Who Should Audit the Fed?

by Chidem Kurdas

A few days ago the House passed with a veto-proof majority the bill known as “audit the fed” or more plainly as H.R. 459, sponsored by Ron Paul.  If it became law, it would open the Federal Reserve’s policy deliberations and decisions, certain operations and dealings with foreign banks and governments to scrutiny by the Congressional Government Accountability Office. The GAO currently audits the Fed’s financials but not its policy making.

A number of House Democrats supported the bill, though party chieftains are against it.  The critics of the measure, prominently including Fed Chair Ben Bernanke, argue that it will open the way to political interference with monetary policy, which is best conducted on purely economic grounds.

Both sides have a valid point. Continue reading

Peace and Free Enterprise

by Jerry O’Driscoll  

Initially, the headlines about the Iowa straw poll said Bachmann won. That was literally true, but hardly interesting. Libertarian Ron Paul basically tied her. The two candidates blew out the rest of the field with 57% of the vote. Under pressure from rapid blog postings, the established media have caught up with the facts.

All candidates spoke of the need for smaller government. Reasonable voters might have suspected, however, that not all candidates were as seriously committed to that as Bachmann and Paul. Both have unassailable Tea party credentials. The Tea Party in part grew out of Ron Paul’s 2008 presidential campaign. Bachmann jumped on the bandwagon early, before it was popular.

Paul finished fifth in Iowa in 2007. He surged this year on two other issues: end the wars and end the Fed. His call to bring home the troops and end the wars resonated with Iowa Republican voters. We’ll see how it plays out in other contests.

(Ending the Fed was actually his most popular issue in 2008. I thinking ending the wars mattered more this time.)

The linkage between peace and free markets was central to classical liberalism in 19th century Britain, right up through the Gladstone Liberal victory in 1906. Nineteenth-century economist James Mill summed it up when he said that war was the worst calamity that can befall a country. Randolph Bourne summed it up in 20th century when he described war as the health of the state. That is a favorite Ron Paul quote.

What won in Iowa is liberty.

Regulatory War of Choice

by Chidem Kurdas

“A just war” is how Treasury Secretary Timothy Geithner describes the movement to expand financial regulation.  “It’s a war of necessity, not a war of choice,” he  is reported as saying about  the battle to impose greater government control on the financial sector.

This is the man who presided over the New York Federal Reserve Bank as the Fed assiduously provided the monetary fuel for the over-expansion of credit and the associated property bubble. The eventual implosion  of the twin bubbles caused the financial crisis of 2008.

For sure, markets are prone to ups and downs, because people are prone to behaviors like herding. And yes, bankers drank the spiked punch, as did myriad others from mortgage originators and real estate developers to over-extended households. But the Fed provided the heady stuff, thereby creating a boom-and-bust cycle of extraordinary magnitude.

Now, does Mr. Geithner’s proposed regulations seek to prevent similar nefarious policies in the future by limiting the Fed’s discretionary powers? Of course not. Silly even to ask. His quest is to expand the authority of government agencies, not to regulate them.

The one attempt to get a sense of what the Fed is up to, a bill by Congressman Ron Paul, has been destroyed at a Congressional sub-committee—even though it had 308 co-sponsors. Continue reading