Auditing the Fed Is Economic Suicide 99 comments
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The biggest threat to investors is no longer poor oversight and regulation of financial markets. Indeed, there exists a more immediate and dangerous threat today – the passing of Ron Paul’s H.R. 1207 bill and the inflationary consequences that it brings.
While it may not be the intent of the lawmakers, Ron Paul’s Federal Reserve Transparency Act (H.R. 1207) will enable the congress to influence the outcomes of monetary policy through an audit of the Federal Reserve’s day-to-day operations, thus severely compromising the independence of the U.S. central bank from political influences.
The free market understands that auditing the fed is a very dangerous line to cross. If crossed, U.S. inflation will likely skyrocket over the next decade to unseen levels. U.S. economy tanks. Bond investors lose money as interest rates rise. Stock investors earn negative real return as equity risk premium rises and aggregate PE ratio tank. The US Dollar erodes due to higher domestic inflation relative to foreign inflation. Gold and commodity prices rise.
How Does Auditing the Fed Cause Inflation?
Inflation is caused by a central bank that loses control of its money supply. There are two ways that a politically compromised central bank can lose control of its money supply.
Road to Inflation #1: Repeating the Political Cycle
When the central bank is not independent, politicians have historically pumped up the money supply (for temporary economic boost) shortly before an election to buy votes with a lower unemployment rate. After the election, the effects wear off, returning the economy to its natural rate of unemployment but at a higher inflation rate than before. Because it is hard to fight off inflation quickly, by the time the next election rolls around the economy has not been squeezed back to its original inflation rate. Politicians pump up the money supply again, this time from a higher base inflation. As this cycle repeats itself, the central bank loses control of the money supply.
Road to Inflation #2: Financing Government Spending
A central bank that lacks independence from politicians makes it tempting for the government to finance an inappropriately large portion of its spending through printing money. A central bank that promises to finance too much government spending also loses control of the money supply.
Will the Bill Pass?
The risk of the bill passing is increasing every day. As the table below shows, government officials are embracing a Federal Reserve audit. In fact, 8 more House members and 43 senators is all that’s needed to make this bill veto-proof. Deadline for voting of this bill has been set to December 2010.
Auditing the Fed’s daily operations will cause it to succumb to political pressure, lose control of the money supply, and create sticky inflation that could be much worse than the 1970’s. America is an angry nation right now. When it comes time to vote on the bill, it remains to be seen if cooler heads will prevail or if America will swallow the economic suicide pill.
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Are you actually suggesting that the FED has any control over the money supply?
Federal Reserve Politically Independent ??? - You Need To Do Some More Research On The State Of Current Events. Only in crisis do the "Connections Become Evident".
How about the fact that a "Labor Union Boss" has RECENTLY been appointed the Head Of The New York Fed. - No Political Influence There?
How about the fact that the Federal Reserve IS A PRIVATE ENTITY That Has Never Been Audited. Do You Mind That "A FEW" Hold Sway Over The Destiny Of The Many? Is This Not Against The Very Canons Of Founding Principles Of The United States - ALL ARE CREATED EQUAL. The Federal Reserve Is Not A Governmental Entity - Shouldn't It Come Under The Jurisdiction Of The Country It "Supposedly Resides In"?
Are You Aware That The Federal Reserve Now Has Hired The ENRON LOBBYIST - Linda Robertson? Enron Was Definitely A Very Upstanding Company. (Snark)
Do You Not Care AS A CITIZEN OF THE UNITED STATES - WHERE THE NEXT GENERATIONS MONEY WAS SPENT? (Just because the "Spending Spree" has not Effected You Yet, Does Not Mean It Never Will)
There Are An AMAZING NUMBER OF OBVIOUS SHENANIGANS PLAYING OUT At The Moment - Without Fear Of Justice There Is No Law.
Your Arguments ARE ALL SHORT SIGHTED - "DON'T UPSET THE APPLE CART" Even Though It Is Apparent That "The Drivers Care Not For Who Is In Their Way."
Do Not Continue To Be A Patsy Just Because You Feel Comfortable Or Are Afraid Of Change.
Those Who Throw Their Brethren To The Wolves Have No Merit.
Still Suggest You "Broaden Your Scope" Of The Data You Consider.
Reggie Middleton Discusses Federal Reserve Secrecy:
seekingalpha.com/insta...
Let the light shine into the dark interior of the Fed. A private bank. Owned by private interests. That has controlled the USD since 1913 and debased it's value by 97%. Time for change.
On Aug 28 03:47 AM Donald Ingram wrote:
> Pay no attention to this man behind the curtain. Everything is okay.
> Nothing to see. Move along.
> Let the light shine into the dark interior of the Fed. A private
> bank. Owned by private interests. That has controlled the USD since
> 1913 and debased it's value by 97%. Time for change.
If we don't audit and abolish the Fed, We are in for an Economic Suicide!!!
www.youtube.com/watch?...
The Fed = Fraud Banksters!
The Fed has nothing to do with a free market. It's a state enforced monopoly that has continuously debased the currency since it was founded. Furthermore, Ron Paul is a libertarian who would like to see the federal government at a fraction of its current size. He wouldn't have proposed his bill if it created the risk you assume.
Government spending is out of control and the tab will have to be paid. The only ways to pay are through (a) higher taxes, which would be political suicide at this point; (b) borrowing, which just postpones the taxes unless a default occurs; (c) inflation, which is dressed up in euphemisms like "providing liquidity" or "quantitative easing", and which is inevitable whether the Fed is audited or not.
Apparently being in a sound mind is not a virtue anymore in today America. However, it is usually lethal.
You can't be serious! America committed Economic suicide by severing the last connection to gold by Nixon in 1971. The dollar is in it's death throes.
Guess what? The comments here ARE from people who have read REAL economics books and have not been fed the Keynesian BS when they went to school.
Reasonable and literate people actually know how to spell. A shame you can't
And you say if it ain't broke don't fix it??? WTF? A 97% decline in the value of the dollar when one of the stated objectives of the Federal Reserve is to PROTECT the value of the dollar.
If you worked in a business and f'd up that bad you'd be out on your butt in short order.
There is no justification for what Greenspan and Bernanke have done. Your comments are obviously moronic to everyone here.
Regarding inflation, I'm pretty sure Friedman would disagree with the naive notion that knowing what the Fed is doing (per audit) "causes inflation." Instead, inflation "is always and everywhere a monetary phenomenon." See www.amazon.com/Monetar...
I'm not concerned with the prospects of "politicizing the Fed." It's already politicized. The Fed Chairman already testifies before Congress several times per year. I'm more concerned with increasing the powers of the most powerful institution in the world and allowing them to continue to operate in a completely opaque fashion.
On Aug 28 09:21 AM dan phillips wrote:
> what is with these nutcases. every reasonable and LITERATE people
> know that an audit of the fed would create a disaster. pual and his
> ilk want to destroy the economy for there own interest. you gys needto
> read a book on economics sometime. if you did you would now tha auditing
> the fed a stupid idea. you freakin gold nutjobs need to go back to
> the stone age. you and your talk of flat money or whateer conspirasy
> thory you make up. there is nothing wrong with our system so leave
> it alone go back to your mothers basement. as my grandmother used
> to say if it aint broke DONT FIX IT!!!!