Via-Washington Examiner
Private bankers who run the Federal Reserve System have the power to pump hundreds of billions of dollars into the nation’s money supply, making each dollar in circulation automatically worth less. Any institution with that kind of power over the economic lives and fortunes of Americans should be operated in the open. That is why the Fed’s lack of transparency is troubling, to say the least. More than half of the members of the House of Representatives agree. There are 276 co-sponsors of Texas Republican Rep. Ron Paul’s Federal Reserve Transparency Act of 2009, which requires a full-fledged audit by the Government Accountability Office (GAO) and a report to Congress by 2010. Co-sponsor Brad Sherman, D-CA, was quite right when he stated that “anyone exercising governmental power should be subjected to governmental oversight.”
Paul has been called a kook for his opposition to the central bank, which manipulates interest rates as well as monetary policy. But his stature was enhanced following last fall’s housing bubble collapse because he had predicted in 2003 that it would come. Created by Congress in 1913 to address a series of banking panics, the Fed not only failed to see the 2008 recession coming, it was at the epicenter of the crisis. Its artificially low interest rates stimulated a real estate price bubble that was exacerbated by flawed mortgage products offered by banks it failed to regulate, just as Paul warned five years ago. The Fed also made highly controversial “emergency” loans to bail out failing companies, including American International Group, Inc. (AIG) – which used it to pay bonuses to its top executives.
Given this sorry track record, why does President Obama propose giving the Fed even more power to oversee financial institutions, regulate mortgage lending, and even decide which credit cards consumers can get? Fed chairman Ben Bernanke, who strongly opposes Paul’s bill, promises that the Fed will “absolutely not monetize the debt” and allow its $800 billion in excess reserves to become a giant ATM for the deficit-ridden federal government, which would send inflation skyrocketing. But Bernanke’s four-year term is up in January, and a successor chosen by Obama may not be as resistant to the idea. Instead of “dangerous meddling” - as his critics have charged – Paul’s bill would require that Congress take seriously its oversight responsibility regarding the Fed.
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