One Step Closer to an Audit of the Fed

Representative Ron Paul is now closer than ever to getting something he’s wanted since he was first elected to Congress, a full audit of the Federal Reserve. The Federal Reserve Transparency Act sailed through the House of Representatives by a vote of 327-98. This is the second time this bill has passed the House, although it is the first time it passed as a stand-alone bill.

Fox News reports, “But lost in the bipartisan revelry was the fact that eight co-sponsors of the legislation actually voted against it… The eight House Democrats who switched their stance on the issue without an explanation find themselves in good company, with Senate Majority Leader Harry Reid also pulling off a mystifying pivot.

In 2010 and 1995, Reid boasted that he had tried in vain to pass legislation to audit the Fed. The Nevada senator, however, is now refusing to bring the bill, which would fulfill his self-professed yearning, to a Senate vote.”

Angel Clark writes, “Perhaps seeing the overwhelming support the H.R. 459 received in the House of Representatives made Reid wary of the Federal Reserve Transparency Act passing.”

Exactly what would happen if the Senate voted on and passed the bill to audit the Fed?

In 2009 Jim Babka of DownsizeDC presented five possibilities:

Outcome #1: The audit is ignored.
The FED is a complex operation, and the audit will reflect that. There may be no soundbites that the media and the public can understand. The audit report may simply be ignored, and then forgotten.
Outcome #2: The FED gets a passing grade.
We can’t guarantee that the audit will tell us what we want, or that the auditors will even focus on the things we think are important. The audit will most likely be conducted by establishment insiders, not by people like us. The result could be the exact opposite of what we expect.
Outcome #3: The audit reports bad things, but nothing is done about it.
We think this is the most likely result. In the 1980s the Grace Commission found massive examples of government waste and fraud, but nothing was ever done about it. Instead, the problem just got worse. People may pay attention to the audit, just as they did the Grace Commission, but that doesn’t mean real change will happen.
Outcome #4: The auditors report big problems, and Congress decides to fix the FED.
This may sound like the result we want, but it could be the worst outcome. We want to end the FED, not have Congress micro-manage it.
Imagine what would happen if money creation was a partisan political power. Imagine the consequences if a single branch of government, Congress, could both spend money, and create it.
Have you ever watched a Financial Services Committee hearings on C-Span? It’s frightening. I hate the FED, but Lord, please, don’t let these people control our money supply!
Outcome #5: The auditors report horrifying things, and Congress decides to close the FED.
This is what we want , but it’s the least likely result. This outcome would only happen if there was a huge army pressuring Congress to make it happen.

While I would be thrilled to see the Federal Reserve audited and/or abolished, I won’t hold my breath. Instead, I’ll do everything possible to make the Fed irrelevant to my life.