Published: Saturday, July 28 2012 12:00 a.m. MDT
As an addendum to my letter, it should be noted that Harry Reid was once a
supporter of a Federal Reserve Audit. You can see a speech where he gives his
reasons on Youtube if you search for "Harry Reid Fed audit". In his
speech he makes the claim that "there's no entity in the world that
controls our lives more than the Federal Reserve System." I point out what
he once believed to show that this should be a bi-partisan issue. It
doesn't belong to Republicans or Democrats. An audit of the fed has been
fought for by progressive democrats like Dennis Kucinich and libertarian leaning
Republicans like Ron Paul.
What will auditing the fed do? Nothing. The Federal Government should abolish it
out right and spend money into the economy debt free and interest free.
@Shaun: and how will issuing debt-free currency solve the inflationary problem
discussed by Mr. King? Won't it enable the government to rob its citizens
even more efficiently of its purchasing power?Auditing the Fed will
let us have a window into how they have manipulated the money supply and
interest rates, and where they have been distributing money and credit (possibly
illegally?). It will, to a great extent, expose the level of crony-capitalism
going on behind government walls. You call that nothing?
Conservatives relying on Keynes? Amazing! Is the irony lost on you?
@Esquire: you'd be surprised how self-contradictory Keynes could be. You
can use his own words against him in a number of topics. That's why it
seems so ironic that liberals trust his pronouncements at all. Keynes was an
economic chameleon, depending on the situation. His General Theory is an
unintelligible collection of contradictory prose. To call it a coherent economic
theory is a stretch.
@EsquireTrust me, no irony was wasted on me this time. My use of
Keynes's words were deliberate. I could have just as easily have quoted
Austrian economist F.A. Hayek stating that "history is largely a history of
inflation, usually inflations engineered by governments for the gain of
governments," but I wanted someone that would not be immediately dismissed
because they're "not mainstream". I've seen too many comment
threads on these pages devolve into hyperpartisan bickering, so I wanted to
quote Keynes to show that this issue cannot be expressed simply as only one
group having the right position. Members of the tea party support a Federal
Reserve Audit. Many members of the Occupy movement do as well. Politicians
ranging from Jim Demint to a younger version of Harry Reid (as I mentioned
above) and even some in between are Fed audit supporters. Why is there
opposition now to even holding a vote?
@ Shaun & SEYI'd like to see the Fed go away but exactly
how? The powers that be won't let it. Furthermore, Lewis v.
United States (1982) states, "the Federal Reserve is privately owned"
So, its as much a Federal Agency as say Federal Express.Its looking
more and more like Jekyll Island, GA in Nov 1910 (creation of the Fed) was the
darkest day in American History.
No reasonable person can deny that the American economy, and even the American
way of life is under attack by a vast conflagration of left-wing extremists.
They have gone so far as to essentially take over the fed.We cannot
allow the fed to continue using its power to support leftist bailouts,
entitlements, and socialistic programs that destroy the economy. These are the
very insidious programs that the leaders of the fed took an oath to fight
against. It is time to hold them to that oath.All patriotic
Americans must demand a full and complete audit of the fed. Its works have been
cloaked in darkness long enough.
David - I agree that inflation is the cruelest tax of all because it punishes
people who do the right thing (work, save, and invest) and as you said it
enables politicians to keep spending money we don't have. The idea
though that we would allow Congress to interfere even more with the Fed is more
frightening to me than no oversight. Do you really want someone like Al Franken
or Patty Murray poking around the Fed's books? I suggest ending the
dual mandate for the Fed to maintain a stable currency and low unemployment
rates (they aren't compatible) or switch back to a convertible currency
(e.g. gold standard) Also, the Fed should stop buying Treasury debt so maybe
we'd have an idea of what the market really thinks the ten year treasury
yield should be.
@Hank Pym: I'm pessimistic about the possibility of eliminating the Federal
Reserve by any outside action. You're right, the fix is in and the powers
that be won't allow that to happen as long as they're in charge. What
will have to happen (and I believe it will eventually) is that the Fed will
disappear when the economy along with the US currency collapses. Both are on an
RE: SEY 10:27 a.m. Agreed. When the eventual happens
will some credit be given to the conflagration of evil lefties known as Occupy
Wall St? ROFL! p.s. In the meantime, I'm off to learn Mandarin.
@red state prideI see your point, but I still believe Congressional
interference is preferable to complete secrecy.A partial audit of the
Federal Reserve in 2011 revealed that they had given more than 16 trillion in
secret loans during 2008. To me, that sort of thing is worth finding out about
even if it is done by a politician seeking political gain. I am almost certain
that a complete audit of the Fed would reveal more secret actions performed by
the Fed. To steal a phrase that big government advocates use when trying to
justify civil rights curtailing legislation like the Patriot Act, "those who
have done nothing wrong have nothing to fear." If the Fed has not done
anything that can't be justified they have nothing to fear. It is only if
they have been bailing out buddies or giving special deals that they should have
cause to worry. If that is the case, than a painful truth is better than a veil
of secrecy which prevents us from ever knowing what is being done.
The Federal Reserve was audited last year, wasn't it? It was found that
this banking institution had given 16 trillion Amercan taxpayers' dollars
was to foreign governments.A full audit is now demanded by more than
two thirds of the House. How dare Harry Reid conspire to prevent a debate and
vote in the Senate. Iime to go Harry!Next year would make a hundred
years of this control of the value of the American dollar (almost always to its
detriment) by a secret organisatin. An hisoric moment and a good time to vote
it out of existence.Meanwhile let's insist on a full audit. An
audit does not give any opportunity for Congress to meddle in he economy (they
do that aleady) but it does show us what the "Reserve" is doing to your
money. Imo their actvities will not survive the full light of day for long.
Great letter, David King, and your follow up comments reinforce your argument
even more fully. The more said about the need for Fed audit and transparency the
better. I give a hearty amen to your observation that "too many
comment threads on these pages devolve into hyperpartisan bickering." It
accomplishes nothing and ruins what otherwise might turn into a decent debate or
discussion. This thread (so far) is different and for that I am grateful.Also a nod to SEY for his astute observations.
If the Fed is to be audited, it needs to be done independent of congress (the
final report goes to them, that is all). Congressional meddling with the Fed
would not be a good thing.As to abolishing the Fed, please point to
the modern economy that functions without a central bank. Was the gold standard
working well for us? For the rest of the world? If so, why abandon it? Were
there no issues with using a gold standard? Were there economic crashes under
the gold standard?I have no problem talking about change. But I
would hate to use our economy as the lab rat. If this is all such a good idea
then other countries should be racing for the same goal. If not, we need to
step back real slowly and ask why.
When we were fighting in Iraq there were whole pallets of $100 bills that were
flown to Iraq and disappeared into "thin air". I don't think any of
the alleged "trillions" the Fed may have used to bail out overseas banks
like Deutschebank "disappeared". We're talking about bankers here.
Has a banker ever just given anyone money? Not any that I know. I reject the
notion that the Federal Reserve is a sinister institution. Incompetent?
Definitely. Go back to the easy money of Alan Greenspan that gave us the dot-com
bubble and the housing bubble and now Bernanke who has given us the new
commodity bubble and zero interest on savings accounts and cd's. I
agree that all will end in a very bad place but Congressional meddling will just
exacerbate the mess that's probably going to come our way. You do
have options. The Swiss franc is pretty solid- buy francs. You can buy gold if
you don't think it is part of a bubble or McDonald's gift cards. You
do have options to show your skepticism.
@Twin Lights: the question shouldn't necessarily be about choosing between
central banking and the gold standard. Neither system will guarantee the absence
of recessions, depressions or panics. They have happened under both. The real
issue is the concept of fractional reserve banking and the excessive credit
spawned by it. The gold standard, when strictly adhered to, should
reduce or eliminate the hazards of excessive credit. The panics that occurred
under the gold standard happened because species payment was suspended for
whatever emergency reason. The result was that speculation increased in a
similar way it did in the recent real estate boom. Eventually, borrowers
defaulted on loans and banks failed, causing panics. It was not the gold
standard at fault, it was fractional banking and excess credit.The
point is that something needs to anchor and limit the money supply to prevent
excess credit from creating booms and their concomitant bust. Economic problems
are not caused by having too little money. They're caused by rapid
expansions and contractions of the money supply. If you can suggest a better way
of minimizing those shocks than by implementing the gold standard, I'd love
to hear it.
SEY has said it with ringing clarity. I would recommend a second reading of his
comment (4:49pm). He's pointed directly to the cause of our economic
problem, which is rapid expansions and contractions of the money supply--and the
source of the problem--fractional reserve banking. A system wherein every single
dollar is borrowed into existence, and it’s owed back with interest.While we may understand that the present currency system “is what
it is” and we have to operate within it, for now… it is educational
to learn more about how this system of creating currency really works.
Good letter. Transparency is always a good thing. Audit the Fed, by all means.
>SEYJust because you can't understand
Keynes' General Theory doesn't mean it's incoherent or
contradictory or inconsistent. It just means that you've haven't done
the requisite background reading in economics.
Why would you want an audit? To get a look at the balance sheet and income
statement? I think those are already available to the public.The
Fed is the central banking system of the United States with the objectives of
maximum employment, stable prices, and moderate long-term interest rates. It
accomplishes these goal using monetary policy, member bank depository
requirements, and the Discount Window.That's it. If the
objectives are not being met an audit will not help. In which case, all that it
needed is to replace the Chairman and the Board of Governors, et. al.It appears those who are calling for an audit actually are concerned with the
whys and wherefores of the poor condition of our economy... as if an audit would
bring to light and solve those problems.
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