On the Wrong Side of History
Bloomberg is out with a new article today called "Bernanke's Nightmare Audit Pushed For Romney's Platform." It's an informative piece that sheds some light on the efforts to get Audit the Fed included into the Republican Party platform in Tampa this month.
One interesting quote that stands out from the article comes from former Republican National Committee Chairman, Haley Barbour, who is apparently opposed to Audit the Fed:
“I don’t want Congress controlling the money supply or usurping the authority of the Fed — I can’t think of a group that I would less rather have do that, just because they’re politicians and this is not about politics,” Barbour said in an interview. “I do not think any group would put purity on issues like this in front of victory.” [emphasis added]
"…usurping the authority of the Fed…" Let's focus on that for a second.
In Article 1, Section 8, Clause 5, the Constitution states that Congress shall have the power "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
When Congress created the Fed, they were delegating an enumerated power over monetary policy to the Federal Reserve. Now, reasonable people can debate the questionable constitutionality of Congress delegating any enumerated power away without first amending the Constitution. But, what is most certainly not open for debate is that because the Federal Reserve was created by Congress, they have not only the authority, but the responsibility to conduct oversight of the Fed's actions and to hold them accountable to the American people.
Congress' investigative arm, the Government Accountability Office (GAO), is currently prohibited by law from examining discount window and open market operations; agreements with foreign governments and central banks; and Federal Open Market Committee (FOMC) directives.
It is of the utmost importance this information be made public so the American people can know how and why Fed officials expand the money supply and set interest rates.
Let's be clear, it is not enough for the Fed simply to provide its updated balance sheet after crucial decisions and transactions already have occurred, as folks like Barbour suggest is enough.
In fact, the Fed's vaunted independence is a myth; largely created by Fed officials and its Wall Street/financial sector supporters who benefit from its lack of transparency. The Fed is intended to be independent from the Treasury Department, but never from Congress. Indeed, the Fed remains subject to full oversight and regulation by Congress — up to and including abolishing the Fed altogether!
Perhaps it would assuage some of Haley Barbours' concern, if I pointed out that Audit the Fed would not change or set monetary policy: it merely grants Congress retrospective access to the information used to determine and carry it out, so Congress can properly understand, oversee, and evaluate the Fed.
Then again, maybe not. Barbour actually went on to say it would be "objectionable" for the party to go on the record in support of Audit the Fed.
Perhaps Barbour missed the vote last month when all but one Republican member of the House (NY Rep, Bob Turner — who apparently missed the memo) went on the record in support of Audit the Fed, as it passed the House of Representatives with support from 75% of the people's representatives!
Interestingly enough, polls indicate that 75-80% of the American people support Audit the Fed.
As we near Tampa and the Republican National Convention, let me be frank: Anyone opposed to Audit the Fed is on the wrong side of history.
Audit the Fed is a winning issue with the American people. Not only is it does it make economic sense, but it's great policy and even better politics. Delegates to the National Convention should choose sides wisely.