Ron Paul vs. the Federal Reserve

One congressman fights to open the books on our not-so public bank.

by John Hauck

The University of MinnesotaâÄôs Northrop Auditorium was recently fortunate enough to entertain the humble presence of Rep. Ron Paul, R-Texas. Speaking with principled (if slightly meandering) passion, Paul underscored his goals of limited government, ending the war on drugs and, most importantly, dismantling the Federal Reserve Bank. Paul introduced H.R. 1207 to the House of Representatives on Feb. 26. Known as the Federal Reserve Transparency Act, it calls for a complete audit of the Federal Reserve Bank to be finished no later than December 2010. This action is nearly a century overdue, because the Federal Reserve âÄî our federal governmentâÄôs central bank âÄî is, in PaulâÄôs words, âÄúno more federal than the Federal Express.âÄù The Federal Reserve Bank is a private enterprise, but one with a dangerously public province. Sure, the president nominates the Fed chairman and the larger board of governors. President Barack Obama nominated Ben Bernanke to his second term just weeks ago. When asked exactly which banks received $2 trillion in emergency loans from American taxpayers in the midst of the financial panic last fall, the Fed stayed mum, citing âÄúconfidential commercial information.âÄù New York City mayor and financial media mogul Michael Bloomberg filed a lawsuit against the Fed, under the Freedom of Information Act, to force the Fed to disclose what sort of collateral it had accepted for its unprecedented lending. If itâÄôs the same junk derivatives and mortgage-backed securities investors sold off in nervous frenzy last fall, it means the tunes turned off in a massive game of musical chairs, and the American taxpayer has ended up without a seat, or, that the Fed pulled the plug and is forcing us to foot the multi-trillion-dollar bill rung up by profit-drunk bankers, hedge fund managers and real estate barons throughout the past few years. The Federal Reserve has been given unmatched power to print money (a tag-team magic show with the Treasury), underwrite vast proportions of deficit spending and debt -accumulation, but somehow has shirked the scrutiny that ought to properly accompany such power. Under the guise of avoiding the âÄúpoliticizationâÄù of the FedâÄôs affairs, an embattled Chairman Bernanke is trying to derail PaulâÄôs audit âÄî the closest the American people have ever been to pulling the curtain on the massive charade. It stands to reason that if an agency of the State Department or any individual was dealing privately with foreign governments there would be outrage and legal action would ensue. Why should the Federal Reserve be treated any differently? Americans cannot afford to allow the Federal Reserve carte blanche to make its dealings in secret any longer. The effects of the recent economic downturn and the subsequent failures and bailouts of large companies have made PaulâÄôs audit an increasingly important and popular stance. With so much more spending, the need to have a clear, transparent view of where all the money goes becomes all the more essential. In the House, Paul is known as âÄúDr. NoâÄù because of his tenacity of principal for voting against any bill that increases the deficit. He is often the lone dissenting voice due to his seemingly radical but typically nuanced, unusual approach to certain issues. Paul favors withdrawal from the North Atlantic Treaty Organization and the United Nations, as well as withdrawal from the North American Free Trade Agreement and organizations such as the World Trade Organization. He supports laissez-faire free trade, the abolishment of the federal income tax and the erasure of numerous federal agencies that he perceives to be unnecessary and unconstitutional bureaucracies, including the Fed. Paul is a strict believer in stateâÄôs rights and thinks that a non-interventionist foreign policy is best for all. Most of these positions have yet to resonate among the political mainstream, but his bill has already seen over two-thirds of the House become co-sponsors. Most liberal co-sponsors would draw the monetary policy line with a Fed audit, but Paul would like to go further, to where he sees the root of our ills: the unsound character of our money. To Paul and other followers of Austrian school economists, the simple printing of money not backed by one or more intrinsically valuable commodities such as gold, silver, oil, coffee or iron ore is blatant counterfeit. Without a guaranteed value, the unfettered introduction of currency into the money supply makes our economy devastatingly volatile and our money exceedingly worthless. At Northrop last Friday, Paul explained, âÄúSince 1913, the dollar has lost over 95 percent of its purchasing power, aided and abetted by the Federal ReserveâÄôs loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation?âÄù To audit the Federal Reserve would make visible the severity of its practices âÄî an invaluable step in transforming the monetary status quo. H.R. 1207âÄôs corresponding bill in the Senate has 28 co-sponsors and is gaining steam, but Minnesota Sens. Al Franken, D-Minn., and Amy Klobuchar, D-Minn., have not yet signed on. Urge your senators to shine the light on the Federal Reserve goliath before it pillages any more of our hard-earned money. John Hauck welcomes comments at [email protected]