Federal Reserve

Audit the Fed Already!

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The Daily Beast

Before the House of Reps high-tailed it out of D.C., it passed a bill to audit the Federal Reserve System by a massive bipartisan vote of 333 to 92. Now the legislation goes to the Senate, where it will…be ignored until the next Congress starts in January and the process will begin again. Standing in the way? Senate Majority Leader Harry Reid, who called for just such legislation back in the 1990s. Not no more.

In the wake of the bombshell report from Pro Publica illustrating absolute capture of Fed regulators by Goldman Sachs, there's even more reason to truly open the books of the nation's central bank and figure out exactly what's on its balance sheet and how it operates (the fed does get a perfunctory annual audit that really doesn't amount to much).

You don't have to be a Bilderberger conspiracist or a lefty New World Order wingnut to believe more transparency is called for here. As I write at The Daily Beast,

The Fed as an inherently problematic institution. The central bank is explicitly tasked with the fundamentally incompatible duties of conducting stable monetary policy, promoting full employment, acting as a lender of last resort, and regulating the banks it works with. Good luck with all that. Also, while it's technically independent, the federal government exerts massive political pressure on the Fed and appoints its chair and board of governors….

The Fed's operational furtiveness—there's a reason why William Greider titled his 1989 history of the bank Secrets of the Temple—is hugely at odds with growing interest in transparency in all aspects of contemporary life. How is it that we can know more about the coffee beans we buy at the grocery store than how our money gets made?

Read the whole thing.

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  1. Now the legislation goes to the Senate, where it will…be ignored until the next Congress starts in January and the process will begin again.

    Wasn’t current senator and future presidential primary loser Fauxcahontas on board with this? She’s Big Squaw Go Getter. It’s gonna happen.

    1. My thoughts exactly. Warren is sharping her scalping knife for Sen. Reid. (sarc)

    2. She wanted end the Ex-Im bank and now she doesn’t. Im seeing a pattern here.

      1. There’s a term for someone who takes back things previously offered.

          1. Damn Hitler givers.

  2. Allow me to preempt Shriek and his idiocy about Deloit’s yearly sham audit:

    Audits of the Reserve Board and Federal Reserve banks may not include:

    1. transactions for or with a foreign central bank or government, or nonprivate international financing organization;
    2. deliberations, decisions, or actions on monetary policy matters;
    3. transactions made under the direction of the Federal Open Market Committee; or
    4. a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to items (1), (2), or (3).

    1. Imagine for a moment the hue and cry if a major private corporation or large bank were exempt from similar during their audits.

      1. funny it probably should be the other way around if we insist on using the fed still.

        when will people learn that free markets insulate the damages to the customer base, and are therefore less capable of widespread damage through incompetence than a centralized market who effects all the consumers once a monopoly is legislated by terrorists in suits on the hill

  3. In all seriousness, just what the hell are they doing that would cause them so much embarrassment? Yes, I know they are destroying the currency. But everyone already knows that. It is also pretty clear that they live pretty lavishly for government employees. That to me doesn’t seem to be bad enough to justify fighting the audit so hard. It would be a big deal for a week and they would end up saying FUTIW until the public moved onto something else. So, it must just be more that the Chairman has a limo and gets huge bonuses.

    1. It’s the principle. Sometimes power is denominated in secrecy and control rather than dollars.

      1. Yeah. That is probably it. It wouldn’t show anything that bad. It is just the principle of how dare the peasants except us to account for ourselves.

        1. Also, I think the Fed chairmen do take seriously their various mandates, however flawed those are, and view opening their books to civilian review as tantamount to showing their hand to the markets.

    2. I strongly suspect that, like Enron, the minute people start asking simple questions like, “So how does this all work now?” the answer “It’s complicated” will only take them so far.

      1. I would like to buy your stock options.

        1. Trust me, after this week they’re down. Way down. Apparently, my broker bought high and sold low. “It’s complicated,” he informs me.

          1. “It’s complicated” is -still- a better answer than “Fuck you, that’s why.”

    3. I also think they take the idea of being independent pretty seriously and are worried about undue outside influence if they’re audited. I’m not saying that’s a legit reason only that the Fed truly believes it is a legit reason.

      I suspect the amount of money given to bail out foreign banks in 2008-09 is a big issue.

      The other factor involves the specifics in the bill. I know some Fed audit bills set up Congress to do the audit which would be complete BS. Even some people who support auditing the Fed oppose that way of doing it.

    4. They aren’t gov’t employees.

  4. Audit the Fed – HELL! Get rid of the goddamned thing!

    1. KILL IT WITH ALL THE FIREZZZZZZ

  5. Re: John,

    That to me doesn’t seem to be bad enough to justify fighting the audit so hard.

    What does is the fact that they have been cooking the books for 4 generations and that the “assets” they’re holding are nothing but a papered scam.

    But outside a few libertarians and some anti-Fed individuals, nobody else will care. The sheep have been led to the slaughterhouse already. It is up to you to save yourself.

    1. Again, the issue of whether the Fed really owns anything but paper bullshit is already out there. I can’t see an audit showing anything that would convince either side of the debate.

      1. Re: John,

        Again, the issue of whether the Fed really owns anything but paper bullshit is already out there.

        At least that is what you and I suspect, John. But nobody else knows that for a fact or the extent on which the whole thing is built on a gigantic house of cards. It is possible the Fed governors fear a runaway panic that can collapse the whole financial system in an even worse way than the housing market bubble collapse, and they should fear such a panic.

        I just don’t think it will matter even if a panic happens for everybody, outside the libertarians and anti-Fed people, will blame the free market and capitalism – again.

        1. the Fed governors fear a runaway panic that can collapse the whole financial system in an even worse way than the housing market bubble collapse, and they should fear such a panic.

          Yes, the entire value of fiat money (and money in general) is psychological. If people don’t think it’s worth anything, it isn’t worth anything. If people think it’s worth a lot, it’s worth a lot.

          The longer they can keep the majority of people in the dark, the more value they can assign to worthless slips of paper with drawings of presidents on them.

          1. Ironically, the less money one has the more they’re inclined to believe it’s worth. I note this because by devaluing the currency, we’re all led to the assumption that because our money buys less somehow it’s worth more to us.

      2. The audit would shed some light on how much of the Fed’s 261 million oz of gold are still actually there, and how much has been leased (and sold) into the market.

        1. I do believe that an audit would reveal tactical sales and buys to manipulate gold price, since gold is frequently used as a measure of any given currency’s value.

  6. The audit, if it includes the details on the Federal Reserve Bank of New York, might shed some light on the curious tale of German gold.

    1. Do you know who else was interested in German gold?

      1. Neal Stephenson?

        Or was that Japanese gold?

  7. In the wake of the bombshell report from Pro Publica illustrating absolute capture of Fed regulators by Goldman Sachs

    You slay me.

  8. … back in the 1990s. Not no more.

    This grammatical error can’t be a typo (right?) Yet any possible literary purpose escapes me. I seek enlightenment.

    A few days ago Nick wrote, “(Not me anyways.)” At least “anyways” has some familiarity as nonstandard usage, but “Not no more”?

    1. The quote should be “(Well, me anyways.)”

    2. And the link isn’t functional. Let’s try this: Nick wrote.

      I’ll desist now, regardless of success.

    3. racist.

    4. Cuz folksy New Jersey boy makes good?

  9. a massive bipartisan vote of 333 to 92.

    Reid, who called for just such legislation back in the 1990s. Not no more.

    “Gold bug isolationist fundie preppers!!!”

    -Shrike

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