Audit the Fed Ain’t Happening – Libertarians, Stop Hurting Your Head About It!

May 6, 2010 · Posted in Politics · 2 Comments

Earlier I received an email from AuditTheFed.com:

Dear Supporter of Transparency,

According to our sources on the Hill, Senator Bernie Sanders has unfortunately given in to pressure from the White House and Chris Dodd and stripped out the Paul-Grayson language from his Fed transparency amendment.

What Sanders is now proposing is essentially the Watt amendment the Audit the Fed Coalition opposed last year in the House.

Talking Points Memo reports that, “In order to allay some of the White House’s and the Fed’s concerns, Sanders has agreed to limit the scope of what the Government Accountability Office would be allowed to audit–but his plan will still require thorough review of all the Fed’s emergency lending, beginning December 1, 2007.”

Call Senator Sanders’ office at (202) 224-5141 and tell him how you feel about this last-minute compromise.

Click here for contact information for your senators and urge them to oppose this compromise. Tell them it’s time to support a standalone vote on S. 604, Audit the Fed.

A vote could come even late tonight or early tomorrow. Let your senators know where you stand right away.

The American people deserve a full, thorough audit.

Sincerely,

The Audit the Fed Coalition

The Wall Street Journal writes Plan for Congressional Audits of Fed Dies in Senate:

Last-minute maneuvering in the Senate allowed the Federal Reserve to sidestep legislation that would have exposed its interest-rate decision-making to congressional auditors.

Pressure from the Obama administration led Senate lawmakers to alter a provision pushed by Sen. Bernie Sanders (I., Vt.) that was gaining momentum despite opposition from the Treasury and the Fed. It would have largely repealed a 32-year-old law that shields Fed monetary policy from congressional auditors.

The compromise, endorsed by Senate Banking Committee Chairman Christopher Dodd (D., Conn.) and the Treasury, would require the Fed to disclose more details about its lending during the financial crisis. It would also require a one-time audit of those loans and a one-time review of Fed governance. A formal vote was pushed back until next week.

Thursday’s Senate showdown came after senators on the left and right joined forces to support Mr. Sanders’ provision.

“At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer,” Mr. Sanders said. “The American people have a right to know.”

But Fed Chairman Ben Bernanke, while insisting on a commitment to “openness” at the Fed, said in a letter to Congress the Sanders measure would “seriously threaten monetary policy independence, increase inflation fears and market interest rates, and damage economic stability and job creation.”
More

* Letter: Bernanke Outlines His Opposition
* Letter: Volcker Outlines His Opposition

Journal Community

Deputy Treasury Secretary Neal Wolin, in a statement, endorsed the revisions to the Sanders provision, saying they would provide a comprehensive audit of the Federal Reserve Board’s operations in response to the financial crisis, “while preserving the existing protections of the Federal Reserve’s independence with respect to monetary policy.”

A House bill sponsored by Rep. Ron Paul (R., Texas) that passed in December contains a proposal similar to the original Sanders measure. If the Senate bill passes, it will need to be reconciled in a conference committee. That keeps the pressure on the Fed alive for the coming months.

The original Sanders measure stated that it shouldn’t be “construed as interference in or dictation of monetary policy.” But the Fed and administration warned that would allow auditors to interview Fed policy makers and staffers about monetary policy, thereby allowing congressional critics to pressure the Fed and undermine its independence.

Like most other capitalist democracies, U.S. politicians have given the central bank considerable latitude to control interest rates on the theory that elected politicians are prone to keep rates too low to get more growth during their terms at the cost of more inflation later. Although sponsors of legislation insisted that wasn’t their intent, the Fed and its allies said otherwise.

“It’s a chilling kind of circumstance,” former Fed Chairman Paul Volcker, an Obama adviser, said in an interview. “The more you have no clear boundaries about what’s appropriate and what’s inappropriate, you castrate the decision-making process. That’s true for any organization, but it’s particularly true when you get into the sensitivities of monetary policy that can generate speculative waves in financial markets and speculation in people’s minds,” said Mr. Volcker, who also urged lawmakers to eliminate the audit provision.
Who’s Who in the Senate Financial Overhaul

Learn more about key players in the Senate’s discussion.

View Interactive

Anil Kashyap, an economist at the University of Chicago’s Booth School of Business, stressed that independent central banks need to be insulated from politics and make decisions several months ahead of expected trends.

“There are times when you have to start raising interest rates before the economy’s recovering. If you’re going to get audited while you do that, you know you’re going to be slower—meaning we’re going to tolerate higher inflation.”

Before the last-minute compromise, the Fed’s foes appeared to be winning, and got a major boost when Senate Majority Leader Harry Reid (D., Nev.) said he would side with Mr. Sanders.

Mr. Bernanke, meanwhile, returned to Washington Thursday afternoon after a morning speech in Chicago to continue pressing for changes to the Sanders bill. In the past few days, Mr. Bernanke has spoken to at least a half-dozen senators to argue the Fed’s case that the bill would deeply damage the Fed’s credibility and ability to make tough decisions about interest rates.

At least half a dozen Obama administration officials joined the blitz, including Treasury Secretary Timothy Geithner—a former Fed official—and Rahm Emanuel, the White House chief of staff. Administration aides credited Mr. Dodd with pushing back against the original amendment and developing an acceptable alternative.

New York Fed President William Dudley also advocated to scale back the scope of the auditing. He was among those arguing that ongoing reviews of the Fed’s regular lending to financial institutions would stigmatize the program and cripple the Fed’s role as the nation’s lender of last resort.

The Senate beat back another amendment with populist tinges, defeating 61-33 a provision that would have put strict caps on the size of the nation’s banks. Offered by a bloc of liberal Democrats, it would have capped at 10% the limit on the nation’s total insured deposits any single bank holding company could carry. It would have also set a 6% leverage limit for banks and capped their non-deposit liabilities at 2% of U.S. gross domestic product.

I think it is about time to realize how ridiculously funny this whole farce is. First off: The gang that is the Congress is not going to push through measures that will seriously jeopardize its beautiful money printing machine. It’s simply inconceivable for to happen in any meaningful way. I once thought they could, too, I have come to realize that they won’t.

The temptation of political action is enormous. I, too, fell for it for a long time. The alternatives are hard to accept and just as counter-intuitive as many libertarian solutions seem to unenlightened people in the realm of economics.

We are all perfectly aware of the mechanism of credit expansion and how the Fed is at the root of financial crises that will occur again and again. But do you seriously think president Obama or any other one of these narcissistic, self aggrandizing officials will ever give a flying rats ass?? Haha, it’s unthinkable!

An article such as the one above is just another display of the blatant and shameless lies and falsehoods that politicians and clueless academics will deliberately spread with no reservations whatsoever. We’ve heard this nonsense again and again and it’s just about time we stop pretending that this is a debate. It’s not. It’s a bunch of clowns frantically taking mental craps into the minds of a deluded populace to justify a ponzi scheme that will collapse sooner or later of its own accord. It’s funny at best. But it’s not deserving of a shred of our precious time that we could spend educating those around us about the truth and living our principles in our own lives!

By pretending that it is an intellectual debate we sanction a fundamentally corrupt process. This is not what we should be doing. We shouldn’t justify the systematic looting, theft and defrauding of the majority of the people, in short government, via attempts to participate in it. It hasn’t worked for centuries and trying it over and over again is really the mother of all abusive relationships.

The Audit The Fed efforts are a particularly tragic example. Here we are, fighting day in day out, donating enormous amounts of money, effort, etc. … for what? In order to get the government to deign to have it’s counterfeiting institution to produce a few more pieces of paper to report Congress? Do you seriously think this is going to strip this gang off its powers even one tiny bit?? Even if it did, all it would do introduce 1000s of new “regulations” that will grant more powers.

Millions of innocent and poor people have died over he past years in unconstitutional wars, millions have been thrown in to prison cells for owning or selling some piece of vegetation, our and our kids’ futures have been mortgaged off to foreign nations, corrupt union thugs, and bureaucrats, around 40% of our income per year is taken from us at the point of a gun to support the gaping black hole that is the playground of bureaucratism, and we are fighting tooth and nail about a few pieces of paper? And on top of that, paper that will be submitted to Congress??

I think we reasonable people should not degrade ourselves like that. It costs too much time, effort, and nerves. The purpose of life is happiness. We should live our values, educate our friends and family, get the bad people out of our lives, make sure we raise loved, educated, reasonable children, and over time we will change the whole world in a way that is much more fundamental than adding to the demand for the business of paper production. :)

Tags: audit the fed, federal reserve bank

Ron Paul on Audit the Fed (on Kudlow)

November 30, 2009 · Posted in Monetary Economics · 1 Comment

Tags: audit the fed, ron paul

Ron Paul’s Audit the Fed Amendment Passes; One More Hurdle Taken; More Battles Ahead

November 20, 2009 · Posted in Politics · Comment

From John Tate with C4L:

Dear Friend of Liberty,

Thanks to your quick action in contacting Congress, the House Financial Services Committee earlier today rejected Representative Mel Watt’s attempt to hijack Audit the Fed by voting 43-26 to pass Ron Paul’s amendment to the financial regulatory reform bill.

Dr. Paul called me right after the vote to personally express his thanks to C4L members for all of your efforts!

It is an incredible testament to the growing power of the liberty movement that we were able to get such an audit passed by a major House committee, but this is by no means the end of our fight.

Financial Services leadership has seemed determined for several months that if an audit of the Fed were to get out of Committee, it should be attached to an overall regulatory reform package that would actually increase the powers of the Fed to interfere in our economy.

Congressman Paul’s amendment gives the Government Accountability Office power to conduct a thorough audit of the Fed’s entire $2 trillion balance sheet and replaces the Watt language that would have further restricted GAO audits of the Federal Reserve.

While this is a victory over an attempted hijacking of our cause, the audit authority is still being rolled into the Financial Stability Improvement Act, a bill that Campaign for Liberty will oppose.

This Act will be voted on as soon as the Committee returns from its Thanksgiving break, and we will then know if it will move to the floor.

And it’s already becoming clear that Ron Paul’s amendment may face challenges on the House floor.

Now is the time to turn up the pressure!

Keep contacting Congress and tell your representative that before Congress debates over giving the Fed any new powers, we need to know what they’re doing with the ones they already have!

Urge your representative to support a standalone, up or down vote on Audit the Fed, H.R. 1207.

We’ve put too much work into this effort to see an audit bogged down in yet another Washington bureaucratic nightmare.

Make no mistake, though, the victory today proved we can get the votes to pass the thorough, historic audit we’ve been fighting for this past year. We have put the Federal Reserve on notice that the freedom movement is serious about reclaiming our country and that it is here to stay.

Thanks for all you do for the cause of freedom. Now, let’s finish this fight!

In Liberty,

John Tate

President

P.S. Turn up the pressure! Tell your representative you want a standalone vote on Audit the Fed, H.R. 1207.

Stay on top of this. Remain vigilant. There will be many more attempts to water down this bill and maintain secrecy of the Fed!

Here is Alan Grayson:

Tags: audit the fed, mel watt, ron paul

“Audit the Fed” Bill Gutted; Ways to Take Action

November 14, 2009 · Posted in General Economics · Comment

As Ron Paul recently pointed out, and as was unfortunately expectable, there are forces at work in Congress that attempt to prevent a meaningful audit of the main culprit of the financial crisis:

Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.

The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.

“There’s nothing left, it’s been gutted,” he said in a telephone interview. “This is not a partisan issue. People all over the country want to know what the Fed is up to, and this legislation was supposed to help them do that.”

The Fed, led by Chairman Ben S. Bernanke, has come under greater congressional scrutiny while attempting to end the financial crisis by bailing out financial firms and more than doubling its balance sheet to $2.16 trillion in the past year. The central bank is also buying $1.25 trillion of securities tied to home loans.

Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.

Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.

Original Language

Paul said he intends to introduce an amendment to the bill when it comes to the House floor for a vote restoring the legislation’s original language.

Representative Barney Frank, a Democrat from Massachusetts and chairman of the committee, said in interview that he intends to ensure legislation would provide a time lag between FOMC actions and the reporting of them.

Such a provision would “lessen the market impact,” he said on Oct. 20. “The importance is to see that there are no abuses and to judge what they did.”

The legislation will probably be included in a broader Democratic package of financial-regulation changes in the House, Frank said.

I should remind you again of past disagreements between Barney Frank and Ron Paul:

I quote:

… but you’re not going to see the [housing] collapse that you see when people talk about a bubble and so those of us on our committee in particular will continue to push for home ownership…

Thanks, Barney, for admitting, at least back then, that you were on the forefront of pushing for excessive home ownership and thus being instrumental to the housing crisis. Would you come forward today and say the same things? But then, I guess, nobody could see this coming, right?

Nobody? Here’s Ron Paul in 2003:

The special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital that they could not attract under pure market conditions. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing, the damage will be catastrophic.

… who would you rather listen to?

Today we know the tragic consequences of such foolishness. Unfortunately people continue to put these people in charge. We have to deal with that reality for the time being and take action. This I received today from the Audit the Fed Coalition:

Dear Supporter of Transparency,

You and I face our biggest challenge yet.

Mel Watt (D-NC), Chairman of the Monetary Policy Subcommittee, has sided with Fed and is working to gut substantial audit provisions from HR 1207.  The bill Congressman Watt has sent to the full Financial Services Committee contains no audit of the Fed’s monetary policy-making authority or transparency of the Fed’s secret agreements with foreign central banks.

Without these provisions, a so-called “audit” of the Fed would be worthless.

The full Financial Services Committee is likely to vote on this bill either later this week or early next.

Congressman Ron Paul will offer an amendment to restore the provisions contained in HR 1207 to audit monetary policy and activity with foreign central banks. Thirteen of the 41 Democrats and all 29 Republicans on the Committee have cosponsored HR 1207, and if they hold the line, we will have the votes to win and restore our audit.

Pressure on the Democrat House Financial Services Committee members is critical! Below is a list of Democrats who have cosponsored. Please call them and urge them to vote “Yes” on the Paul Amendment. Click on their names to get their web contact information.

1. Rep. John Adler, NJ (202) 225-4765

2. Rep. Travis Childers, MS (202) 225-4306

3. Rep. Steve Driehaus, OH (202) 225-2216

4. Rep. Alan Grayson, FL (202) 225-2176

5. Rep. Rubén Hinojosa, TX (202) 225-2531

6. Rep. Suzanne Kosmas, FL Toll Free: 1-877-956-7627

7. Rep. Dan Maffei, NY (202) 225-3701

8. Rep. Brad Miller, NC (202) 225-3032

9. Rep. Walt Minnick, ID (202) 225-6611

10. Rep. Ed Perlmutter, CO (202)-225-2645

11. Rep. David Scott, GA (202) 225-2939

12. Rep. Brad Sherman, CA (202) 225-5911

13. Rep. Jackie Speier, CA (202) 225-3531

When contacting these members, remember that up to this point, these members have been allies on this issue.  A civil yet firm tone should be kept during these calls.  They should be thanked for their cosponsorship, told that Mel Watt’s changes to the bill are unacceptable, and urged to hold the line and honor their promise to support transparency at the Fed by voting “Yes” for the Paul amendment.

It is also important that we contact Financial Services Chairman Barney Frank and House Speaker Nancy Pelosi and urge them to schedule a standalone, up or down vote on the real Audit the Fed bill.

Rep. Barney Frank: (202) 225-5931

Speaker Nancy Pelosi: (202) 225-0100

Now is a crucial time for Audit the Fed.  If these 13 Democrats hold the line, we can win this battle.  But, they must vote “Yes” on the Paul amendment when the full committee votes.

Sincerely,

The Audit the Fed Coalition

The Federal Reserve bank is an institution that exists without any moral, legal, or economic justification. It has been at the center of creating this financial crisis. It is at the center of the fraudulent fractional reserve banking system. It has created a banking cartel that represents the pinnacle of arrogance, irresponsibility, and corruption in our society.

All major problems over the past 96 years can be traced back to the Fed. It needs to be audited, exposed, and closed down. Whoever tries to prevent an audit in such a shady, cowardly, and secretive manner as Mel Watt needs to hear from those who deserve to know what is happening to their money: We, the people.

Tags: audit the fed, barney frank, ron paul

Audit the Fed Hearing Tomorrow! Your help needed now!

September 24, 2009 · Posted in Politics · Comment

From John Tate, President of Campaign for Liberty:

September 24, 2009

Dear Friend of Liberty,

This Friday, the House Financial Services Committee will meet at 9 am eastern to hold a hearing on Congressman Paul’s Audit the Fed bill, HR 1207.

We have come a long way in this historic effort, but your action is needed now more than ever.

Click here to find the names of the representatives on the Financial Services Committee and to get their contact information.  Even if they do not represent your district, be sure to call as many of them as you can anyway, as their work on the Committee greatly impacts every one of us.

Urge them to pass the Audit the Fed bill to the floor on its own merits and not as part of an overall package that would strengthen the Federal Reserve and further damage our economy.  Transparency in our monetary system is too important to be smothered in yet another Washington regulatory bill.

If your representative is not on the Committee, please contact him as well and tell him you want to know what the Fed has done with your money.  Demand a standalone vote on Audit the Fed and that he cosponsor HR 1207 if he has not yet done so.

The hearing will be streamed live on the Committee’s website.

This hearing would not have taken place if not for all of your hard work in calling, writing, faxing, and petitioning Congress to support HR 1207 and S 604, its Senate companion.

It’s incredible to see all the support we have amassed in this historic effort, but if we want to achieve a complete victory, we must now push harder than ever and turn the heat up!

Your call could have a critical impact on your representative’s decision. Contact them immediately!

In Liberty,

John Tate
President

Tags: audit the fed, federal reserve bank

Announcing AuditTheFed.com

August 13, 2009 · Posted in Politics · Comment

An update from Campaign for Liberty’s president John Tate:

Dear Friend of Liberty,

As you and I both know, Campaign for Liberty is leading the fight to pass Ron Paul’s bill to Audit the Fed. With 282 cosponsors in the House and 23 in the Senate, your efforts have so far proven very successful in establishing large, bipartisan support for Federal Reserve transparency. We’ve come a long way in demonstrating to the nation that monetary policy is a critical issue, and every day more and more people are waking up to the harm that the Fed has caused our economy.

But our mission is not yet complete. There are more Americans to educate, more signatures to collect, and more work to be done to combat the “big guns” that have come out against Ron Paul’s Audit the Fed bill. That’s why today I’m proud to announce that we’ve taken the next step in our efforts by launching AuditTheFed.com, a focused, coalition website with one purpose: to push this historic piece of legislation through Congress, past the President’s desk, and into law.

AuditTheFed.com includes: contact information for your congressman and senators, petitions, widgets, and banners to promote the website, dynamic graphs of the bill’s cosponsors, a detailed summary of the Audit the Fed bill, a list of our growing coalition, a blog to keep you up to date on all the latest Audit the Fed news, a sign up for email updates, and social networks to help get the word out online. This website was designed to put you, the liberty-loving activist, in a position to efficiently and effectively promote Audit the Fed to family, friends, neighbors, and strangers alike.

This new website is the latest addition to our efforts to Audit the Fed, but it is by no means the culmination. Stay tuned to CampaignforLiberty.com in the coming days for information on how we plan to mobilize to gain not only more cosponsors for HR 1207 and S 604, but support for a vote in the House and Senate.

For Liberty,

John Tate

President

Tags: audit the fed, auditthefed.com, campaign for liberty

Ron Paul on Audit the Fed – What Are They So Afraid Of?

July 31, 2009 · Posted in Monetary Economics · 1 Comment

Well overdue: Ron Paul takes 5 minutes to completely crush every single one of Bernanke’s and his supporters’ rubbish arguments against auditing the Fed.

I say Ron Paul should offer Ben Bernanke one last chance: a public debate. He can take it and convince us how right he is, or decline and shut up once and for all.

Tags: audit the fed, ron paul

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

July 30, 2009 · Posted in Monetary Economics · 1 Comment

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

Tags: audit the fed, federal reserve bank, hr1207, s604

Federal Reserve Officials Lost in Mindless Blather

July 10, 2009 · Posted in Monetary Economics · Comment

Grilled by Ron Paul, Kohn warns Congress on meddling in Fed’s affairs:

The Federal Reserve on Thursday launched a robust defense of its independence and warned that efforts in Congress to put monetary policy under political sway would hurt the economy.

Fed Vice Chairman Donald Kohn said opening up some of the U.S. central bank’s most sensitive decisions to political scrutiny could result in higher long-term interest rates and hurt the United States’ credit rating.

Testifying before a congressional panel, Kohn sought to beat back a proposed bill that would open the U.S. central bank’s policy decisions to audits by a federal watchdog agency. More than half of the members of the U.S. House of Representatives have signed as co-sponsors of the measure.

“Any substantial erosion of the Federal Reserve’s monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation,” Kohn told a House subcommittee.

Kohn’s testimony comes as Congress debates President Barack Obama’s plan for regulatory reform, which envisions the Fed taking on an expanded role monitoring risks across the entire financial system to help ward off future financial crises.

The proposal has boosted calls for greater accountability at the central bank, which already faces heavy scrutiny from lawmakers troubled by its role in bailing out Wall Street.

Kohn said the administration’s plan would not greatly expand the Fed’s power, and said it would work hand-in-glove with monetary policy, not compromise it as some critics contend.

BACKLASH

Fed officials have had to endure rigorous congressional grillings over their aggressive actions to restore financial calm. Their e-mails have been subpoenaed, recalling past episodes when the central bank came under attack and was forced to yield to the political will.

The proposed bill, put forward by Representative Ron Paul, a Texas Republican and long-standing Fed foe, would expose decisions on monetary policy and emergency lending to audits by the Government Accountability Office.

The GAO is currently prohibited from auditing these areas. Kohn said removing this exclusion would be highly detrimental and could lead investors to worry that politics — not economics — would guide the Fed’s decisions.

“The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy,” Kohn said.

He also said it could “cast a chill” on monetary policy deliberations by making officials nervous that ideas they discuss behind closed doors could become public.

Paul denied his bill was about Fed independence. “We are not looking to the Congress to run monetary policy. We just want to know what’s going on, and why,” he told Kohn.

However, the bill would remove a provision of law that exempts Fed monetary policy decisions, transactions with other central banks and discussions between Fed officials from GAO audits.

Political attacks on the Fed are not new. Representative Henry Gonzalez pushed hard in the 1990s to force the central bank to publish transcripts of its policy meetings after he exposed that the meetings had been discretely recorded.

Paul’s bill has 250 co-sponsors, including 78 Democrats. But it has not been promoted by the Democratic majority leadership in the House, where it has yet to face even a committee-level vote.

If it were to emerge from the House, to become law it would also need to clear the Senate, where support may be scant.

AAA DANGER

Kohn warned that congressional meddling in the Fed’s affairs could threaten the United States’ AAA credit rating and drive up interest rates.

“History provides numerous examples of non-independent central banks being forced to finance large government budget deficits,” he said. “Such episodes invariably lead to high inflation.”

Some investors are already worried the Fed could begin to “monetize” the debt, and Kohn and St. Louis Federal Reserve Bank President James Bullard said with debt skyrocketing, the Fed’s independence had to be fiercely protected.

“Any kind of hint that you are trying to take away Fed independence could be very counterproductive at this point in time,” Bullard told Bloomberg television.

The Fed cut overnight interest rates almost to zero in December and has pledged to buy up to $1.75 trillion of longer-dated government debt to try to end the worst U.S. recession in decades.

Two other Fed policy-makers also spoke publicly on Thursday.

Minneapolis Federal Reserve Bank President Gary Stern said recovery was “close at hand,” [ID:nNYS005219] and Fed Governor Elizabeth Duke agreed, though she urged banks to do more to get credit flowing.

“Economic conditions are stabilizing or, where they are still deteriorating, appear to be doing so more slowly,” she said.

Kohn is seriously trying to tell the people that they are better off if they don’t know what he is doing behind closed doors. Ron Paul is not asking for Congress to run the Fed, he is asking that the representatives of the people know what an institution that has bee chartered by the public trust is doing. It is curious that Fed officials are so reluctant when it comes to opening up their books about relevant data, and letting the people know what is going on.

If this kind of independence was so great, then why don’t we make all government institutions independent of everyone?

Here is Ron Paul grilling Kohn:

Tags: audit the fed, federal reserve bank

Audit the Fed – Breaking News

July 6, 2009 · Posted in Politics · Comment

A message from John Tate with C4L:

Dear Friend of Liberty,

Earlier today, the first shot in our battle to pass Audit the Fed through the U.S. Senate was fired on the Senate floor by Senator Jim DeMint of South Carolina.

Senator DeMint, who has a well-deserved reputation for taking the battle to the other side in the Senate, once again proved why he is such a valuable ally in our fight to bring transparency and accountability to the Federal Reserve.

A little while ago, the Senate voted to pass HR 2918, the Legislative Branch Appropriations Act. This $3 billion bill contains, among many other things, provisions for GAO audits on certain agencies.

Seizing on a chance to take quick action to bring Audit the Fed up for a vote, and with the GAO provisions in mind, Senator DeMint attached the full text of S 604, the Senate version of Ron Paul’s Audit the Fed bill, to HR 2918 as Senate Amendment 1367 before it was considered for final passage.

However, Senate Democrats refused to even allow a vote on the amendment! That’s right. The internationalist, Fed-loving elite in the Senate used a parliamentary tactic to shut down DeMint’s amendment.

After Senator DeMint brought Audit the Fed to the floor, Senator Ben Nelson of Nebraska raised a “point of order” to prevent a vote, claiming that the amendment violated Senate Rule 16 by “legislating” on an appropriations bill. The Senate president agreed, and the amendment was shot down.

Senator DeMint did not back down, though, and directly challenged Senate leadership by pointing out the other GAO audits contained in the bill. As Senator DeMint listed them off, the Senate president was forced to agree with Senator DeMint that each one he described, all of which would be left in for final passage, also violated Senate Rule 16.

Which tells us at least one thing: the problem wasn’t with “legislating” on the bill or violating Senate Rules (which is commonly done). Shooting down the amendment was about preventing a thorough audit of the Federal Reserve for the first time in its history!

Senate leadership is hoping this issue will just fade away so they can get on to what they deem to be more “important” business, like dictating what kind of healthcare plan you and I can carry or passing destructive Cap-and-Tax legislation.

But the American people deserve answers on what the Fed has done with trillions of our tax dollars and what they are committing us and future generations to as part of their secret deals with foreign central banks and governments.

The leadership decided today to turn their backs on transparency, but our fight is just beginning.

As Senator DeMint made clear on the floor, the Audit the Fed bill has wide bipartisan support. He rightly warned the Senate that even if they delay today, they WILL have to deal with the issue on the floor.

It is up to you and me to back up Senator DeMint’s words by making sure the momentum continues to build and the bill comes up for a final vote.

The rejection of the Audit amendment is just the first battle in our war. Now is the time to really put the pressure on the U.S. Senate to Audit the Fed!

Senator DeMint fired the opening salvo and showcased the hypocrisy of the Senate for allowing other GAO audits to be included in the bill while refusing to even allow a vote on Fed transparency.

Again, we’re just getting started. Senator DeMint will keep fighting to pass Audit the Fed on its own or as an amendment, and we need to continue putting pressure on our senators to do everything in their power to achieve a floor vote!

Click here to sign our online petition. And visit our Audit the Fed action page for contact information to call, write, and fax your senators and urge them to support S 604 and to push for a final vote.

Together, we will finish this fight to Audit the Fed!

In Liberty,

John Tate

President