Why the "Audit the Fed" Movement Is Dead Wrong

Huffpost

This is a classic example of Congress demonstrating it is filled with idiots on both sides of the aisle.

First, all of the Fed's financial information is already online. If you want to find out about the Fed's overall position, click on the above line. In addition, the Fed has a financial audit every year:

The Board of Governors orders an annual external audit of the financial statements of the Board and the Reserve Banks. The current independent auditor is Deloitte and Touche. Each Reserve Bank publishes its audited financial statements, and the Board of Governors publishes the audited combined Reserve Bank financial statements and the Board's financial statements in its annual report to Congress. The Reserve Banks and the Board comply voluntarily with the internal control requirements of the Sarbanes-Oxley Act. The external auditors also perform an evaluation of internal controls over financial reporting.

So -- we already have an audit every year. Why do we need another one?

There are two answers to that question. The first is downright scary:

the Texas Republican's proposal requiring audits of the central bank's interest-rate decisions is getting traction.

The absolute last thing we need is for anyone to second guess the Fed's interest rate decisions. That would make the country's interest rates the whim of politicians. What would happen is easy to predict. Any attempt to raise rates would be stopped cold because someone would object. They would argue "that will hurt one of my constituents." And we'd be left with low rates until inflation destroyed the economy.

The second is people want "transparency" for all the Fed's transactions. This would also be a mistake of epic proportions. Currently -- and for the entire history of the Federal Reserve -- it has engaged in "open market operations." In other words, it has purchased various securities at various times in order to implement monetary policy. This is what all central banks do to carry out their mandate. And again -- the Fed has done this since they were formed; it is standard procedure. Making these trades transparent would tell all of Wall Street exactly what security the Fed is buying. Congratulations -- you have driven up the cost of performing monetary policy. Brilliant.

The audit the Fed crowd has gotten completely out of hand. If their proposals are implemented the US economy will be crippled to the point of economic deadlock. If you thought the economic fallout in 2008 was extreme -- you ain't seen nothin' yet.

I actually agree with the article, and I also see a conspirational angle to this. The audit the fed bill is actually a trigger, the final nail to the coffin to bring down the entire US economy. It's not the cure, it's the final ingredient to the lethal cocktail.

Sometimes it is just better to destroy a rundown house than to try to repair it. Often times it is cheaper in the long run as well.

Then again there is the whole Constitutionality of the situation, Congress is supposed to coin the money and regulate the value. And I feel it would ultimately be in the people's best overall interest for Congress to concentrate on the jobs that it is supposed to do versus finding new things to do that are not part of their job.

Originally posted by Ahabstar
Sometimes it is just better to destroy a rundown house than to try to repair it. Often times it is cheaper in the long run as well.

You're... absolutely right. Sometimes it's better.

Then again there is the whole Constitutionality of the situation, Congress is supposed to coin the money and regulate the value. And I feel it would ultimately be in the people's best overall interest for Congress to concentrate on the jobs that it is supposed to do versus finding new things to do that are not part of their job.

True.

Besides, the national debt is ballooning, it's hard to see for how much longer it can be sustained.

I've said this is a bad idea as well.

I would hate to show our hand to a player that could make us pay for it.

I relate this to a poker game for a simple analogy.

I do not think they will find anything anyway as the juiciest stuff was prob. destroyed long ago.

So... if this is the case and they receive and audit every year and all of the things are public...

Then why is the Fed and Bernanke so adamantly against this? Like hardcore style. If they have nothing to hide then they should stand down and let it happen, because after all, "everything is already public."

I call BS on this as more propaganda against this. I look back to the video from last year where Bernanke refused to name the banks that got the bailout money. Just in that instance alone it was proven that the Fed is hiding something and the American people deserve to know exactly what it is.

reply to post by gwydionblack


It's in the article actually, it's about the central bank interest rate. Ron actually mentioned that in the video in other recent thread. Although in this case, I believe he wants higher interest rate.

That would make the country's interest rates the whim of politicians. What would happen is easy to predict. Any attempt to raise rates would be stopped cold because someone would object. They would argue "that will hurt one of my constituents." And we'd be left with low rates until inflation destroyed the economy.

More than meets the eye isn't it?