Sen. Rand Paul, R-Ky., continuing a campaign launched decades ago by his father, Rep. Ron Paul, R-Texas, is promising to hold up Obama administration nominees to the Federal Reserve unless a program to audit the massive money machine moves forward.
In a letter to Senate Majority Leader Harry Reid, Rand Paul linked the approval of the nominees to his proposed S. 209, the Federal Reserve Transparency Act.
“I am writing to convey my objection to floor consideration of the pending nominations to the Federal Reserve System … without also considering legislation to bring much-needed transparency to the Fed,” Paul wrote.
“As the Senate debates the Federal Reserve Board nominees, there is no more appropriate time to provide Congress with additional oversight and scrutiny of the actions and decisions of the central banks. Therefore, I request that my bipartisan legislation, S. 209, the Federal Reserve Transparency Act, be scheduled for an up or down vote concurrently with nominees to the Federal Reserve Board of Governors,” Paul wrote.
“My bill calls to eliminate all restrictions placed on Government Accountability Office (GAO) audits of the Federal Reserve. The Fed’s credit facilities, securities purchases, and quantitative easing activities would also be subject to Congressional oversight. Similar legislation passed 327-98, with bipartisan support, in the House of Representatives on July 25, 2012. This same bill has been stalled in the Senate for more than three years,” he wrote.
Without the audit?
“I will object to any unanimous consent agreement or the waiver of any rule with respect to these nominees without a vote on S. 209. I know you have been an outspoken proponent of Federal Reserve transparency in the past, and I hope we can work together to pass this important legislation,” he said.
WND reported in late 2013 when Janet Yellen was nominated to be chairman that Paul also pushed for a positive response to his “Transparency Act.”
At the time, he said, “The American people deserve transparency from the Federal Reserve and the federal government as a whole.”
Then, it would have required 60 votes in the Senate to approve a candidate, but Democrats in the Senate soon changed the rules so that a simple majority is all that’s needed.
Former Fed chairman Alan Greenspan admitted, in an interview last fall, that experts knew there was a bubble in the economy just before the market crashed in 2008.
He said the episode convinced him that there was something “fundamentally wrong” with the way he was looking at the economy.
See Ron Paul’s comments:
And see Greenspan:
Paul has followed in his father’s footsteps, introducing an audit-the-Fed bill to Congress, where a similar plan previously passed the House.
Rep. Paul Broun, R-Ga., was a staunch ally of Rep. Ron Paul’s legislation to audit the Fed and sponsored a bill identical to the one that easily passed the House in the 112th Congress.
Broun told WND: “We should audit the Fed. Hopefully we get rid of the Fed, and I introduced a bill to do that also.”
Broun said it’s remarkable that the public knows virtually nothing about an institution with so much power over the economy.
“Congress has basically abdicated its duty to control money and the monetary supply and control of our money supply as a nation over to this semi-governmental agency that’s not really governmental,” he said. “In reality, we have had no auditing. We have absolutely no idea what they’re doing over there.
Some of Ron Paul’s concerns about the Federal Reserve were based on Article 1, Section 8 of the Constitution, which assigns to Congress the right to coin money.
There is no mention in the Constitution of a central bank, and it wasn’t until the Federal Reserve Act of 1913 that the Fed was created.
Ron Paul previously has said: “Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy.”
He proposed repeatedly the idea of auditing the Fed to determine exactly what it has been doing and then begin making corrections. With a book titled “End the Fed,” he’s made no secret of his ultimate goal.
That the Fed is at least partly to blame for the financial problems that have developed in the U.S. seems not to be in dispute.
It was longtime Fed Chairman Bernanke who admitted as much.
Bernanke said it was the Fed that caused the Great Depression, the longest and worst depression ever experienced by the industrialized Western world. While originating in the U.S., it ended up causing drastic declines in output, severe unemployment and acute deflation in virtually every country on earth.
At a Nov. 8, 2002, conference to honor economist Milton Friedman’s 90th birthday, Bernanke, then a Federal Reserve governor, gave a speech at Friedman’s old home base, the University of Chicago.
After citing how Friedman and a co-author documented the Fed’s continual contraction of the money supply during the Depression and its aftermath – and the subsequent abandonment of the gold standard by many nations to stop the devastating monetary contraction – Bernanke said:
Before the creation of the Federal Reserve, Friedman and [Anna] Schwartz noted, bank panics were typically handled by banks themselves – for example, through urban consortiums of private banks called clearinghouses. If a run on one or more banks in a city began, the clearinghouse might declare a suspension of payments, meaning that, temporarily, deposits would not be convertible into cash. Larger, stronger banks would then take the lead, first, in determining that the banks under attack were in fact fundamentally solvent, and second, in lending cash to those banks that needed to meet withdrawals. Though not an entirely satisfactory solution – the suspension of payments for several weeks was a significant hardship for the public – the system of suspension of payments usually prevented local banking panics from spreading or persisting. Large, solvent banks had an incentive to participate in curing panics because they knew that an unchecked panic might ultimately threaten their own deposits.
It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon’s infamous “liquidationist” thesis, that weeding out “weak” banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks – which would have intervened before the founding of the Fed – felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view.
In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn. …
History records that in 1913 President Woodrow Wilson approved the Federal Reserve Act but later reflected that his actions “unwittingly ruined my country.”
Wilson said that since the U.S. system of credit is concentrated in the hands of a few, “we have become … one of the most completely controlled and dominated governments in the civilized world.”