Anything Less Than Full Disclosure Is Unacceptable

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Last week a
new bill was introduced in the Senate to audit the Federal Reserve.
Some backers of my bill HR1207 and the existing Senate companion
bill S.604 were a little miffed at this, but depending on how you
think about it, this new legislation poses no great threat to our
efforts.

With the economy
in shambles, people are looking for answers — not just because
of lost savings on Wall Street, but because of lost houses on Main
Street. Because of the many problems we face, the Federal Reserve
and its powers over the economy have come under scrutiny. This translates
into a lot of political pressure on Congress. With all the House
Republicans signed on as co-sponsors and over half of the Democrats,
HR 1207 has enormous bipartisan support. It would be disingenuous
for Washington not to embrace the principles behind this bill after
all the promises for transparency. How can one credibly argue for
more transparency in government in one breath and defend the secrecy
of the Federal Reserve in the next?

However, there
is still very powerful resistance to the disclosures that HR 1207
would require and efforts to weaken it will continue to pop up before
this issue is settled.

The good news
is that Washington is responding and the Federal Reserve has become
the issue. Concerned Americans need to keep the pressure on by continuing
to define what we want, and what we do not want.

One major concern
is that HR 1207 constitutes some kind of power grab for Congress.
Congress would not do a better job dictating interest rates or managing
money supply growth than the Federal Reserve does for exactly the
same reasons: Congress is not the free market. Any select group
of people, no matter how wise and educated, simply cannot replace
the wisdom of the market. HR 1207 does not seek to replace the wisdom
of the Fed with the wisdom of Congress. That would be a giant step
backwards. HR 1207 simply asks for full disclosure, and I am agreeable
to allowing for a reasonable lag time to calm the fears that Congress
intends to dictate monetary policy.

What we do
want, what we insist upon, is that no longer will decisions that
carry so much economic weight be made in absolute secrecy. We want
to know what arrangements the Fed makes with other governments and
central banks. We want to know who is benefiting from the actions
of the Fed and what deals are being made. The Fed is already reacting
to pressure by scaling back its liquidity facilities and returning
to more traditional monetary policy through direct asset purchases.
With nearly $800 billion in mortgage-backed securities on its books
already, $800 billion in Treasury securities, and no real limit
to what the Fed can acquire, there is a tremendous opportunity for
malfeasance. We need to know who the Fed deals with, what they buy,
how much they spend, and who benefits. As good as any step towards
Federal Reserve transparency is, anything less than full disclosure
at this point is unacceptable.

See
the Ron Paul File

October
30, 2009

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

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