The Real Reasons Behind Fed Secrecy

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Last
week I was very pleased that the Financial Services Committee held
a hearing on the Federal Reserve Transparency Act, HR 1207. The
bill has 295 cosponsors and there is also strong support for the
companion bill in the Senate. This hearing was a major step forward
in getting the bill passed.

I was pleased
that the hearing was well-attended, especially considering that
it was held on a Friday at nine o’clock in the morning! I have
been talking about the immense, unchecked power of the Federal Reserve
for many years, while the attention of Congress was always on other
things. It was gratifying to see my colleagues asking probing questions
and demonstrating genuine concern about this important issue as
well.

The witness
testifying in favor of HR 1207 made some very strong points, which
was no surprise considering the bill is simply common sense. It
was also no surprise that the witness testifying against the bill
had no good arguments as to why a full audit should not be conducted
promptly. He attempted to make the case that the Fed is already
sufficiently accountable to Congress and that the current auditing
policy is adequate. The fact is that the Fed comes to Congress and
talks about only what it wants to talk about, and the GAO audits
only what the current laws allow to be audited. The really important
things however, are off limits. There are no convincing arguments
that it is in the best interests of the American people for anything
the Fed does to be off limits.

It has been
argued that full disclosure of details of funding facilities like
TALF and PDCF that enabled massive bailouts of Wall Street would
damage the financial position of those firms and destabilize the
economy. In other words, if the American people knew how rotten
the books were at those banks and how terribly they messed up, they
would never willingly invest in them, and they would fail. Failure
is not an option for friends of the Fed. Therefore, the funds must
be stolen from the people in the dark of night. This is not how
a free country works. This is not how free markets work. That is
crony corporatism and instead of being a force for economic stabilization,
it totally undermines it.

If the Fed
gave its actual arguments against a full audit, they would not have
mentioned anything about political independence or economic stability.
Instead they would admit they don’t want to be audited because
they enjoy their current situation too much. Under the guise of
currency control, they are able to help out powerful allies on Wall
Street, in exchange for lucrative jobs or who-knows-what favors
later on. An audit would expose the Fed as a massive fraud perpetrated
on this country, enriching a privileged few bankers at the top of
our economic food chain, and leaving the rest of us with massively
devalued dollars which we are forced to use by law. An audit would
make people realize that, while Bernie Madoff defrauded a lot of
investors for a lot of money, the Fed has defrauded every one of
us by destroying the value of our money. An honest and full accounting
of how the money system really works in this country would mean
there is not much of a chance the American people would stand for
it anymore.

See
the Ron Paul File

September
30, 2009

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

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