WaPo Afraid of Ron Paul

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Here is the interesting part of a terrified editorial from the Washington Post, the house organ of the Fed and the DC power elite, on Ron’s Audit the Fed amendment:

Whatever good [the financial regulation bill] might do would be canceled out by the inclusion of Texas Republican Ron Paul’s proposal to subject the Federal Reserve’s monetary policymaking to regular audits by the Government Accountability Office, an arm of Congress.

Supporters suggest that the measure would merely provide “transparency” for a secretive, powerful institution. But for all its wide, bipartisan backing, this is anything but a prudent or centrist law. In fact, it is an attack — born of crisis and the attendant emotions — on the political independence the central bank must have to do its job.

The case for political independence at the Fed is elementary. Elected officials, such as members of Congress, are inherently loath to tighten the supply of money available to their constituents, even when that might be necessary to fight inflation. U.S. experience, and that of countries around the world, confirms this, which is why Congress exempted the Fed’s money-supply decisions from GAO scrutiny in a 1978 law. Mr. Paul’s proposal would effectively repeal that. Investors already spend enough energy and money trying to figure out where interest rates are heading without this additional dose of permanent uncertainty. Trust in the Fed, and, by extension, the dollar, will evaporate if markets believe that the Fed is courting the approval of Congress’s auditors.

Mr. Paul doesn’t care; he’s an “end the Fed” man. In the past, other members of Congress have basically just humored him. It’s a sign of the times — and not a good one — that they have been Fed-bashed into following him now.

Of course, the link to Ron’s great book is mine. BTW, a good rule of DC thumb is to be for whatever WaPo is against. It’s sort of all you need to know. And thanks to Travis Holte.

10:56 am on December 19, 2009