Time to Open its Books to Auditors
It’s time to drag the Fed out from the shadows and open its books to auditors.
The Federal Reserve’s unprecedented intervention into the U.S. economy has inflamed more Americans than almost any other issue in recent memory. More than 75 percent of Americans now support an audit of the Federal Reserve system, and it’s no wonder.
The most conservative estimates place the potential cost of the Federal Reserve’s bailouts and guarantees at about $9 trillion. That is equivalent to more than 60 percent of the U.S. economy, all undertaken by one organization, and almost all of those transactions are exempt from congressional oversight and public scrutiny.
The Fed and its apologists are using bogeymen to deflect criticism. If the Fed were audited, they argue, monetary policy would be compromised as Congress tries to direct the Fed’s actions, and the Fed’s record of economic stability and low inflation would come to an end. Nothing could be further from the truth.
Legislative proposals such as my bill H.R. 1207, the Federal Reserve Transparency Act, merely remove all exemptions from audits of the Federal Reserve and call for a full audit. Every intervention, every bailout, every credit facility would be subject to an audit.
Nothing in this proposal would call on Congress to involve itself further in monetary policy, as that is completely unnecessary. Article 1, Section 8 of the Constitution already grants Congress the power “to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.” Also, Congress already dictates monetary policy to the Federal Reserve through the mandates of full employment and stable prices.
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