When asked about a bill introduced by
Kentucky Senator Rand Paul to “Audit the Fed,” Ms. Yellen declared: “I want to
be completely clear: I strongly oppose ‘Audit the Fed.'”* Ms. Yellen
defended her position on the grounds, which have been given by every previous
Fed Chairman, that oversight would lead to politicized monetary decision making
thus compromising the central bank’s “independence.”
Senate Banking Chairman, Richard Shelby
(R., Ala.) countered the Chairwoman saying “there is an even greater need for
additional oversight” of the Fed since the onset of the financial crisis in
2007.
Ms. Yellen, her predecessors, and every
other Fed apologist are simply wrong when they assert that the central bank is
an independent agency that is free of political influence. The Federal Reserve
System was created by an act of Congress (1913) and can ultimately be
“reformed,” altered, and or abolished by Congressional fiat if so desired.
That Congress does not oversee Fed
policy is a result of its charter, which was originally crafted by the Big
Banksters of the time (mostly the Rockefellers and Morgans) in concert with
their bought for and paid politicians. The lack of oversight was a deliberate
part of their plan to give bankers and financers free reign to conduct monetary
policy for their own benefit.
The Federal Reserve is and has always
been a political creature designed for the benefit of financial elites. It is a
highly privileged cartel with monopoly control of the nation’s money supply.
Unlike the propaganda which emits from Fed officials, the central bank was
instituted to protect banksters from financial collapse and bank runs. Fine
tuning the economy, reducing unemployment, or fighting inflation are all
ancillary concerns for the Fed.
These are the simple facts which are
deliberately kept from the public at large by the political establishment,
academia and the media.
The Audit the Fed movement, which began
in earnest with Ron Paul’s first presidential run, is a wrongheaded approach to
solve the nation’s ongoing financial crisis. Senator Rand Paul’s bill is mostly
grandstanding to bolster his status among the Republican Party’s populist
contingent in his anticipated race for the nomination.
In fact, instead of meaningful reform,
greater public oversight of the Fed would most likely lead to worse results.
Every Congressman and Senator would be pressuring the central bank to fund
their pet projects. Can one imagine what the growth rate of the money supply
would be if 535 ravenous politicians had a say in the conduct monetary policy?!
Those who want to reverse the nation’s
economic malaise should seek the Federal Reserve’s abolition and advocate its
replacement with a de-politicized monetary order free of central banking. Such
a system would most likely be based on a commodity (gold and/or silver) where
“money producers” are free to engage in the creation of the “best money” and
banking services to satisfy customers’ needs.
In such an order, banks would function
as any other enterprise by profit and loss. If banks loan funds wisely, they
will succeed; if not, they will fail and go out of business replaced in the
marketplace by more savvy entrepreneurs. There will be no bailouts at
taxpayers’ expense for reckless financial speculation. Money and banking would
become a sound and honest undertaking.
To actually believe that an Audit the Fed
initiative would become law is beyond naïve. The political establishment will
never voluntarily relinquish or allow any legitimate oversight of one of its
chief pillars of power.
Instead of seeking change via politics,
reformers must first change the climate of public opinion which can only be
accomplished when the prevailing ideology is debunked. Until the Federal
Reserve is seen as an engine of inflation and the creator of economic disorder
which needs to be eradicated, America’s financial woes will, unfortunately,
continue.
* Jon Hilsenrath, “Yellen Puts Fed on
Path to Lift Rates,” The Wall Street Journal, Wednesday, 25February
2015, A1, A2.
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