Rep. Congressman Grayson Demands Fed Accountability

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Rep. Alan Grayson, D-Fla., is upset that Congress is in the dark about much of the Federal Reserve’s activity. He notes that he asked Fed Chairman Ben Bernanke what happened to $500 billion that the Fed extended in swaps to foreign countries, Grayson writes on the Naked Capitalism Web site. Bernanke’s response: He didn’t know. The $500 billion lent out should have been discussed by Congress, Grayson says. "That is how democracy is supposed to work – not through secret deliberations" of 12 unelected bankers, the members of the Federal Reserve. … That’s the point.

The Constitution grants to Congress power over the currency and power over the public purse strings for a reason, because we are accountable to ordinary citizens through the ballot box. The Federal Open Market Committee isn’t." ~ MoneyNews

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Dominant Social Theme: A reasonable request: Make the Fed accountable.

Free-Market Analysis: More than almost anyone else, recently, Alan Grayson has put Federal Reserve Chairman Ben Bernanke on the hot seat during Congressional hearings. And Grayson has grilled other Fed personnel as well, most notably Inspector General Elizabeth Coleman – a Youtube performance that has now garnered over two million views and several thousand comments.

What Grayson evidently wants as a result of all his grilling, is a Fed that is more accountable to Congress. He seems to believe that if Congress understood and Okayed what the Fed had in mind, then the monetary system would work better, or at least along constitutional lines. Good for Grayson. But now let us turn to a colleague of his and a "fellow traveler."

Former Republican presidential candidate Ron Paul (R-Tex) is one of the most fiercely literate people in the world when it comes to free-market economics. He understands, probably much more than Grayson, that congressional supervision of the Federal Reserve is probably not the answer. Ron Paul believes that central banking doesn’t work no matter who is in charge of it.

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August 4, 2009