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Recently, our own libertarian/republican, obstetrician, representative, Ron Paul, got 313 of his colleagues to back up his plan to subject the Federal Reserve System to audits by the Government Accountability Office(GAO) and the Financial Services committee. When it gets to the senate, Senator Dodd wants to strip the Fed of its power to regulate banking. Transparency is a great thing but if the Fed bashers get overzealous, the president will veto their efforts, and I seriously doubt they could garner enough votes to override a presidential veto. The Fed chairman and his underlings offered detailed disclosures of their policies; in their testimony to Congress, 32 times in 2009. These details can be found in the Federal Open Market Committee's statements or in the congressional reports. The GAO can already audit the Fed's activities and banking regulations. The Fed will not reveal how it conducts its monetary policy or its dealings with foreign central banks.

Congressman Paul is a good principled man but his views have not changed since 1971. The congressman's views on paper money, hatred of the Fed, wars, the IRS and other Federal government agencies are well known. If you were left up to him the government would quit printing entitlement checks. He appeals to the “I've got mine”, libertarian mindset but hardly anyone else. That is why he only got 42 delegates in the recent 2008 presidential election, and he came in 5th in the libertarian strong hold, “Live Free or Die” state of New Hampshire. We will never return to the gold standard; so Ron Paul will never get to see his dream of abolishing the Federal Reserve System.

The Federal Reserve System is a hybrid agency; part government agency and part of the banking system. This is by design. The Fed was rightly created to prevent future bank panics but it needs its independence from political influence and pressure. That's not always the case because the agency is always pushed to a business friendly low interest rates but then it loses its vigilance on price stability.

There's no denying that the Fed was complacent in the recent economic crises and the Fed chairman might have made some questionable moves but that is no reason throw out the baby with the bath water. In this climate of frustration, fear, and uncertainty, it is easy to come to a knee jerk decision of using the Fed as a scapegoat for all our financial ills. I will continue to believe that more than any other government agency, the Fed actions kept from going over the cliff. The Fed immediately pumped in over $1 trillion of new credit supporting the credit markets and who knows what domino effect might have taken place if AIG would have gone into bankruptcy. Sure, now that Wall Street has been stabilized it’s easy to second guess. Think about it, do we really want all the 535 members of Congress questioning every move the Fed makes? I can only imagine what would come from the town hall meetings after the partisan representatives stirred up their constituents with rumors, misinformation, and outright lies.

When I get through reading "Too Big to Fail"(sometime before 2012) I will have to read "Secrets of the Temple" by William Grieder and "End the Fed" by Ron Paul.

*Sources December 7 & 14 issues of Newsweek December 14 issue of Time