Guest Post: We Should All Love Fed Transparency

Tyler Durden's picture




 

Submitted by John Aziz of Azizonomics,

Ron Paul’s signature Audit the Fed legislation finally passed the House; on July 25, the House bill was passed 327 to 98. But the chances of a comprehensive audit of monetary policy — including the specifics of the 2008 bailouts — remain distant.

Why? Well, the Fed doesn’t seem to want the sunshine. Critics including the current Fed regime claim that monetary policy transparency would politicise the Fed and compromise its independence, and allow public sentiment to interfere with what they believe should be a process left to experts dispassionately interpreting the economic data. Although the St. Louis Fed makes economic data widely available, monetary policy is determined behind closed doors, and transactions are carried out in secret.

Bernanke:

We fully accept the need for transparency and accountability, but it is a well-established fact that an independent central bank will provide better outcomes.

Ron Paul:

When the Fed talks about independence, what they’re really talking about is secrecy. What the GAO cannot audit is monetary policy. It would not be able to look at agreements and operations with foreign central banks, and governments, and other banks, transactions made under the direction of the FOMC [Federal Open Market Committee], and discussions or communications between the board and the Federal Reserve system relating to all those items. And why this is important is because of what happened 4 years ago. It’s estimated that the amount of money that went in and out of the Fed overseas is $15 trillion. How did we get into this situation where Congress has nothing to say about bailing out all these banks?

What I am struggling to understand is why the Fed is so keen to not disclose the inner workings of monetary policy even in retrospect. How can we judge the success of monetary policy operations without the raw facts? How can we have an informed debate about what the Fed does unless we know exactly what the Fed does? Why should only insiders be privy to this information? Surely the more we know, the better debate economists and the wider society will be able to have about Fed policy?

There are plenty of critics of Bernanke and the Fed, including both those who believe the Fed should do more, and those who believe the Fed should do less. But it seems very difficult to appraise the Fed’s monetary policy operations unless we can look at every aspect of its policy. If Bernanke and the FOMC are confident that their decisions have been the right ones, why can they not at least disclose the full extent of monetary policy and explain their decisions? If they are making the right decisions, they should at least have the confidence to try and explain them.

All that the current state of secrecy does is encourage conspiracy theories. What is the FOMC trying to hide? Are they making decisions that they think would prove unpopular or inexplicable? Are they ashamed of their previous decisions or decision-making frameworks? Are they concerned the decision making process will make them look bad? Are they bailing out well-connected insiders at the expense of the wider society?

We can’t have a real debate about policy unless we have access to all the data about decisions. Those who believe the Fed’s monetary policy has worked should welcome transparency just as much as those who believe the Fed’s monetary policy has not worked. If the Fed’s actions have been beneficial, then transparency will shine kindly on it. If not, then transparency will help us have a better debate about the road forward.

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Thu, 08/02/2012 - 11:42 | 2672445 malikai
malikai's picture

Audit, then End the Fed.

They don't want transparency because it will end up like Perestroika.

Thu, 08/02/2012 - 11:46 | 2672465 john39
john39's picture

its too late, this is all just show...  we will get an audit, when the banker criminals are totally done with this part of the scheme and ready to screw the world with something worse.

Thu, 08/02/2012 - 11:51 | 2672476 Precious
Precious's picture

Americans won't like the Fed expense reports.  Too many five star hotels.  Just like the rest of the DC establishment.  State, Justice, Commerce, Energy, CIA, FBI... Do you think these people ever stay at a Day's Inn?

Thu, 08/02/2012 - 11:51 | 2672487 hedgeless_horseman
hedgeless_horseman's picture

 

 

Those who believe the Fed’s monetary policy has worked should welcome transparency... If not, then transparency will help us have a better debate about the road forward.

Stop it with the damn logic!

Thu, 08/02/2012 - 11:53 | 2672494 camaro68ss
camaro68ss's picture

The day an audit starts is the day all the bankers head to there bunkers for the end game

Thu, 08/02/2012 - 11:57 | 2672511 LedMizer
Thu, 08/02/2012 - 12:05 | 2672556 LMAOLORI
LMAOLORI's picture

 

 

 

Schumer Pushes Fed Toward QE3, Tells Bernanke 'Get To Work Mr. Chairman'

http://www.forbes.com/sites/steveschaefer/2012/07/17/bernanke-to-hint-at-more-stimulus-gold-doesnt-think-so/

Democrats warn Rep. Paul's 'audit the Fed' bill will politicize monetary policy

http://thehill.com/blogs/floor-action/house/239821-dems-warn-pauls-audit-the-fed-bill-will-politicize-monetary-policy

Thu, 08/02/2012 - 12:07 | 2672562 LawsofPhysics
LawsofPhysics's picture

Why shouldn't monetary policy be up for political debate?  It is the fucking taxpayer's money after all? 

Thu, 08/02/2012 - 12:23 | 2672624 boogerbently
boogerbently's picture

Too many, that are absolutely positive the govt. is corrupt and want to change it, have been media brainwashed about Ron Paul.

BOTH sides have worked tirelessly to keep him and his ideas away from American voters.

I will write him in.

Thu, 08/02/2012 - 12:27 | 2672641 RSloane
RSloane's picture

You're not alone, I will as well...again.

Thu, 08/02/2012 - 12:39 | 2672692 LawsofPhysics
LawsofPhysics's picture

Likewise.

Thu, 08/02/2012 - 13:51 | 2673101 Paul Atreides
Paul Atreides's picture

Bring a Sharpee, you're going to need something permanent for that Diebold screen.

Thu, 08/02/2012 - 12:31 | 2672660 A Nanny Moose
A Nanny Moose's picture

Exactly! As if monetary policy is a-political now. Isn't the whole fucking point of debate, an attempt to reveal the truth? While we might not arrive at the truth through debate, we will not arrive at truth if we continue such covert operations with other peoples' money.

Meantime...Mitt's audience revealed, starting at about 0:09

http://www.youtube.com/watch?v=O2BFss6Qs0c&feature=youtu.be

Thu, 08/02/2012 - 15:07 | 2673440 CompassionateFascist
CompassionateFascist's picture

An audit tells us nothing. We already know what the Fed does. What it was created to do: facilitate the debt-financing of the welfare-warfare state through monetization, price inflation, interest rate manipulation, and other kosher scams. It needs to be taken apart brick-by-brick, and the bricks dropped in the deepest part of the ocean. With a banker/politician attached to each brick.   

Thu, 08/02/2012 - 18:26 | 2674209 mkkby
mkkby's picture

Agreed.  An audit IS WORTHLESS.  Did audits do anything about Madoff, MFG or any other banker fraud factories?  How about the fucking stress tests?  Those were audits.

First there has to be THE WILL TO ENFORCE THE LAW.  Then an audit as a form of criminal discovery.  Then trials and imprisonment. 

Just an audit would be another fraud.  Ron Paul is just one well-meaning little man trying to do his best against a world gone mad.  Things have to get a lot worse before people are ready to listen.

Thu, 08/02/2012 - 12:18 | 2672605 jvetter713
jvetter713's picture

Thank you for posting that.

Thu, 08/02/2012 - 16:41 | 2673937 rufusbird
rufusbird's picture

Thank you posting that. The next thing I will do is write a short letter thanking my Congressman for his brave Yea vote!

Thu, 08/02/2012 - 11:58 | 2672501 BoNeSxxx
BoNeSxxx's picture

The 100 year Federal Reserve charter is set to expire and it needs to be renewed by CONgress in 2013.

 

I am taking bets on whether the re chartering process will be transparent or whether the re-authorization will be tacked onto some other pending legislation at 4:00 am on Christmas Eve...

 

Any takers?

Thu, 08/02/2012 - 12:02 | 2672548 LawsofPhysics
LawsofPhysics's picture

Either way, all those who vote in favor of passing the charter will be easily identified.  My bet is on your latter scenario.  If ZH reports on anything in 2013, I sure hope they publish the voting record on this.

Thu, 08/02/2012 - 12:07 | 2672561 hedgeless_horseman
hedgeless_horseman's picture

 

 

Jackson vs. Biddle 2.0

Thu, 08/02/2012 - 12:08 | 2672569 LawsofPhysics
LawsofPhysics's picture

About damn time.  bring it.

Thu, 08/02/2012 - 12:18 | 2672579 hedgeless_horseman
hedgeless_horseman's picture

 

 

The problem is that the banking cabal has assured that, unfortunately for the American people, there will be no Andrew Jackson in office this time around...

Obamney 2012

100 More Years of Debt Slavery!

Thu, 08/02/2012 - 12:23 | 2672627 prains
prains's picture

Oligarchmney 2012

Thu, 08/02/2012 - 12:24 | 2672628 prains
prains's picture

Olifartonme 2012

Thu, 08/02/2012 - 12:29 | 2672648 AnAnonymous
AnAnonymous's picture

there will be no Andrew Jackson in office this time around...

_______________

Unfortunately for US citizens, US of A banned slavery shortly after that president. So no more US of A president with over 150 slaves as ownership.

The ethnical cleansing is still possible though. One has only to find the Indians to match.

Thu, 08/02/2012 - 12:36 | 2672676 BlueCollaredOne
BlueCollaredOne's picture

Two words: "The Laogai"

 

As usual, your post deserves a ROR.  Ha ha ha, you vellllly funny.

Thu, 08/02/2012 - 13:31 | 2673008 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous, squatting and dropping another stool, identical in every way with his previous droppings:

Unfortunately for US citizens, US of A banned slavery shortly after that president. So no more US of A president with over 150 slaves as ownership.

Yeah, well, I guess Chinese citizenism citizens have the US of A beat in that regard, as slavery keeps rearing its ugly head there, even in the 21st century. By the way, how is your friend Wang Bingbing doing these days?

http://en.wikipedia.org/wiki/2007_Chinese_slave_scandal

The ethnical cleansing is still possible though. One has only to find the Indians to match.

Sure, sure. According to you, the Indians are US citizens just like the rest, so why not just use any US citizens? We all look alike to you anyway.

Thu, 08/02/2012 - 13:47 | 2673088 4horse
4horse's picture

keep insinuating the race card . . . you insidious piece-of-shit

m e g a p h o n e*

 

smell-of-the-greasepaint, roar-of-the-crowd, nobody's missing your act

 

 

 

 

*clown: @ 0.0001 an hour

Thu, 08/02/2012 - 15:11 | 2673459 CompassionateFascist
CompassionateFascist's picture

Somewhere in Peking, a lost puppy is barking. Somewhere in Peking, anonymouse salivates and rises from his computer...

Thu, 08/02/2012 - 12:22 | 2672623 fuu
fuu's picture

Umm the Fed charter is a red herring. There is no need to renew anything.

http://www.law.cornell.edu/uscode/text/12/341

"Second. To have succession after February 25, 1927, until dissolved by Act of Congress or until forfeiture of franchise for violation of law."

Thu, 08/02/2012 - 12:35 | 2672671 A Nanny Moose
A Nanny Moose's picture

"...until forfeiture of franchise for violation of law."

Something about stable prices comes to mind...

Thu, 08/02/2012 - 13:44 | 2673071 BoNeSxxx
BoNeSxxx's picture

You are correct, sir.

 

So much for 'wishful thinking my way to reality'

 

Guess it's back to drinking...

Thu, 08/02/2012 - 12:23 | 2672629 Bring the Gold
Bring the Gold's picture

Not true I don't have a link on me, but they got a perpetual charter sometime in the 50's if I recall correctly. That said, the FED like JPM and GS are all worthy scapegoats for the BIS and IMF to create its one world financial system. Give the proles something without the puppet masters giving up ANY power. People act like it ends at the FED, Bernanke like all Central Bankers reports to the BIS. Think about it.

Thu, 08/02/2012 - 12:09 | 2672572 jayman21
jayman21's picture

"Americans won't like the Fed expense reports.  Too many five star hotels.  Just like the rest of the DC establishment.  State, Justice, Commerce, Energy, CIA, FBI... Do you think these people ever stay at a Day's Inn?"

 

You make it sound as if the Fed is a part of the gov't.  Friendly reminder....The Fed is a private institution.  The first question I would like answered is who is the owner/beneficiary just like one has to answer before an account is open anywhere else.  It is called know your client (kyc).  Who are these people?

Thu, 08/02/2012 - 13:10 | 2672894 Canaduh
Canaduh's picture

Actually, it is neither a private institution or part of the government. At the same time, it is both. As with almost everything a central bank involves itself in, obfuscation is the name of the game.

Thu, 08/02/2012 - 12:37 | 2672679 tarsubil
tarsubil's picture

Yes, they stay in the Mayflower but they get the government rate. Err, well, some of the time. Sometimes it is hard to do the people's work.

Thu, 08/02/2012 - 11:50 | 2672482 idea_hamster
idea_hamster's picture

We can’t have a real debate about policy unless we have access to all the data about decisions.

You say that like anyone in the Fed wants a "real debate about policy" -- a quaint idea that went out with civil liberties and buggy whips.

Thu, 08/02/2012 - 12:03 | 2672539 Aziz
Aziz's picture

I'm just trying to illustrate the reality that defenders of the Fed's secrecy are more or less advocating technocratic fascism.

Thu, 08/02/2012 - 12:39 | 2672674 Dr. Richard Head
Dr. Richard Head's picture

The majority of American people care more about Chick-fil-Not-Gay, then they do about an audit.  Distractions rule!

Other than a small minority speaking out when Sen. Sander's watered-down bill showd $17 TRILLION handed out to banksters, the people were more concerned about Mile Cyrus' areola or something.

Thu, 08/02/2012 - 23:57 | 2674850 idea_hamster
idea_hamster's picture

I agree entirely -- my comment wasn't criticism.

I only meant that for all we hear about substantive debate about meaningful policy reforms, we sometimes forget that the established hierarchy isn't always interested in truly fostering those conversations.

Sunlight is said to be the best of disinfectants!

Thu, 08/02/2012 - 11:51 | 2672489 Dr. Engali
Dr. Engali's picture

That's the goal.

Thu, 08/02/2012 - 12:21 | 2672618 vast-dom
vast-dom's picture

Aziz: come on man, if The Fed were to become transparent it's quite obvious what the general consensus would be. Of course they do not want to disclose their shadow operations and books. They rigged the markets -- that we know. But then they broke their very own mandate by rigging FOREIGN markets AND bailing out FOREIGN banks. And where does it state in the 1913 mandate that they must bail out an entire failing sector at the expense of the country? The Fed has consistently broken the law and destroyed the free markets.

 

The only questions left for Bernank are: What is the point of free markets? Why do you manipulate that which by its very definition must not be rigged and gamed and altered. How can you defend ZIRP when it distorts the entire marketplace such that malinvestement and gambling by very institutions you bail out continuously for years are the very institutions that hinder intelligent investing and entrepreneurship in general. And finally, do you think it is right to bail out foreign banks and governments in order to prop up insolvent US institutions and markets? We know his answers without even asking them.

Thu, 08/02/2012 - 12:33 | 2672665 Aziz
Aziz's picture

Some questions off the top of my head for Bernank:

1/ Who did they bail out? Why? Who didn't they bail out? Why? Why did they favour some companies over others?
2/ Which central banks did they engage in swaps with? Why? Did they favour certain central banks over others? Why?
3/ Why did they expand the balance sheet through QE? Why not somehow else? Are they aware that QE enriches the banks at the expense of society? 4/ Why is the Fed not concerned about private debt levels? Why was the Fed not concerned about soaring private debt levels before 2008? Why is their monetary policy focused on reflating private debt levels when it is soaring private debt levels that leads to the bust?

 

 

Thu, 08/02/2012 - 14:06 | 2673179 OneTinSoldier66
OneTinSoldier66's picture

There's a ZH member that has a great nick that explains the answers to your questions...

 

TPTB_r_TBTF

 

Of course, there really is no such thing as Too Big To Fail. Too Big To Jail is more like it.

Thu, 08/02/2012 - 12:24 | 2672631 Abiotic Oil
Abiotic Oil's picture

Here is a good blog post.  How the GOP stole the nomination from Ron Paul.

http://jaretglenn.wordpress.com/2012/07/31/how-the-republican-party-stol...

"If you follow mainstream election coverage, you might think Mitt Romney has coasted to an honest, easy, well-deserved Republican nomination. Unfortunately for Republican voters, nothing could be further from the truth. The primary process has been an all-out slugfest and many of the delegates Romney has won may be the result of dirty tricks and even election fraud. The following narrative includes links to reports, first-hand testimonials, and video evidence highlighting actions taken by the GOP to ensure a Romney victory, at the expense of fracturing the party just prior to the general election. Party leaders at the county and state level have changed or violated party rules, cancelled caucuses, changed vote counts, thrown out entire counties of votes, counted public votes privately, called-in the SWAT team, and inexplicably replaced Paul delegates with Romney delegates to block Ron Paul from winning the nomination."

Thu, 08/02/2012 - 12:41 | 2672698 Abiotic Oil
Abiotic Oil's picture

Buckle up...  er lock 'n' load er something...

Here is a search warrant issued for printed words... I have no love for Occupy but they certainly have the right to read, write and print as they will.

http://www.indybay.org/newsitems/2012/07/30/18718597.php

"When FBI and Joint Terrorism Task Force agents raided multiple activist homes in the Northwest last week, they were in search of “anti-government or anarchist literature.”

The raids were part of a multi-state operation that targeted activists in Portland, Olympia, and Seattle. At least three people were served subpoenas to appear before a federal grand jury on August 2nd in Seattle.


In addition to anarchist literature, the warrants also authorize agents to seize flags, flag-making material, cell phones, hard drives, address books, and black clothing.

The listing of black clothing and flags, along with comments made by police, indicates that the FBI may ostensibly be investigating “black bloc” tactics used during May Day protests in Seattle, which destroyed corporate property.

If that is true, how are books and literature evidence of criminal activity?"

Thu, 08/02/2012 - 12:47 | 2672736 Chump
Chump's picture

"If that is true, how are books and literature evidence of criminal activity?"

Because they are evidence of having the wrong thoughts.

Thu, 08/02/2012 - 12:54 | 2672787 Abiotic Oil
Abiotic Oil's picture

Don't mind me... Just going off here.

Chinese Teen Kills 8 in Knife Attack.  

Clearly here in the US we need to ban evil black assault knives! At the minimum we need to stop internet sales of knives.  We should absolutely start federally regulating knife dealers.  I'm scared, I think my neighbors have a whole set of black steak knives.  I've got 911 on speed dial though so I should be ok... right?

http://news.yahoo.com/chinese-teen-kills-eight-knife-attack-reports-1026...

Thu, 08/02/2012 - 13:45 | 2673080 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Clearly here in the US we need to ban evil black assault knives! At the minimum we need to stop internet sales of knives.  We should absolutely start federally regulating knife dealers.

You're forgetting about baseball bats. We need federal regulation to ban aluminum assault bats, and strict licensing, registration, and background checks for any hardwood bats. Additionally, balsa wood bats and hollow plastic fungo bats should only be sold to those over the age of 21, after an appropriate waiting period.

Thu, 08/02/2012 - 14:26 | 2673279 akak
akak's picture

FOR THE CHILDREN!!!

Do NOT follow this link or you will be banned from the site!