Newberg Graphic Online

Guest Opinion: It is time we audited the Federal Reserve

• Published: 9/8/2009 4:43:09 PM

By Robert Swift, Newberg attorney and resident  

House Resolution 1207 calls for a complete audit of the Federal Reserve and removes many significant barriers toward transparency of our monetary system. This bill now has 282 co-sponsors, with support from both Republicans and Democrats. Sen. Bernie Sanders has introduced a companion bill in the Senate, S 604, which will hopefully begin to gain momentum as well.
   The main argument against HR 1207 seems to be that congressional oversight over the Federal Reserve is government interference in the free market. This argument shows a misunderstanding of what a free market is.
   Fundamentally, you cannot defend the Federal Reserve and the free market at the same time. The Federal Reserve negates the very foundation of a free market by artificially manipulating the price and supply of money — the life blood of the economy.
   In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.
   Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-government banks that,  nstead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930s. It has also inflated away the value of currency by more than 96 percent since its inception in 1913. It has invisibly stolen from the poor and given to the rich through this controlled inflation and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problem it was meant to solve.
   Detractors have also argued that the Federal Reserve must remain immune from the political process, and that more congressional oversight would distort their very important decisions. On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the chairman is a political appointee.
   High level officials routinely make the rounds between positions at the Federal Reserve, member banks, and the Treasury, taking care of friends and each other along the way.
   As far as the foolishness of placing complex monetary policy decisions in the hands of politicians — I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over.
   To understand how unwise it is to have the Federal Reserve, one must understand the magnitude of the privileges. It has been given the power to create money, by the trillions, and to give it to friends, under any terms, with little or no meaningful oversight or accountability.
Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so.
   However, it is the responsibility of every member of Congress to represent the interests of the people that sent them to Washington and find out what has been happening with our money. As the branch of government with the power of the purse, Congress has no other reasonable choice when the economy is in the shape that it is in.

  (log in to rate)