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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 - 12:39 | 2672689 RSloane
RSloane's picture

You must be joking, right? Obama?

Thu, 08/02/2012 - 12:43 | 2672707 Vic Vinegar
Vic Vinegar's picture

I'm considering voting for Barry.  I didn't do it the first time around, but this time maybe.  Ironic, I know.

It would be for the simple reason that I doubt he's going to take me out with a drone.  It would be nice to hear him come out and say this, but we all know pols lie. 

Unless you internet commenters have a better idea...

Thu, 08/02/2012 - 12:58 | 2672806 Vic Vinegar
Vic Vinegar's picture

The problem with your reds - and articles like this - is that they only make me more inclined to vote for Mr. Obama, for reasons I noted above.

Try harder.  Otherwise, I say throw your support behind the candidate who promises not to fly drones over your house.

Thu, 08/02/2012 - 15:06 | 2673435 TheFourthStooge-ing
TheFourthStooge-ing's picture

While I can't bring myself to vote for either Barry or Willard, I can't help but think that the world would be worse off if Willard wins than it would be if Barry is re-elected.

Either way, the United States is pretty much irretrievably fucked and the global economy is doomed. The only difference I see is that Willard has guaranteed that he'd sacrifice the people of Israel and the people of the US on AIPAC's altar by incinerating the people of Iran.

With Barry, this outcome is still probable, but he hasn't yet explicitly guaranteed it.

+1 green arrow to you, Vic, for your candor.

Thu, 08/02/2012 - 12:49 | 2672745 working class dog
working class dog's picture

An audit is a waste of time, they are doing exactly what the law says they are permitted to do, of course if you take away the 100 ammendments to the original Federal Reserve Act of 1913 and the abilty of the IRS to tax human labor, than you might have something that will reign in the Timmah's, Bernanksters, Dimons, Diamonds, Fuld, etc. etc. etc.. of the system. You see they are doing exactly what the law says, but doing gods work is screwing the american WORKERS who put boots on the ground and work in the heat and cold and risk injury and financial loss. These pigs have the fix in, see how accomplished they are at accomplishing the real mandate of the Cartel, that is to enrich the members and loot the sheeple.

Doing what it was designed to do the Central Bank exceeds all wild expectation, that is to enrich the members and impovrish everyone else.

The Federal  Reserve act should be repealed completely and put the currency control back to treasury, period.

Thu, 08/02/2012 - 13:26 | 2672982 AnAnonymous
AnAnonymous's picture

An audit is a waste of time, they are doing exactly what the law says they are permitted to do,

_______________

Fair but tough...

Thu, 08/02/2012 - 14:14 | 2673145 akak
akak's picture

Incoherent but amusing ...

Thu, 08/02/2012 - 13:10 | 2672877 Shizzmoney
Shizzmoney's picture

The Fed will be as "transparent" as they want to be.

I remember when Dylan Ratigan issued a FOIA request for his MSNBC show for the FOMC meeting right after the 2007 crash......he eventually got it earlier this year.  With over 85% of it redacted.

The only part was the quips about them ordering lunch (on our dime, most likely).

The only thing I found out what Ben Bernanke said that day, was that he ordered the Chicken Cobb Salad.

Thu, 08/02/2012 - 14:03 | 2672901 TomGa
TomGa's picture

Even the MSM are waking up... (well a local FoxNews channel at least):

 

Mainstream Reporter Tells The Truth About Audit The Fed And The Creation Of The Federal Reserve

https://www.youtube.com/watch?v=mqmYRnBVmEo

 

 

Harry Reid, US Senate Floor Speech - 

"I Think We Should Audit the Federal Reserve!"

PresProTem: "The Senator from Nevada"

Reid: "Mr. President, I would like to extend my congratulations to the senator from North Dakota of course for authoring this amendment of which I am a sponsor, but more importantly for speaking out about the Federal Reserve.

For years I have sponsored legislation which would call for an audit of the Federal Reserve system. I offer that amendment every year. Every year the legislation gets nowhere. I think it would be interesting to know about the Federal Reserve. I THINK WE SHOULD AUDIT THE FEDERAL RESERVE. It's taxpayers' money that being used there, but we don't do that.

Senator Dorgan has spoken out on the secrecy of the Federal Reserve system. He's spoken out on the Federal Reserve more than anyone that I know in either body.

But even though there is no entity in the World that controls our lives more than the Federal Reserve system, his speeches go unnoticed, I'm sorry to say. People just don't care it seems about the Federal Reserve. Maybe it's because it's a subject that isn't very interesting. You know it's not pornography, it's not, uh, murder, it's not uh, it's not an issue that deals with the wild west, water, grazing. It doesn't deal with issues that we talk about here a lot.

But we don't talk enough about the Federal Reserve and the impact it has on our lives, so I acknowledge the work that my friend from North Dakota has done on this issue, and I am sorry that his very lucid statements have received very little attention.

I was thinking as the senator from North Dakota was outlining the secrecy of the Federal Reserve system, that maybe what we should do is, [unintelligible] the Central Intelligence Agency has received a lot of criticism lately of not doing a real good job; one reason may be they are not secret enough in some of the things they do, um, maybe we should combine them with the Federal Reserve Board. What the Federal Reserve Board does, nobody knows what they're doing. CIA, it seems that everyone has some idea what they're doing, so maybe we could combine the two, it might not be a bad idea.

 

Thu, 08/02/2012 - 13:48 | 2673091 Eric L. Prentis
Eric L. Prentis's picture

Covering up the credit crisis by boosting Keynesian government spending, the zero interest rate policy (ZIRP), and increasing the supply of money through quantitative easing by the Federal Reserve does not the address our real fundamental economic problems of high debt levels, lack of demand, declining employment, absence of income growth and the structural problems of the insolvent banking system.

 

President Obama’s solutions to the credit crisis over the past four years have made our real economic problems worse. Doing more of the same is insanity. The US needs new leadership.

Thu, 08/02/2012 - 14:10 | 2673203 NoelConfidence
NoelConfidence's picture


"Secrecy, being an instrument of conspiracy, ought never to be the system of a regular government."  -  Jeremy Bentham


Thu, 08/02/2012 - 15:06 | 2673431 CustomersMan
CustomersMan's picture

 

Bottom Line:

 

I don't need any "Jews" counting my money for me.

Thu, 08/02/2012 - 16:06 | 2673733 Bansters-in-my-...
Bansters-in-my- feces's picture

"better outcome"

 

Ya for who,you fucking terrorist.

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