

Senate Votes for Audit of Fed (96-0) - mojuba
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201005111408dowjonesdjonline000510&title=2nd-updateus-senate-passes-amendment-for-one-time-audit-of-fed

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chaostheory
It's just a dog and pony show with little meaning:

"Audits of the Federal Reserve Board and Federal reserve banks may not
include—

transactions for or with a foreign central bank, government of a foreign
country, or nonprivate international financing organization;

deliberations, decisions, or actions on monetary policy matters, including
discount window operations, reserves of member banks, securities credit,
interest on deposits, and open market operations;

transactions made under the direction of the Federal Open Market Committee; or
a part of a discussion or communication among or between members of the Board
of Governors and officers and employees of the Federal Reserve System related
to clauses (1)–(3) of this subsection."

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presidentender
Senate votes for toothless, meaningless lipservice. This one-time 'audit'
isn't going to accomplish much, unfortunately. I'm glad that this step is
being taken, but I'd much rather see the original language restored.

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philwelch
I think the one thing saving us from hyperinflation is the _lack_ of political
control and influence over the FED. You see hyperinflation in currencies where
the ordinary government has control and influence over the central bank,
because they just use the central bank's inflationary power to boost spending.
The FED is independent from Congress for a reason, and an ongoing power to
audit threatens that independence and, by extension, our currency.

A one-time audit for the bailout will accomplish the main objective people
have been asking for--accounting for all the bailout--without threatening the
operational independence of the FED.

~~~
presidentender
So why not have a one-time audit of the rest of the Fed's activities?

~~~
philwelch
I don't know if that's a good idea or not. People are mostly worried about the
bailout, so auditing the rest of the FED's activities is out of scope. I think
the relevant boundary is between accounting for a (legitimately questionable,
expressly Congressionally-authorized) bailout and going on a general crusade
against the FED.

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marr
''' "This amendment begins the process of lifting the veil of secrecy of
perhaps the most powerful federal agency," Mr. Sanders said at a news
conference after the vote. '''

Am I mistaken in thinking that "the Fed" is not a federal agency? Or is "the
Fed" as a whole generally considered one because of the Board?

~~~
noelchurchill
You're right. The federal reserve is a quasi private/public entity. It's a
private organization with the chairman appointed by the federal government.

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chaosmachine
non-paywall source:

[http://www.nasdaq.com/aspx/stock-market-news-
story.aspx?stor...](http://www.nasdaq.com/aspx/stock-market-news-
story.aspx?storyid=201005111408dowjonesdjonline000510&title=2nd-updateus-
senate-passes-amendment-for-one-time-audit-of-fed)

~~~
mojuba
WSJ showed the full article when I opened it through Google News Search...
didn't know even WSJ does the dirty tricks with referrers.

~~~
pyre
WSJ isn't doing it. It's evidence that Google is 'stealing' from Rupert.
Google is allowing people to read WSJ articles that are supposed to be behind
a pay wall... </sarcasm>

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spoiledtechie
I question why they want to see where the FED spent the money. Is it actually
because they care, or they want to get in on all the wheeling and dealing with
the banks? I agree with transparency, but what is the true motive of the
politicians? I think it will be to line their pockets.

~~~
borism
Ron Paul is known gold bugs' favorite, so undermining the Fed by any means is
definitely going to score some points for him.

~~~
philwelch
For the longest time there was a theory called "starve the beast". The idea is
that Republicans interested in reducing the scope of the federal government
could cut taxes and actually increase spending, forcing a deficit crisis and a
sudden paring-back of the government (similar to the now famous Greek
"austerity measures") and creating a permanent distrust of big government.

I bring this up because it seems like a similar tactic could be applied to the
FED. The FED doesn't hyperinflate because there's no oversight or control by
Congress--if there was oversight, Congress would do all they could to get the
FED to hyperinflate just to increase spending. Maybe goldbugs want to
introduce permanent oversight and control over the FED just to cause that
hyperinflation, just so they could turn around and say "Look! Central banks
are untrustworthy!".

There are _lots_ of similar examples on the left, whether deliberate or
accidental--regulating certain industries within inches of their lives
(healthcare) and then pointing to it as a market failure.

~~~
jacoblyles
"Starve the Beast" is a surprisingly bipartisan tactic. For example, it's no
secret on the right that entitlement spending has the US government on a
course towards bankruptcy. So the right wing tends to think the left wing is
stupid when they support even more generous benefits.

But I read an interview with Paul Krugman the other day where he acknowledged
the fact that our entitlements are unsustainable. Of course, having a Nobel
prize in economics, he would not be so blind as to miss our looming national
bankruptcy. But he figures if the public finances get bad enough, then
politicians will be forced to raise taxes and/or nationalize health care, i.e.
follow the leftist plan. The theory is that if politicians play chicken with
global debt markets then eventually they will be forced to swerve.

Krugman has more faith in politicians than I do. I think the politicos are
going to drive us off a cliff.

Starve the beast comes in many guises. Even the most shrill critics of it's
practice by the right wing (such as Mr. Krugman) practice it themselves. I
don't think any such tactics are terribly smart.

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andre
about time

