Wednesday, October 21, 2015

BERNANKE: Rand Paul’s ‘Audit the Fed’ Bill is ‘Very Deceptive’

Former Federal Reserve chairman  Ben Bernanke  gave a blistering rebuke to Rand Paul’s proposed bill to audit the Fed, reports NyPo.

“This is very deceptive — this bill is very deceptively titled,” Bernanke said during a discussion at Nasdaq’s Times Square headquarters to promote his new book, “The Courage to Act.”

Bernanke suggested the bill wasn’t about increasing transparency so much as giving lawmakers more control over the Fed and its monetary policies.

“You’re basically saying that Congress should run monetary policy,” he said. “I always like to say, if you love the way they’re managing fiscal policy, let them run monetary policy.”

On this specific point, I happen to agree with Bernanke.

From the start, I have not been a big fan of the Audit the Fed bill.

 In May 2009, I wrote:

I Smell A Trap

Ron Paul's House bill calling for an audit of the Fed is getting support from the strangest places.

Lew Rockwell today links to a column by Dean Baker who now supports an audit of the Fed.

The problem with Baker's column is that he doesn't quote Ron Paul. He doesn't even mention that Paul introduced the bill. He does, however, mention Elizabeth Warren, who heads a congressional oversight panel, dealing with bailout money.

I've discussed Warren before, her oversight committee went so out of bounds that two members of the five member panel dissented. She is a big time Obama operative. You don't want columnists using Warren as a signal flag to support Paul's bill.


This what Baker would like to see come from an audit:

The proposal for a GAO audit of the Fed is a first step towards reasserting democratic control over this institution...In a democracy, it is difficult to justify a situation in which the most important economic policy making body is, by design, more answerable to the banking industry than democratically elected officials.
I hope Congressman Paul knows what he is doing, to me it sounds like this may evolve into a power play over who controls Fed money printing, rather than an investigation into whether the Fed should be printing money in the first place. If Democrats start signing on to the bill in heavier numbers, it may be a sign that an audit may come, but it will end with a restructured Fed controlled by left wing radicals, who believe money is for handing out and who have no fear of inflation.
My view has always been that the focus should be on ending the Fed, or at least preventing the Fed from expanding the money supply. An audit of the Fed just leaves the door open for all sorts of power players attempting to gain control of the printing presses rather than destroying them. Do we really want Mitch McConnell or Nancy Pelosi (or for that matter Rand) having a say in the money printing?

By all means, audit the gold, audit Fort Knox, but not the Fed. End the Fed.



  1. Central banking is a disaster no matter who runs it. I agree though that End the Fed is a better message than Audit the Fed. Just like End the NSA is better than Reform the NSA.

  2. As if the Fed acts as some kind of check on Congress's profligacy. The Fed is a "creature" of Congress acting on delegated authority. It could be audited or ended tomorrow via legislation. Congress doesn't want that because the Fed provides an element of complexity designed to distract Boobus from the truth, which represents its greatest power and vulnerability, that was summed up by Greenspan when he said "the gov't can never go broke because it (via the Fed) can print up any amount of FRNs necessary to pay any bill."

  3. ─“You’re basically saying that Congress should run monetary policy,” he said. ─

    It's in the Constitution, Ben.

    Section 8 article 5: [The Congress shall have Power] "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"

    You may not *like it*, but the responsibility of setting up monetary policy (i.e. 'regulating the value thereof') belongs to Congress.