Audit the Fed – 75% in Favor – Time to Push Senate Bill

According to a recent Rasmussen poll, 75% support efforts to Audit the Fed:

So much for the ongoing secrecy of the nation’s independent central banking system. A new Rasmussen Reports national telephone survey finds that 75% of Americans favor auditing the Federal Reserve and making the results available to the public.

Just nine percent (9%) of adults think that’s a bad idea and oppose it. Fifteen percent (15%) aren’t sure.
Over half the members of the House now support a bill giving the Government Accounting Office, Congress’ investigative agency, the authorization to audit the books of the Federal Reserve Board.

This is great momentum. People aren’t buying Bernanke’s nonsense. But then, why should they? He has been consistently wrong on everything he said:

The new, opposite video is a compilation of the 2005–2007 prognostications of Federal Reserve Chairman Ben Bernanke. In it, Bernanke is shown to have been just as embarrassingly wrong as Schiff was uncannily right.

Could their differences in economic understanding have anything to do with this remarkable dichotomy? I have transcribed most of the video, and offer my own comments interspersed with it.

July 2005

INTERVIEWER: Ben, there’s been a lot of talk about a housing bubble, particularly, you know [inaudible] from all sorts of places. Can you give us your view as to whether or not there is a housing bubble out there?

BERNANKE: Well, unquestionably, housing prices are up quite a bit; I think it’s important to note that fundamentals are also very strong. We’ve got a growing economy, jobs, incomes. We’ve got very low mortgage rates. We’ve got demographics supporting housing growth. We’ve got restricted supply in some places. So it’s certainly understandable that prices would go up some. I don’t know whether prices are exactly where they should be, but I think it’s fair to say that much of what’s happened is supported by the strength of the economy.

This is not only wrong in hindsight; it’s a complete misunderstanding of the issue. Bernanke said that the housing boom was fine because it was supported by, among other things, growth in jobs, incomes, and in the economy in general. But that very growth itself was supported by the housing boom! For example, most of the job growth was in the housing sector. Witness Bernanke’s amazing levitating economy: its housing sector is held up by economic growth, which is held up by its housing sector. And it’s just as ridiculous that he denied the existence of a housing bubble by pointing to low mortgage rates. The low rates were a chief cause of the housing bubble, and were a direct result of his actions as Federal Reserve chairman.

July 2005

INTERVIEWER: Tell me, what is the worst-case scenario? Sir, we have so many economists coming on our air and saying, “Oh, this is a bubble, and it’s going to burst, and this is going to be a real issue for the economy.” Some say it could even cause a recession at some point. What is the worst-case scenario, if in fact we were to see prices come down substantially across the country?

BERNANKE: Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.

As Peter Schiff pointed out in his speech “Why the Meltdown Should Have Surprised No One,” while it is true that up until the housing crash, house prices hadn’t gone down on a nationwide basis, it’s also true that they had never risen so precipitously before either. Bernanke’s argument is akin to getting someone drunk for the first time, putting them in a car, and then saying, “He’ll be fine; he’s never been in a car accident before.”

That interview continued:

INTERVIEWER: So would you agree with Alan Greenspan’s comments recently that we’ve got some areas of that country that are seeing froth, not necessarily a national situation, but certainly froth in some areas?

BERNANKE: You can see some types of speculation: investors turning over condos quickly. Those sorts of things you see in some local areas. I’m hopeful — I’m confident, in fact, that the bank regulators will pay close attention to the kinds of loans that are being made, and make sure that underwriting is done right. But I do think this is mostly a localized problem, and not something that’s going to affect the national economy.

Bernanke’s Fed itself created the false signals that led to vast disruptions in the housing market. Speculators try to see through those disruptions and anticipate how prices will change as valuation mistakes are corrected in order to profit from them. In fact, their speculation is part of the correction process. If their speculation is on the mark, it speeds up the price-correction process. If it’s wrong, then the consequences are on their heads. Speculation is nothing but high-uncertainty entrepreneurship; and entrepreneurship is how optimal prices are found and markets clear. It was the Fed under Bernanke himself, and his predecessor Alan Greenspan, that created the price disruption and high uncertainty that made speculation profitable in the first place.

November 2006

BERNANKE: This scenario envisions that consumer spending, supported by rising incomes and the recent decline in energy prices, will continue to grow near its trend rate and that the drag on the economy from the [inaudible] housing sector will gradually diminish. The motor vehicles sector may already be showing signs of strengthening. After having cut production significantly in recent months, in response to the rise in inventory of unsold vehicles, automakers appear to have boosted the assembly rate a bit in November, and they have scheduled further increases for December. The effects of the housing correction on real economic activity are likely to persist into next year, as I’ve already noted. But the rate of decline in home construction should slow as the inventory of unsold new homes is gradually worked down.

Here we have the Keynesian fallacy (which I have written about here) that consumer spending, in and of itself, creates general increases in wealth. And note the irony in Bernanke applauding the boost in automotive production: the products accumulated during that boost turned out just to be more malinvestment to be liquidated or bailed out when Chrysler and GM collapsed.

February 2007

BERNANKE: We expect moderate growth going forward. We believe that if the housing sector begins to stabilize, and if some of the inventory corrections still going on in manufacturing begin to be completed, that there’s a reasonable possibility that we’ll see some strengthening in the economy sometime during the middle of the new year.

Our assessment is that there’s not much indication at this point that subprime mortgage issues have spread into the broader mortgage market, which still seems to be healthy. And the lending side of that still seems to be healthy.

For Bernanke, healthy lending is the same thing as “a lot of lending.” This dovetails with his statement in the first interview, hailing low mortgage rates as a self-evidently good thing. He has no conception of an equilibrium interest rate determined by society’s average time preference, so bubbles will always surprise him. For more on this calamitous gap in Bernanke’s understanding, see “Manipulating the Interest Rate: a Recipe for Disaster” by Thorsten Polleit.

July 2007

BERNANKE: The pace of home sales seems likely to remain sluggish for a time, partly as a result of some tightening in lending standards, and the recent increase in mortgage interest rates. Sales should ultimately be supported by growth in income and employment, as well as by mortgage rates that, despite the recent increase, remain fairly low relative to historical norms. However, even if demand stabilizes as we expect, the pace of construction will probably fall somewhat further, as builders work down the stocks of unsold new homes. Thus, declines in residential construction will likely continue to weigh on economic growth in coming quarters, although the magnitude of the drag on growth should diminish over time. The global economy continues to be strong, supported by solid economic growth abroad. U.S. exports should expand further in coming quarters. Overall, the U.S. economy seems likely to expand at a moderate pace over the second half of 2007, with growth then strengthening a bit in 2008 to a rate close to the economy’s underlying trend.

Strengthening in 2008? Perhaps the biggest confirmation ever of Rockwell’s Law: always believe the opposite of what government officials tell you.

Bernanke’s own words, in light of how the crisis developed, are a testament to much more than his own personal failings as a forecaster and policy maker. They demonstrate the complete inadequacy of mainstream macroeconomics in its present state, devoid as it is of the essential insights of the Austrian School. They also reveal the folly of the very idea of giving a single man and his institution the power to centrally plan the most important price in the economy: the rate of interest. Make no mistake: the present economic crisis was brought on by central planning. It is unsettling to think that the fellow in the new video who so badly misread an economy on the brink is arguably the most powerful central planner in the world.

But even the most powerful and sequestered bureaucrat is not completely invulnerable. The Federal Reserve Transparency Act and the End the Fed movement have ruffled the Fed’s feathers enough that Bernanke actually felt the need to address the public in a “townhall forum” to be broadcast on the News Hour. According to NPR,

after the forum was over, a Fed employee passed out souvenirs, an unintended metaphor perhaps for what some fear Bernanke’s aggressive policies may eventually do to the currency: shredded cash.

The Fed employee, who apparently suffers from a defective sense of irony, was even recorded saying, “Here, you want money?” and, “Here’s some free shred folks, thanks for coming by, we appreciate it,”

No, no, thank you and your boss, Mr. Fed employee. Within the space of days, we’ve been provided, courtesy of the Fed itself, with footage that perfectly distills the complete failure of Fed forecasting and planning, and audio that encapsulates splendidly the only thing that the Fed actually accomplishes: the destruction of money.

Everyone can do their part to put an end to this shenanigans: Support the Audit the Fed Bill in the House of Reperesentatives.

But now it’s also time to Push the corresponding Senate bill, S604. Without it, all efforts in the House are futile. Momentum is building, the Senators will listen if their offices are flooded with faxes and calls:

Start your phone tree to call the committee to support the bill.
http://banking.senate.gov…?
Link to bill info:
http://thomas.loc.gov/cgi…

# Denotes on Banking Committee!
~ Denotes up for reelection!

Graph of S604 by 95687-for-rp:
http://spreadsheets.googl…

SPONSOR: SANDERS, BERNARD (I – VT) 202 224 – 5141

CO-SPONSORS

Sen DeMint, Jim [SC] – 6/11/2009
Sen Vitter, David [LA] – 6/16/2009
Sen Crapo, Mike [ID] – 6/25/2009
Sen Isakson, Johnny [GA] – 7/8/2009
Sen Chambliss, Saxby [GA] – 7/8/2009
Sen Brownback, Sam [KS] – 7/8/2009
Sen Inhofe, James M. [OK] – 7/9/2009
Sen Burr, Richard [NC] – 7/9/2009
Sen Feingold, Russell D. [WI] – 7/15/2009
Sen Lincoln, Blanche L. [AR] – 7/15/2009
Sen McCain, John [AZ] – 7/15/2009
Sen Bennett, Robert F. [UT] – 7/15/2009
Sen Barrasso, John [WY] – 7/15/2009
Sen Harkin, Tom [IA] – 7/20/2009
Sen Hutchison, Kay Bailey [TX] – 7/20/2009
Sen Cornyn, John [TX] – 7/20/2009
Sen Coburn, Tom [OK] – 7/20/2009
Sen Hatch, Orrin G. [UT] – 7/24/2009
Sen Graham, Lindsey [SC] – 7/24/2009
Sen Cardin, Benjamin L. [MD] – 7/28/2009

SENATOR – position on S604

#Akaka, Daniel K (D-HI)202-224-6361fax:202-224-2126 – neutral
Alexander, Lamar (R – TN) 202 224-4944 – neutral
Baucus, Max (D – MT) 202 224-2651 – neutral
~#Bayh, Evan (D – IN) 202 224-5623 fax: 202-228-1377
Begich, Mark (D – AK) 202 224-3004 – unknown
~#Bennet,Michael (D – CO)202-224-5852fax:202-228-5036
Bingaman, Jeff (D – M) 202 224-5521- neutral
~Bond, Christopher S.(R – MO) 202 224-5721-neutral
~Boxer, Barbara (D – CA) 202-224-3553
#Brown, Sherrod (D-OH)202-224-2315fax:202-228-6321 – neutral
~#Bunning, Jim(R-KY)202-224-4343fax:202-228-1373 – supportive
~Burris, Roland W (D – IL) 202 224-2854 – neutral
Byrd, Robert C.(D – WV) 202 224-3954 – neutral
Cantwell, Maria (D – WA) 202 224-3441 – neutral
Carper, Thomas R (D – DE) 202 224-2441 – unknown
Casey, Robert P. Jr (D – PA) 202 224-6324 – neutral
Cochran, Thad(R – MS) 202 224-5054 – unknown
Collins, Susan M.(R – ME) 202 224-2523 – neutral
Conrad, Kent (D – ND) 202 224-2043 – unknown
#Corker, Bob (R-TN)202-224-3344 fax: 202-228-0566 – neutral
~#Dodd, Chris J(D-CT)Chairman202-224-2823f:202-224-1083
~Dorgan, Byron L (D – ND) 202 224-2551
Durbin, Richard J (D – IL) 202 224-2152
Ensign, John (R – NV) 202 224-6244
Enzi, Michael B (R – WY) 202 224-3424
Feinstein, Dianne (D – CA) 202 224-3841
Franken, Al (D-MN) 202-224-5641
Gillibrand, Kirsten E (D – NY) 202 224-4451
~Grassley, Chuck (R – IA) 202 224-3744
~Gregg, Judd (R – NH) 202 224-3324
Hagan, Kay R (D – NC) 202 224-6342
~Inouye, Daniel K (D – HI) 202 224-3934
#Johanns, Mike (R – NE) 202 224-4224 fax: 202-228-0436
#Johnson, Tim (D-SD) 202 224-5842 fax: 202-228-5765
Kaufman, Edward E (D-DE) 202 224-5042
Kennedy, Edward M (D-MA) 202 224-4543
Kerry, John F (D-MA) 202 224-2742
Klobuchar, Amy (D-MN) 202 224-3244
#Kohl,Herb (D-WI) 202 224-5653 fax: 202-224-9787
Kyl, Jon (R – AZ) 202 224-4521
Landrieu, Mary L 202 224-5824
Lautenberg, Frank R (D – NJ) 202 224-3224
~Leahy, Patrick J (D – VT) 202 224-4242
Levin, Carl (D – MI) 202 224-6221
Lieberman, Joseph I (ID – CT) 202 224-4041
~Lincoln, Blanche L (D – AR) 202 224-4843
Lugar, Richard G (R – IN) 202 224-4814
~#Martinez, Mel (R-FL) 202224-3041 f:202-228-5171
~McCain, John (R – AZ) 202 224-2235
McCaskill, Claire (D – MO) 202 224-6154
McConnell, Mitch (R – KY) 202 224-2541
#Menendez, Robert (D-NJ) 202-224-4744 fax: 202-228-2197
#Merkley, Jeff (D – OR) 202 224-3753 fax: 202-228-3997
~Mikulski, Barbara A (D – MD) 202 224-4654
~Murkowski, Lisa (R – AK) 202 224-6665
~Murray, Patty (D – WA) 202 224-2621
Nelson, Ben (D – NE) 202 224-6551
Nelson, Bill (D – FL) 202 224-5274
Pryor, Mark L (D – AR) 202 224-2353
#Reed, Jack (D – RI) 202 224-4642 fax: 202-224-4680
~Reid, Harry (D – NV) 202 224-3542
Risch, James E. (R – ID) 202 224-2752
Roberts, Pat (R – KS) 202 224-4774
Rockefeller, John D IV (D – WV) 202 224-6472
~#Schumer, Charles E (D-NY) 202 224-6542 fax: 202-228-3027
Sessions, Jeff (R – AL) 202 224-4124
Shaheen, Jeanne (D – NH) 202 224-2841
~#Shelby, Richard C(R-AL)Ranking Member202 224-5744fax: 202-224-3416
Snowe, Olympia J (R – ME) 202 224-5344
~Specter, Arlen (D – PA) 202 224-4254
Stabenow, Debbie (D – MI) 202 224-4822
#Tester, Jon (D-MT) 202 224-2644 fax: 202-224-8594 t
~Thune, John (R – SD) 202 224-2321
Udall, Mark (D – CO) 202 224-5941
Udall, Tom (D – NM) 202 224-6621
~Voinovich, George V (R – OH) 202 224-3353
#Warner, Mark R (D – VA) 202 224-2023 fax: 202-224-6295
Webb, Jim (D – VA) 202 224-4024
Whitehouse, Sheldon (D – RI) 202 224-2921
Wicker, Roger F (R – MS) 202 224-6253
~Wyden, Ron (D – OR) 202 224-5244

{My script was as follows:
Hi, How are you. My name is: … from city, state. I’m calling Senator … to urge him/her to support S 604 Federal Reserve Sunshine Act of 2009.
Remember to stay polite above all else. You’ll get more bees with honey than vinegar. Plus, a friendly face to face meeting goes a long ways. Act just like a professional lobbyist would. Our mission is to sell S604.}

Post from Liberty_Mike with complete addresses
http://www.dailypaul.com/…

Updated with the fax numbers thanks to Qwerk
Updated with election cycle thanks to cactus1010

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