I didn’t say the blogosphere “has” to be a place where people attack each other. You chose to personally “attack” Rep. Paul with your initial posting, so you received the wrath of his supporters. If you had done your due diligence and proper editing before posting your attack, you wouldn’t have had to correct your comment or been personally attacked. You set up the “attack” scenario with your original post. You reaped what you sowed.
The phrase “Don’t punish the Fed” in itself is inflammatory and contentious to sound money advocates who contend it is the Federal Reserve that “punishes” the American people through inflation. Why throw gasoline on a fire if you can’t stand the heat?