Thomas Massie: Audit the Fed!

Representative Thomas Masse (KY-04),lead sponsor of the Audit the Fed legislation, recently penned an Op-Ed for the Kentucky Courtier-Journal laying out the case for passing the bill:

Beyond spurious internet ads urging, “Refinance your mortgage now, Fed lowers interest rates by half a point!” most of us do not think about the actual effects of this secretive institution upon our daily lives. For example, consider that the 2008 financial market collapse was the direct result of the bubble inflated by the easy money, low-interest policies of the Fed.

One hundred years ago, Congress established the Fed and delegated its constitutional authority “to coin money and regulate the value thereof.” Under the Fed’s reckless inflationary policies, the dollar has lost over 95 percent of its value since then.

My bill, H.R. 24, the “Federal Reserve Transparency Act,” would remove the veil of secrecy around the Fed. H.R. 24 is not a controversial bill. In fact, Americans demand transparency, and the House of Representatives has responded by passing this same legislation twice in previous Congresses by huge bipartisan majorities.

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Yet still some have asked and will ask, “Why do we need this legislation? Isn’t the Federal Reserve already audited?” It’s true that the Government Accountability Office (GAO) performs a limited financial audit of parts of the Federal Reserve, but this audit is perfunctory due to the limits placed on the GAO by Congress.

The U.S. Code (31 USC § 714) makes several critical exceptions to the Fed’s audit protocol, and these exceptions cover the Fed’s most crucial activities. For example, the GAO is prohibited from examining Fed transactions or agreements with foreign governments, foreign central banks, and international financing organizations. Yet, hundreds of billions of dollars in loans regularly flow to foreign banks.

When these restrictions were originally added in the 1970s, the GAO testified publicly that it could not “satisfactorily audit the Federal Reserve System without the authority to examine the largest single category of financial transactions and assets that it has.”  Therefore, since only a cursory audit is performed, a programmatic audit must also be completed so that Congress can understand what the Fed actually does, and why the Fed does it.

Another question I frequently hear is, “Won’t a full audit compromise the Fed’s independence?” The answer is that without a full audit of the Fed’s decision-making process, how can we know that the Fed is acting independently of the executive branch? Its charter is not to be a second Treasury Department.  How can we know that the Fed operates independently of big bank CEOs and Wall Street?

Read the rest here. Campaign for Liberty is leading the effort to pass Audit the Fed legislation, and we are know closer than ever to passing this legislation and finally letting the American people know the truth about the Fed’s operations. Please join our efforts.