There is a really bizarre battle shaping up about there being an audit of the Federal Reserve Bank. On the one side are many members of Congress who have proposed a bill that would require an audit of the Fed with a report of the findings made available to Congress. This audit would surely be released to the public as well. On the other side are the board of governors of the Fed and president Obama who do not want the details of the Fed's financial condition or actions made public.
The Fed is now marshaling arguments to the effect that Congress ought not to have any say in the nation's monetary policy since Congress has done so poorly controlling the fiscal policies. The attacks by the Fed strike me as complete overkill. Think about it. All that the bill requires is a review of the books of the Fed by competent accounting professionals and a release of an audit report. In other words, the bill only says that Congress and the American people will get more information about what the Fed is doing and what is its condition.
Can it be that keeping the Fed mysterious helps the US economy? Will too much information actually hurt growth? I really do not see how that could be. Every public company in America has to release detailed financial reports every quarter. The USA made a value judgment long ago that full disclosure of financial details of these companies was needed to prevent fraud in the market. We also opted as a nation to have full disclosure of the finances of the federal government. We know the size of the revenues and expenditures; we know if the budget deficit is growing or shrinking; we know if interest rates paid by the government are trending up or down. Why shouldn't we also know the financial condition and activities of the Federal Reserve Bank?
It would be worth debate if the congressional proposal involved giving more control by Congress over the Fed, but the current proposal is just for the audit. If the audit shows that the Fed is managing well, then nothing further would be required. On the other hand, if the audit shows that the Fed is out of control or mismanaged, shouldn't the nation know? It is incomprehensible that Obama and the Obamacrats would fight to keep secret the activities of an institution like the Federal Reserve.
The Fed is now marshaling arguments to the effect that Congress ought not to have any say in the nation's monetary policy since Congress has done so poorly controlling the fiscal policies. The attacks by the Fed strike me as complete overkill. Think about it. All that the bill requires is a review of the books of the Fed by competent accounting professionals and a release of an audit report. In other words, the bill only says that Congress and the American people will get more information about what the Fed is doing and what is its condition.
Can it be that keeping the Fed mysterious helps the US economy? Will too much information actually hurt growth? I really do not see how that could be. Every public company in America has to release detailed financial reports every quarter. The USA made a value judgment long ago that full disclosure of financial details of these companies was needed to prevent fraud in the market. We also opted as a nation to have full disclosure of the finances of the federal government. We know the size of the revenues and expenditures; we know if the budget deficit is growing or shrinking; we know if interest rates paid by the government are trending up or down. Why shouldn't we also know the financial condition and activities of the Federal Reserve Bank?
It would be worth debate if the congressional proposal involved giving more control by Congress over the Fed, but the current proposal is just for the audit. If the audit shows that the Fed is managing well, then nothing further would be required. On the other hand, if the audit shows that the Fed is out of control or mismanaged, shouldn't the nation know? It is incomprehensible that Obama and the Obamacrats would fight to keep secret the activities of an institution like the Federal Reserve.
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