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Letter: Time to audit the Fed

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  • David King Layton, UT
    July 28, 2012 1:15 a.m.

    As an addendum to my letter, it should be noted that Harry Reid was once a supporter of a Federal Reserve Audit. You can see a speech where he gives his reasons on Youtube if you search for "Harry Reid Fed audit". In his speech he makes the claim that "there's no entity in the world that controls our lives more than the Federal Reserve System." I point out what he once believed to show that this should be a bi-partisan issue. It doesn't belong to Republicans or Democrats. An audit of the fed has been fought for by progressive democrats like Dennis Kucinich and libertarian leaning Republicans like Ron Paul.

  • Shaun Sandy, UT
    July 28, 2012 2:28 a.m.

    What will auditing the fed do? Nothing. The Federal Government should abolish it out right and spend money into the economy debt free and interest free.

  • SEY Sandy, UT
    July 28, 2012 8:15 a.m.

    @Shaun: and how will issuing debt-free currency solve the inflationary problem discussed by Mr. King? Won't it enable the government to rob its citizens even more efficiently of its purchasing power?

    Auditing the Fed will let us have a window into how they have manipulated the money supply and interest rates, and where they have been distributing money and credit (possibly illegally?). It will, to a great extent, expose the level of crony-capitalism going on behind government walls. You call that nothing?

  • Esquire Springville, UT
    July 28, 2012 9:28 a.m.

    Conservatives relying on Keynes? Amazing! Is the irony lost on you?

  • SEY Sandy, UT
    July 28, 2012 9:40 a.m.

    @Esquire: you'd be surprised how self-contradictory Keynes could be. You can use his own words against him in a number of topics. That's why it seems so ironic that liberals trust his pronouncements at all. Keynes was an economic chameleon, depending on the situation. His General Theory is an unintelligible collection of contradictory prose. To call it a coherent economic theory is a stretch.

  • David King Layton, UT
    July 28, 2012 9:43 a.m.

    @Esquire

    Trust me, no irony was wasted on me this time. My use of Keynes's words were deliberate. I could have just as easily have quoted Austrian economist F.A. Hayek stating that "history is largely a history of inflation, usually inflations engineered by governments for the gain of governments," but I wanted someone that would not be immediately dismissed because they're "not mainstream". I've seen too many comment threads on these pages devolve into hyperpartisan bickering, so I wanted to quote Keynes to show that this issue cannot be expressed simply as only one group having the right position. Members of the tea party support a Federal Reserve Audit. Many members of the Occupy movement do as well. Politicians ranging from Jim Demint to a younger version of Harry Reid (as I mentioned above) and even some in between are Fed audit supporters. Why is there opposition now to even holding a vote?

  • Hank Pym SLC, UT
    July 28, 2012 10:03 a.m.

    @ Shaun & SEY

    I'd like to see the Fed go away but exactly how?

    The powers that be won't let it. Furthermore, Lewis v. United States (1982) states, "the Federal Reserve is privately owned" So, its as much a Federal Agency as say Federal Express.

    Its looking more and more like Jekyll Island, GA in Nov 1910 (creation of the Fed) was the darkest day in American History.

  • John Charity Spring Back Home in Davis County, UT
    July 28, 2012 10:05 a.m.

    No reasonable person can deny that the American economy, and even the American way of life is under attack by a vast conflagration of left-wing extremists. They have gone so far as to essentially take over the fed.

    We cannot allow the fed to continue using its power to support leftist bailouts, entitlements, and socialistic programs that destroy the economy. These are the very insidious programs that the leaders of the fed took an oath to fight against. It is time to hold them to that oath.

    All patriotic Americans must demand a full and complete audit of the fed. Its works have been cloaked in darkness long enough.

  • red state pride Cottonwood Heights, UT
    July 28, 2012 10:09 a.m.

    David - I agree that inflation is the cruelest tax of all because it punishes people who do the right thing (work, save, and invest) and as you said it enables politicians to keep spending money we don't have.
    The idea though that we would allow Congress to interfere even more with the Fed is more frightening to me than no oversight. Do you really want someone like Al Franken or Patty Murray poking around the Fed's books?
    I suggest ending the dual mandate for the Fed to maintain a stable currency and low unemployment rates (they aren't compatible) or switch back to a convertible currency (e.g. gold standard) Also, the Fed should stop buying Treasury debt so maybe we'd have an idea of what the market really thinks the ten year treasury yield should be.

  • SEY Sandy, UT
    July 28, 2012 10:27 a.m.

    @Hank Pym: I'm pessimistic about the possibility of eliminating the Federal Reserve by any outside action. You're right, the fix is in and the powers that be won't allow that to happen as long as they're in charge. What will have to happen (and I believe it will eventually) is that the Fed will disappear when the economy along with the US currency collapses. Both are on an unsustainable path.

  • Hank Pym SLC, UT
    July 28, 2012 11:03 a.m.

    RE: SEY 10:27 a.m.

    Agreed.

    When the eventual happens will some credit be given to the conflagration of evil lefties known as Occupy Wall St? ROFL!

    p.s. In the meantime, I'm off to learn Mandarin.

  • David King Layton, UT
    July 28, 2012 1:33 p.m.

    @red state pride

    I see your point, but I still believe Congressional interference is preferable to complete secrecy.
    A partial audit of the Federal Reserve in 2011 revealed that they had given more than 16 trillion in secret loans during 2008. To me, that sort of thing is worth finding out about even if it is done by a politician seeking political gain. I am almost certain that a complete audit of the Fed would reveal more secret actions performed by the Fed. To steal a phrase that big government advocates use when trying to justify civil rights curtailing legislation like the Patriot Act, "those who have done nothing wrong have nothing to fear." If the Fed has not done anything that can't be justified they have nothing to fear. It is only if they have been bailing out buddies or giving special deals that they should have cause to worry. If that is the case, than a painful truth is better than a veil of secrecy which prevents us from ever knowing what is being done.

  • Gildas LOGAN, UT
    July 28, 2012 1:53 p.m.

    The Federal Reserve was audited last year, wasn't it? It was found that this banking institution had given 16 trillion Amercan taxpayers' dollars was to foreign governments.

    A full audit is now demanded by more than two thirds of the House. How dare Harry Reid conspire to prevent a debate and vote in the Senate. Iime to go Harry!

    Next year would make a hundred years of this control of the value of the American dollar (almost always to its detriment) by a secret organisatin. An hisoric moment and a good time to vote it out of existence.

    Meanwhile let's insist on a full audit. An audit does not give any opportunity for Congress to meddle in he economy (they do that aleady) but it does show us what the "Reserve" is doing to your money. Imo their actvities will not survive the full light of day for long.

  • CLM Draper, UT
    July 28, 2012 2:43 p.m.

    Great letter, David King, and your follow up comments reinforce your argument even more fully. The more said about the need for Fed audit and transparency the better.

    I give a hearty amen to your observation that "too many comment threads on these pages devolve into hyperpartisan bickering." It accomplishes nothing and ruins what otherwise might turn into a decent debate or discussion. This thread (so far) is different and for that I am grateful.

    Also a nod to SEY for his astute observations.

  • Twin Lights Louisville, KY
    July 28, 2012 3:16 p.m.

    If the Fed is to be audited, it needs to be done independent of congress (the final report goes to them, that is all). Congressional meddling with the Fed would not be a good thing.

    As to abolishing the Fed, please point to the modern economy that functions without a central bank. Was the gold standard working well for us? For the rest of the world? If so, why abandon it? Were there no issues with using a gold standard? Were there economic crashes under the gold standard?

    I have no problem talking about change. But I would hate to use our economy as the lab rat. If this is all such a good idea then other countries should be racing for the same goal. If not, we need to step back real slowly and ask why.

  • red state pride Cottonwood Heights, UT
    July 28, 2012 4:10 p.m.

    When we were fighting in Iraq there were whole pallets of $100 bills that were flown to Iraq and disappeared into "thin air". I don't think any of the alleged "trillions" the Fed may have used to bail out overseas banks like Deutschebank "disappeared". We're talking about bankers here. Has a banker ever just given anyone money? Not any that I know. I reject the notion that the Federal Reserve is a sinister institution. Incompetent? Definitely. Go back to the easy money of Alan Greenspan that gave us the dot-com bubble and the housing bubble and now Bernanke who has given us the new commodity bubble and zero interest on savings accounts and cd's.
    I agree that all will end in a very bad place but Congressional meddling will just exacerbate the mess that's probably going to come our way.
    You do have options. The Swiss franc is pretty solid- buy francs. You can buy gold if you don't think it is part of a bubble or McDonald's gift cards. You do have options to show your skepticism.

  • SEY Sandy, UT
    July 28, 2012 4:49 p.m.

    @Twin Lights: the question shouldn't necessarily be about choosing between central banking and the gold standard. Neither system will guarantee the absence of recessions, depressions or panics. They have happened under both. The real issue is the concept of fractional reserve banking and the excessive credit spawned by it.

    The gold standard, when strictly adhered to, should reduce or eliminate the hazards of excessive credit. The panics that occurred under the gold standard happened because species payment was suspended for whatever emergency reason. The result was that speculation increased in a similar way it did in the recent real estate boom. Eventually, borrowers defaulted on loans and banks failed, causing panics. It was not the gold standard at fault, it was fractional banking and excess credit.

    The point is that something needs to anchor and limit the money supply to prevent excess credit from creating booms and their concomitant bust. Economic problems are not caused by having too little money. They're caused by rapid expansions and contractions of the money supply. If you can suggest a better way of minimizing those shocks than by implementing the gold standard, I'd love to hear it.

  • CLM Draper, UT
    July 28, 2012 6:58 p.m.

    SEY has said it with ringing clarity. I would recommend a second reading of his comment (4:49pm). He's pointed directly to the cause of our economic problem, which is rapid expansions and contractions of the money supply--and the source of the problem--fractional reserve banking. A system wherein every single dollar is borrowed into existence, and it’s owed back with interest.

    While we may understand that the present currency system “is what it is” and we have to operate within it, for now… it is educational to learn more about how this system of creating currency really works.

  • Eric Samuelsen Provo, UT
    July 28, 2012 7:21 p.m.

    Good letter. Transparency is always a good thing. Audit the Fed, by all means.

    >SEY

    Just because you can't understand Keynes' General Theory doesn't mean it's incoherent or contradictory or inconsistent. It just means that you've haven't done the requisite background reading in economics.

  • wrz Salt Lake City, UT
    July 28, 2012 8:03 p.m.

    Why would you want an audit? To get a look at the balance sheet and income statement? I think those are already available to the public.

    The Fed is the central banking system of the United States with the objectives of maximum employment, stable prices, and moderate long-term interest rates. It accomplishes these goal using monetary policy, member bank depository requirements, and the Discount Window.

    That's it. If the objectives are not being met an audit will not help. In which case, all that it needed is to replace the Chairman and the Board of Governors, et. al.

    It appears those who are calling for an audit actually are concerned with the whys and wherefores of the poor condition of our economy... as if an audit would bring to light and solve those problems.

  • Esquire Springville, UT
    July 28, 2012 8:38 p.m.

    @ SEY, I would sey that conservatives are self-contradictory. They love to pick and choose. Kind of like how they say they hate the federal government, then line up for the handouts.

  • Mr. Bean Salt Lake City, UT
    July 28, 2012 8:47 p.m.

    @SEY

    "The real issue is the concept of fractional reserve banking and the excessive credit spawned by it."

    So, tell us, what are the banks supposed to do with the money put there on deposit by customers if they can't lend it out? And how do banks stay in business without interest income on loans? And how would our economy operate without available credit supplied by banks?

    "The gold standard, when strictly adhered to, should reduce or eliminate the hazards of excessive credit."

    Wrong. The gold standard backs currency... not credit.

    "It was not the gold standard at fault, it was fractional banking and excess credit."

    What do you suppose the FDIC and the Federal Reserve member bank deposit requirements are for? Answer: If there's a run on the bank these two entities can step in to provide needed funds to depositors.

    "The point is that something needs to anchor and limit the money supply..."

    That, sir/ma'am, is the function of the Federal Reserve.

    "If you can suggest a better way of minimizing those shocks than by implementing the gold standard, I'd love to hear it."

    Try the (wait for it) Federal Reserve.

  • Twin Lights Louisville, KY
    July 28, 2012 8:57 p.m.

    SEY,

    The key question IS about choosing between central banking and the gold standard. That is precisely what folks here are talking about. Again, what modern economy uses the gold standard? What modern economy does not use some system of fractional banking? Please just let us see the model so we are not the guinea pigs for someone’s economic reveries.

    As to anchoring and limiting the money supply. If those are the marching orders for the Fed, then that is what they will do. We just have to choose what we want congress to make it do.

    BTW, economic problems can be caused by not having enough money. And, all investment bubbles are not caused by monetary expansion.

  • wrz Salt Lake City, UT
    July 28, 2012 9:49 p.m.

    @Twin Lights:

    "The key question IS about choosing between central banking and the gold standard."

    No country currently uses the gold standard as the basis of its monetary system. But, several hold substantial gold reserves.

    There are at least two problems with a gold standard: First, the price of gold is no longer pegged by the government. Gold prices are subject to and fluctuate with market forces. So the value will go up and down depending on demand for gold as an investment. Then, the quantity of gold may not be large enough to cover the volume of currency in circulation.

    Furthermore, since the government owns gold at Fort Knox and also issues currency (Treasury), can't we say we are de facto on a gold standard? The only difference is... you can't go to Fort Knox and exchange your $20 bill for gold. In fact, you couldn't do that under the gold standard, either.

    "As to anchoring and limiting the money supply. If those are the marching orders for the Fed, then that is what they will do."

    That is exactly what the Fed does. And we have no evidence that it's not doing it.

  • LDS Liberal Farmington, UT
    July 30, 2012 8:57 a.m.

    Why would Gadianton's allow themselves to be audited?

    BTW - The Federal Reserved is NOT part of the Government.
    They are a collective of PRIVATELY owned banks.

    Why do conservatives not know this?
    It's in everyone of W. Cleon Skousen's books....

    I can only reckon Glenn Beck intentiaonally leaves that little factoid out on purpose when he reads it on his programs.

  • CLM Draper, UT
    July 30, 2012 11:46 a.m.

    The Fed is NOT a private business but rather a quasi-public enterprise. The ruling of Lewis v United States (1982), states that the Federal Reserve is "independent, privately owned and locally controlled corporations", and there is not sufficient "federal government control over 'detailed physical performance' and 'day to day operation'" of the Federal Reserve Bank for it to be considered a federal agency.

    What the ruling doesn't say however, is that the Fed is chartered and overseen by Congress. Neither does it refer to the fact that the chairman of the Fed is appointed by the POTUS or that the Board of Governors (7 of them) is appointed by the POTUS and confirmed by the Senate and serves staggered, 14 year terms.

    How many private businesses operate like that?

  • LDS Liberal Farmington, UT
    July 30, 2012 4:45 p.m.

    CLM
    Draper, UT
    The Fed is NOT a private business but rather a quasi-public enterprise.

    ============

    Owned and Operated by non-other-than the Rothchilds...

  • Hank Pym SLC, UT
    Aug. 1, 2012 6:35 p.m.

    re: CLM 11:46 a.m. July 30, 2012

    I already pointed this out on 7/28. I don't know that quasi-public enterprise is the right term IMO.

    I'd say a consortium, cabal, & (for LDS Lib) a not so secret combination. If you look at who they founders were and then look at who received a Lions share of TARP; you'd see a high degree of correlation.