Ron Paul has acknowledged his lack of legislative accomplishments over his storied political career, earning acclaim more for what he votes against than what he votes for. He is after all nicknamed "Dr. No." But that might be coming to an end as his latest and perhaps most important effort yet comes up for debate. H.R. 1207, "The Federal Reserve Transparency Act of 2009," would, at long last, allow some increased scrutiny on exactly what it is the Federal Reserve is doing.

Reuters reports:

House Financial Services Committee Chairman Barney Frank will hold hearings on H.R. 1207, Congressman Paul's bill to audit the Federal Reserve. The hearings are tentatively set to take place Friday, September 25th at 9:00 am.

Of course, those who benefit most from the Fed's secretive manipulation of the nation's money supply are up in arms over the possible implications. Pro-Fed economists have signed a petition urging Congress and the Executive branch to respect the independence of the Fed. Economist Robert Higgs states that those who signed their names discredited themselves by doing so.

All in all, the economists’ petition reflects the astonishing political naïvité and historical myopia that now characterize the top echelon of the mainstream economics profession. ... Everybody now understands that economic central planning is doomed to fail; the problems of cost calculation and producer incentives intrinsic to such planning are common fodder even for economists in upscale institutions. Yet, somehow, these same economists seem incapable of understanding that the Fed, which is a central planning body working at the very heart of the economy—its monetary order—cannot produce money and set interest rates better than free-market institutions can do so. It is high time that they extended their education to understand that central planning does not work—indeed, cannot work—any better in the monetary order than it works in the economy as a whole.

Fed Chairman Ben Bernanke also is sounding the alarm bells over Paul's bill. Reuters reports that "Fed Chairman Ben Bernanke has warned that if the legislation allows an outside agency to audit the Fed's monetary policy decisions — raising or lowering benchmark interest rates or pumping cash into the financial system — it could create the perception that the central bank's independence could be compromised."

Treasury Secretary Timothy Geithner agreed with Bernanke adding "I'm sure people understand that you want to keep politics out of monetary policy."

Alan Binder, writing for Foreign Affairs (the magazine of the globalist think tank Council on Foreign Relations), warned against allowing the audit to happen. Essentially, Binder's argument, along with Bernanke's and Geithner's, is that "technocrats" are suited to make such important decisions without letting political consideration interfere. To really understand Binder's point, just replace "technocrat" with "political elite" and "political considerations" with "the wee peasants too stupid to understand how inflating our currency is really in our best interests."

The libertarian blogger who goes by the name of Citizen X crystallized the arrogance of this position in a post entitled "The Elitist Perspective."

While the current economic turmoil is being blamed on the free market, the truth is that the free market has been subverted.  As has been the case throughout history, the chaos is the result of central planning.  Blinder's article offers a glimpse of the elitist perspective.  Instead of admitting their failures, however, the planners demand more power and more control.  To do otherwise would be admitting their own irrelevance. How much more damage, how many more failures are we willing to endure before we reject the fallacy of central planning and control by elites?

Steven Yates, writing for The New American, also points out the inherent flaws in Bernanke's, Geithner's and Binder's assertions about the Fed "controlling" inflation.

What Blinder euphemistically calls hyper-expansionary monetary policy actually is inflationary, if we understand inflation to be not merely rising prices but an increase in the amount of fiat currency in circulation. Mainstream economics has long preferred the public to see inflation almost exclusively in terms of visibly rising prices. If prices aren't rising, economists can maintain that inflation is low even though the money creation spigot is going full blast — as it has been since the economic crisis began a year ago. If we understand inflation as an increase in the money supply, however, we see immediately that the Fed, far from being a controller of inflation, is actually an engine of inflation. Rising prices in this case are just one possible effect of monetary inflation. The Fed is responsible for the long-term decline in purchasing power of our dollars, which have been backed literally by nothing except legal tender laws and the willingness of the public to accept them since 1971, the year President Richard Nixon severed the last ties between the dollar and gold.

At this point, on the cusp of legislative success, Paul's bill does face some other dangers. For one, Rep Barney Frank who is no friend of the free market has been actively promoting the bill. There is a danger that the bill could end up getting absorbed into much bigger legislation regarding the Fed. John Tate from the Campaign for Liberty cautioned, "However it is important that Audit the Fed not be attached to any other bill that seeks to 'reform' the Fed by increasing its power; that would be a betrayal to the intent and spirit of H.R. 1207, and would be vigorously opposed by
 Campaign for Liberty."

TrackBack URI for this entry

Comments (4)

Subscribe to this comment's feed

Show/Hide comments

danwhitehead1 said:

	This is encouraging; however - - - - - - remember that the scum who would rule are not going to surrender power easily, if at all, without brute force and/or outright extermination.
	report abuse vote down vote up

September 17, 2009
Votes: +0

Joe S said:

... I agree with the gist of danwhitehead1's comment regarding the inability of those who seek to control us relinquishing their power without a fight. But at a time when we're trying to attract and retain a broader spectrum of people to the JBS message, labeling them in derogatory terms such as "scum" only harms our image and fuels the fire of those who categorize us as extremists, on the fringes, etc. Words convey impressions; derogatory terms should be avoided in the comments.

report abuse vote down vote up

September 17, 2009
Votes: +0

Larry Brown said:

	... Joe S.... Amen
	report abuse vote down vote up

September 17, 2009 | url
Votes: +0

danwhitehead1 said:

	Dear JoeS and Larry Brown You are both correct and I humbly accept you chastening. I will do better in future. My anger and quick-flash temper are two of my worst faults. I am just so weary of all these who would push people around and steal from them.
	report abuse vote down vote up

September 18, 2009
Votes: +0