What Is The Fed Afraid Of?


By: Michael Clayton

Last Monday I attended a speech at the Catholic University of America by Mr. Jerome Powell titled: “The Federal Reserve and the Financial Crisis”. Mr. Powell should know this subject well, as he works for the Fed, serving on the Board of Governors. However, this speech did not examine the recent financial crisis and was little more than a PR stunt put on by the Fed in their ongoing attempt to convince the American people that the Federal Reserve is already highly transparent and functional.

In fact, Mr. Powell spent most of his time directly assaulting the integrity of Audit the Fed legislation. His claims that the Federal Reserve is already audited and transparent in every way possible have been repeated multiple times over the last few weeks by misinformed businessmen and economists alike. While this argument is little more than a misdirection act used to deceive the American people into believing that all Fed actions are made public, it is worth questioning why the Fed currently feels the need to defend themselves at all.

The reason is that the Federal Reserve and it’s cronies are scared of being exposed, more now than at any other time in the Fed’s 100-plus year history. They know that if their monetary decisions are made available to Congressional and public scrutiny that they will be forced to end their easy money policies that have made Wall Street rich at the expense of the ordinary American.

Of course, the Fed will claim that it’s fear is derived not from the possibility of being exposed, but from the thought of losing their independence. What a farce! Independence? An institution that can manipulate interests rates and devalue your hard-earned money should not be able to operate independent of oversight. Thier claims that Audit the Fed legislation would “politicize” the Fed are quite ironic considering their recent dealings.

Unfortunately for Mr. Powell, most of the arguments he used in favor of the Fed maintaining its independence are the same arguments we use againt it. You see, the question to be asking is not whether the Federal Reserve should be able to operate independent from Congressional oversight. The question you should be asking is whether or not we need the Fed at all. The vast majority of people who support Audit the Fed abhor central banking and would abolish the Federal Reserve tomorrow if possible.

Mr. Powell complained that Audit the Fed legislation would harm the economy. Well it would, but only because you have been peddling cheap money and low interest rates for so long, the market will have to correct itself. Unfortunately, the longer they continue down the current path, the longer and harder the correction will be. But they are only delaying the inevitable, their current programs will eventually cause the U.S. dollar to collapse.

My favorite part of Mr. Powell’s presentation were his last few words in response to a question from C4L VP of Policy, Norm Singleton. Mr. Powell said that most people who support Audit the Fed legislation we using it as “a stepping stone towards ending the Fed.” Well of course! We have entered an age when people are going to have to ask themselves which works better: Central planning or the free market?