Audit the Fed, Then End It!
There are not too many topics that Americans seem to shy away from politically. Unfortunately, however, one of those topics we don’t like to talk about just happens to be the most important. The monetary system in this country receives absolutely no airtime on the major media networks. There is no debate about monetary creation during the presidential races. And, amazingly, most Americans don’t even know where their money comes from and how it receives its value. This is a trend that truly needs to change before America will be able to break the horrid boom and bust cycle of our economy.
Thankfully, because of the current economic crisis, people are beginning to ask questions in an attempt to pinpoint the culprits behind our current financial meltdown. Americans need not look any further than the Federal Reserve, a.k.a. the Fed, if they want to identify the true perpetrators of our current recession. This institution describes itself as a private and public entity that is independent within our government. However, this central bank unfortunately is the most powerful institution within the United States of America. It controls the flow of money through our country and institutes hidden taxes that always are most detrimental to the poor and impoverished. It does this by constantly creating money in order to finance our government’s extravagant and bankrupt domestic and foreign policies, the failure of bankers that have driven their businesses into the ground through excessive debt, and financial institutions that have wasted billions of dollars in investor money. It is true that the Treasury Department actually prints all of our money, yet once printed the money is given to the Fed for distribution. It is also important to remember that only a small portion of the money supply is actually printed. The huge majority of money creation occurs electronically, without anything of value ever being created to back it up. The result of such excessive monetary creation is always inflation. The process of inflation robs each dollar held by Americans of value and therefore results in Americans being able to buy fewer goods than what they previously could. Even the current Fed Chairman Ben Bernanke admitted that the inflation created by the Fed was most definitely a tax.
In fact, inflation could be considered the most regressive tax of all due to its peculiar effects. Because the economy doesn’t recognize the increase in the monetary supply until the money has actually been spent, the ones who get the money first actually reap the benefits of a higher purchasing power. Inflation only occurs after the new money is spent, i.e. inserted, into the economy. Therefore, if $1,000 is created, those who get to spend that money first are actually able to buy more with that $1,000 than those who get to spend it last. And, egregiously, the ones who always get the money first are the government, rich financial experts, and bankers. The ones who get the money last, if they get any at all, are always the poor and destitute. Therefore, the effect of this inflationary tax is regressive, meaning the rich pay a lower tax than the poor.
And even though most major institutions in America must be thoroughly audited every year, the Fed’s most important functions are exempt from review by the Government Accountability Office (GAO). For example, the main tool the Fed uses to regulate lending throughout the US is the Federal Open Market Committee (FOMC). The FOMC facilitates lending by purchasing government securities, which increases bank reserves, thereby reducing the interest rate that banks use to lend money to each other. The Fed also makes direct loans to financial institutions using a discount interest rate. Therefore, FOMC operations makeup the most important and substantial part of monetary operations, and the GAO is not allowed to audit any of these transactions.
Yet another major aspect the GAO is disallowed from auditing is the Fed’s dealings with foreign governments, foreign central banks, and many other foreign financial organizations. Therefore, foreign governments could be influencing our financial system and there is no way for Americans to retrieve any information that discusses how they may be doing so.
If Congress truly wants transparency in our government, they should acknowledge the hard work of Congressman Ron Paul and others by passing H.R. 1207 and Senate version 604. This landmark legislation will give the GAO full power to audit the Fed in its entirety. This will be the first audit of its kind since the Fed was created in 1913. It is about time we find out where all of our money is going. In the words of Ron Paul, “Audit the Fed, then end it!”
