Progressives Should Audit the Fed

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There’s no aspect of private life that Progressives won’t regulate. Andrew Napolitano has said, “The air you breathe, the water you drink, the size of your toilet tank, the water pressure in your shower . . . are all regulated by federal law.”

"Progressives" always call for more regulation of the free market, and the current crisis is no different.

Yet, for nearly a century, the Federal Reserve System has escaped the Progressive regulatory impulse. Progressives decline to subject Federal Reserve policy to even an audit. Libertarian Congressman Ron Paul observes, “Congress, although not by law, essentially has given up all its oversight responsibility over the Federal Reserve.”

The Progressive neglect to oversee the Federal Reserve might be ideologically consistent were the Fed a non-profit agency, but the Fed is a cartel of commercial banks consisting of the very crony-capitalist interests that Progressives normally oppose. Libertarians are outraged because government grants the Fed a monopoly to counterfeit — and shouldn’t such political favoritism outrage Progressives too?

With the ten-trillion dollar-plus money supply inflating prices at five percent annually, the Fed creates at least five hundred billion dollars a year in new money. The value diluted by those billions belongs to citizens but goes to cronies. There ought to be Progressive outrage. Where is it?

Progressives fume over the "obscene" profits of the oil industry, whose top-ten revenue companies have a combined profit of only $90 billion. Michael Moore’s Sicko rampaged against the drug industry, whose top-ten profit is only $50 billion. Progressives even demand anti-trust action against Microsoft, whose profit is only $18 billion.

The profits of these productive enterprises are far less than the wealth misdirected by the Fed, which produces only inflation. Yet Progressives, who see capitalist conspiracies under every rock, are blind when the Fed exploits openly.

Much of the Fed’s inflation is absorbed by economic growth, so the Fed’s annual expropriation of public wealth could run into the trillions. If we knew the rate of monetary expansion, we would know the extent of the Fed’s thievery, but as Dr. Paul laments, “We get less and less information regarding the money supply each year.” Shouldn’t Progressives care about this unconstitutional cover-up?

Maybe they’re busy fussing over petty partisanship like Alaska’s "Bridge to Nowhere," which cost less than half a billion dollars — that is, less than one thousandth of what the Fed steals every year. Not that the bridge wasn’t political pork, but the Fed hogs enough to build cities of bacon. Where is the outrage?

Instead, Progressive leaders rally to the Fed. William Jennings Bryan, Godfather of American Progressivism, infamously compared the gold standard to a "Cross of Gold," but then supported the creation of the Fed, which has pilfered over 95% of citizen wealth — a wasting financial disease that the gold standard inoculated against.

Today’s Progressives continue the tradition of condemning the free market but never the Fed. For example, Paul Krugman’s criticism of the Fed during the current crisis is that it didn’t regulate the market enough.

Speculation bubbles aren’t inflated by lack of regulation, they’re inflated by too much money, coming from too much credit, caused by keeping interest rates artificially low. In our not-so-free market economy, interest rates are controlled by the Fed — a fact acknowledged incessantly in the financial news media. How can Progressives overlook the Fed’s fingerprints on the money pump?

Perhaps sincere Progressives should evaluate whether their movement has been misled by shills for the Fed.

For example, PublicEye.org (“Researching the Right for Progressive Changemakers”) declares it a "myth" that the Fed has never been audited — but admits there is no audit of “deliberations, decisions, or actions on monetary policy matters.” Why is that okay? “To insulate the central bank’s monetary policy functions from short-term political pressures.”

Huh? Progressive leaders protest when private interests allocate private funds in confidence, but the Fed’s private bankers allocate public funds in absolute secrecy and Progressive leaders approve. If you’re a Progressive, shouldn’t that contradiction unsettle?

If you wonder where the outrage is, libertarians can show the way.

Joe Schembrie [send him mail] is a writer who lives in Bellevue, Washington.

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