On Transparency of the Fed

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This
week the Federal Reserve responded to the American people’s
increased concerns over our monetary policy by presenting new initiatives
aimed at enhancing the Fed’s transparency and accountability.
As someone who has called for more openness from the Fed for over
30 years, I was pleased to see the Fed acknowledge the legitimacy
of this need.

The Federal
Reserve controls the flow of money and credit in our economy because
Congress has abdicated its responsibility over the nation’s
currency. This process therefore occurs centrally, and almost completely
outside the system of checks and balances. Because of legal tender
laws, people are left with no real choice, except to build their
lives and futures around this monopoly currency, vulnerable to powerful
central bankers. The Founding Fathers intended only gold and silver
to be used as currency; however, inch by inch over the decades,
this country has backed away from this important restraint. Our
money today has no link whatsoever to gold or silver. For many reasons,
this is extremely dangerous, and has a lot to do with the boom and
bust cycles that have resulted in the crisis in which we find ourselves
today.

The Fed is
now pledging to reveal to the public more about its economic predictions,
and calls this greater transparency. This is little more than window-dressing,
at best, utterly useless at worst. Many analysts, especially those
familiar with the Austrian school of economics, saw the current
economic crisis coming years ago when the Federal Reserve was still
telling the American people their policies were as good as gold.
So while it might be nice to know what fantasy-infused outlook the
Fed has on the economy, I am much more interested in what they are
doing as a result of their faulty, haphazard interpretation of data.
For instance, what arrangements do they have with other foreign
central banks? What the Fed does on that front could very well affect
or undermine foreign policy, or even contribute to starting a war.

We also need
to know the source and destination of funds provided through the
Fed’s emergency funding facilities. Information such as this
will provide a more accurate and complete picture of the true cost
of these endless bailouts and spending packages, and could very
likely affect the decisions being made in Congress. But with so
much of the Fed’s business cloaked in secrecy, these latest
initiatives will not even scratch the surface of the Fed’s
opaque operations. People are demanding answers and explanations
for our economic malaise, and we should settle for nothing less
than the whole truth on monetary policy.

The first step
is to pass legislation I will soon introduce requiring an audit
of the Federal Reserve so we can at least get an accurate picture
of what is happening with our money. If this audit reveals what
I suspect, and Congress has finally had enough, they can also pass
my legislation to abolish the Federal Reserve and put control of
the economy’s lifeblood, the currency, back where it Constitutionally
belongs. If Congress refuses to do these two things, the very least
they could do is repeal legal tender laws and allow people to choose
a different currency in which to operate. If the Fed refuses to
open its books to an audit, and Congress refuses to demand this,
the people should not be subject to the whims of this secretive
and incompetent organization.

See
the Ron Paul File

February
25, 2009

Dr. Ron
Paul is a Republican member of Congress from Texas.

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