With Representative Thomas Massie reintroducing Audit the Fed yesterday, today seems like a good time to bring back Campaign for Liberty Chairman Ron Paul’s official statement on the Audit the Fed bill from 2009. You can read Dr. Paul’s statement here and below:

           THE FEDERAL RESERVE TRANSPARENCY ACT

 

                                ______

 

                            HON. RON PAUL

 

                               of texas

 

                   in the house of representatives

 

                     Thursday, February 26, 2009

 

 Mr. PAUL. Madam Speaker, I rise to introduce the Federal Reserve

Transparency Act. Throughout its nearly 100-year history, the Federal

Reserve has presided over the near-complete destruction of the United

States dollar. Since 1913 the dollar has lost over 95% of its

purchasing power, aided and abetted by the Federal Reserve’s loose

monetary policy. How long will we as a Congress stand idly by while

hard-working Americans see their savings eaten away by inflation? Only

big-spending politicians and politically favored bankers benefit from

inflation.

 

 Serious discussion of proposals to oversee the Federal Reserve is

long overdue. I have been a longtime proponent of more effective

oversight and auditing of the Fed, but I was far from the first

Congressman to advocate these types of proposals. Esteemed former

members of the Banking Committee such as Chairmen Wright Patman and

Henry B. Gonzales were outspoken critics of the Fed and its lack of

transparency.

 

 Since its inception, the Federal Reserve has always operated in the

shadows, without sufficient scrutiny or oversight of its operations.

While the conventional excuse is that this is intended to reduce the

Fed’s susceptibility to political pressures, the reality is that the

Fed acts as a foil for the government. Whenever you question the Fed

about the strength of the dollar, they will refer you to the Treasury,

and vice versa. The Federal Reserve has, on the one hand, many of the

privileges of government agencies, while retaining benefits of private

organizations, such as being insulated from Freedom of Information Act

requests.

 

 The Federal Reserve can enter into agreements with foreign central

banks and foreign governments, and the GAO is prohibited from auditing

or even seeing these agreements. Why should a government-established

agency, whose police force has federal law enforcement powers, and

whose notes have legal tender status in this country, be allowed to

enter into agreements with foreign powers and foreign banking

institutions with no oversight? Particularly when hundreds of billions

of dollars of currency swaps have been announced and implemented, the

Fed’s negotiations with the European Central Bank, the Bank of

International Settlements, and other institutions should face increased

scrutiny, most especially because of their significant effect on

foreign policy. If the State Department were able to do this, it would

be characterized as a rogue agency and brought to heel, and if a

private individual did this he might face prosecution under the Logan

Act, yet the Fed avoids both fates.

 

 More importantly, the Fed’s funding facilities and its agreements

with the Treasury should be reviewed. The Treasury’s supplementary

financing accounts that fund Fed facilities allow the Treasury to

funnel money to Wall Street without GAO or Congressional oversight.

Additional funding facilities, such as the Primary Dealer Credit

Facility and the Term Securities Lending Facility, allow the Fed to

keep financial asset prices artificially inflated and subsidize poorly

performing financial firms.

 

 The Federal Reserve Transparency Act would eliminate restrictions on

GAO audits of the Federal Reserve and open Fed operations to enhanced

scrutiny. We hear officials constantly lauding the benefits of

transparency and especially bemoaning the opacity of the Fed, its

monetary policy, and its funding facilities. By opening all Fed

operations to a GAO audit and calling for such an audit to be completed

by the end of 2010, the Federal Reserve Transparency Act would achieve

much-needed transparency of the Federal Reserve. I urge my colleagues

to support this bill.

 

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