Disappointingly, but not surprisingly, President Trump’s pick to replace Janet Yellen is not only likely to continue her policies, but is also one of the chief propagandists against Audit the Fed.
In 2015, Powell spoke at Catholic University, and a large potion of his talk was devoted to attacking the audit the fed bill.
Paul-Martin Foss wrote about the talk here:
Monday also saw Federal Reserve Board Governor Jerome Powell deliver a speech at Catholic University’s Columbus School of Law in opposition to Audit the Fed and other proposals to oversee and rein in the Fed’s actions. According to Powell:
…these proposals are based on the assertion that the Federal Reserve operates in secrecy and was not accountable for its actions during the crisis, a perspective that is in violent conflict with the facts. The Fed has been transparent, accountable, and subject to extensive oversight, especially during and since the crisis. We have also taken appropriate steps since the crisis to further enhance that transparency.
Perhaps we should give Mr. Powell the benefit of the doubt since he wasn’t working at the Fed during the financial crisis, but his assertion flies in the face of the facts. Remember when the Fed issued their data dumps? Their attitude was, “Oh, you want this data? Well, here you go, take a look at these thousands of pages of documents. It’s not searchable, there’s no index, and oh yeah, most of the details have been redacted. Enjoy.” The Fed had to be dragged kicking and screaming towards transparency, and the only reason they continue to publish financial transaction data (buried on the New York Fed’s website) is because they were legally required to do so thanks to the (watered down) transparency provisions enacted in Dodd-Frank.
Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials. As recent U.S. history has shown, elected officials have often pushed for easier policies that serve short-term political interests, at the expense of higher inflation and damage to the long-term health and stability of the economy.
We are fully in agreement with Mr. Powell that putting politicians in charge of monetary policy is a bad idea. But just because someone is unelected doesn’t mean they’re any less a politician. Generals don’t progress to flag rank due to their martial prowess but rather because of their ability to navigate the politics of the promotions process. And anyone appointed to the Federal Reserve Board doesn’t get the appointment because of a devotion to sound money or understanding of good economics but rather because they are going to be someone who does what the President wants and doesn’t rock the boat. Let’s not forget that the Federal Reserve Board is an executive agency and maintains a majority of the seats on the FOMC, which makes monetary policy decisions. Thus monetary policy in the United States today is firmly under the control of the President, not Congress.
Arguments that Congress is looking to influence monetary policy are more a defense of the Fed’s, and by extension the President’s, current power to influence monetary policy than they are an objection to governmental influence over monetary policy. If we were to suggest to Mr. Powell that monetary policy should be free of any government influence at all, that is to say, eliminate the Federal Reserve Board and FOMC, privatize the Federal Reserve Banks, and eliminate any governmental involvement whatsoever in monetary policy, would he agree to that? Of course not. He fully supports the Federal Reserve System and the privileges it enjoys from the federal government.
Help Campaign for Liberty get Paul Ryan to schedule a vote on Audit the Fed by signing the Audit it Now petition to the Speaker of the House.
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