Liberal leaders in the country are beginning to express their discontent with Senator Rand Paul‘s newly introduced “Audit the Fed” bill. The bill was introduced last month and has since added 31 cosponsors. The actions proposed would finally bring to light the reasoning behind some of the Federal Reserve’s policy decisions and could possibly expose corruption. While the Federal Reserve’s financial statements have been audited for some time, this bill is distinct in that it would give Congress annual reports on monetary policy functions and core responsibilities of the Fed.
The discrepancies of the Federal Reserve first became newsworthy thanks to former Congressman Ron Paul. During his time in the House of Representatives and presidential campaigns, the elder Paul became one of the first national figures to criticize the Fed’s policies and examine all of the harm that it has done since its creation in 1913. Paul and other critics of the Federal Reserve system point out how the central bank’s printing of money to assist in paying off American debts has led to runaway inflation, as well as instability in the economy that results in frequent “booms and busts.”
The alternative would allow for a free market to determine interest rates and money supply. The issue is that the excessive printing of the Federal Reserve has gone hand-in-hand with ever-increasing government spending. When the government needs more dollars for their pet projects, they only must turn to the Fed to print more money. In a world without such central banking policies, legislators would have to curb government services or raise taxes, likely imperiling their political careers.
What is particularly disturbing about the Fed’s inflationary policies is that, like so many other well-intentioned ideas, it passes the burden on to the poor. Through its printing, the Fed places a “hidden tax” on the poorest Americans. While the money that is printed gets handed to the wealthiest and most powerful, who can afford to cash in on “sweetheart” deals through government projects, while the impoverished are left in the dark. To that point, the American dollar has lost 96% of its buying power since the beginning of the Federal Reserve; $1.00 in 2014 is equivalent to $0.04 in 1913.
All of these crony capitalist results apparently created by the Fed would lead one to believe that Senator Elizabeth Warren, so-called “champion of the poor,” would be more than happy to clamp down on the biggest of big banks and demand transparency. However, she has stated that she is against Sen. Paul’s legislation, as, in her words, “[I]t promotes congressional meddling in the Fed’s monetary policy decisions, which risks politicizing those decisions and may have dangerous implications for financial stability and the health of the global economy.”
For someone that regularly decries corporate greed and wishes to bring an end to corporatism, Warren does not seem to be willing to put her money where her mouth is. In addition to her opposition of auditing the Fed, she also supports the Export-Import Bank.
Joining Warren in opposition of the “Audit the Fed” bill is Jason Furman, chairman of President Obama’s Council of Economic Advisers. Furman argues that the proposed legislation is “somewhere between superfluous and highly counterproductive,” and that it too easily allow legislators to second-guess the bank’s decisions. He stated that he would encourage the President to veto the bill if it were successful in passing the House and Senate.
It is unclear why these prominent liberal leaders oppose such transparency. However, their protests speak volumes. It is apparent that the audit of the Federal Reserve is long past due. For legislation that had previously seemed nowhere near plausible, the reality of its success seems closer to becoming reality every day.
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