“For years, I have sponsored legislation that would call for an audit of the Federal Reserve System. I offer that amendment every year. Every year, the legislation gets nowhere. I think it would be interesting to know about the Federal Reserve. I think we should audit the Federal Reserve. It’s taxpayer’s money that’s being used there. But we don’t do that.” — Senator Harry Reid, 1995
I agree with Senator Reid. I think we should audit the Federal Reserve.
A century ago, Congress relinquished its constitutional duty to regulate our nation’s monetary policy and instead, gave that power to a quasi-government entity — the Federal Reserve. Established under President Woodrow Wilson in 1913, the Federal Reserve issues all coin and paper currency, controls interest rates, and sets the course of our nation’s monetary policy. The Fed is the banker’s bank, the federal government’s bank, and, as such, it is the most powerful and influential financial institution in the world. Senate Majority Leader Reid once articulated it nicely when he said “there is no entity in the world that controls our lives more than the Federal Reserve System.”
Yet, despite the undeniable importance and responsibility of the Federal Reserve over our nation’s economy, we are unable to obtain a complete grasp of its inner-workings: Current law specifically prohibits full audits of the Federal Reserve’s deliberations, decisions, or actions on monetary policy. This means that for the past 100 years, the Federal Reserve has controlled our nation’s monetary policy – and, therefore, our economy – behind a complete veil of secrecy.
The Federal Reserve’s lack of accountability and transparency has led to grievous consequences. Since the Federal Reserve was established, the United States has witnessed the Great Depression, the high inflation and unemployment of the 1970s, the stock market crash and banking crisis of the 1980s, the market turbulence of the 1990s, and, most recently, the 2008 financial crisis. Yet at the same time, the buying power of the United States dollar has fallen 95 percent under the Fed’s stewardship – in other words, today’s dollar is valued at approximately what a nickel was worth in 1913. What does this mean for the average American taxpayer? The steady decline of the U.S. Dollar punishes thrift, erodes the value of savings, and harms senior citizens living on fixed incomes.
Fortunately, my dear friend and former colleague, Dr. Ron Paul, has tirelessly fought for transparency at the Federal Reserve. Last Congress, Dr. Paul amassed the bipartisan coalition that saw his Federal Reserve Transparency Act – which would simply provide for a full audit of the Fed – pass in the U.S. House. This Congress, I reintroduced this important legislation as H.R. 24, and just weeks ago, the House passed it by an overwhelming 333-92 margin.
H.R. 24 currently sits on Senator Reid’s desk among hundreds of other House-passed bills, awaiting consideration. In the past, the Senate Majority Leader has voiced his support for an audit of the Federal Reserve. As recently as 2010, he stated, “There should be a Federal Reserve audit. We haven’t gotten it yet, but we’ve made some progress in that regard.” In 1995, he enthusiastically called for an audit of the Federal Reserve on the U.S. Senate floor, “I think we should audit the Federal Reserve. It’s taxpayer’s money that’s being used there. But we don’t do that.”
Last Congress, Senator Reid stonewalled Dr. Paul’s “Audit the Fed” bill. Why his sudden change of heart, when the facts on the Fed remain the same? If anything, the Fed has proven to be a more powerful force today than it was 19 years ago. In fact, in 2011, a partial audit of the Federal Reserve required by the Dodd-Frank law found that the Fed had loaned 16 trillion dollars to financial institutions – some of which were not even American – between 2007 and 2010. If this is the sort of activity brought to light by a partial audit, then I believe it further highlights the absolute necessity of a full audit.
I agree with Senator Reid that we should audit the Federal Reserve, and it’s up to the American people to hold him accountable and remind him of his past support of the provisions found in H.R. 24. I urge citizens across the nation to flood Senator Reid’s phone lines, call, and write their U.S. Senators, and tell them you want H.R. 24 to come to the Senate floor for a vote. The strongest political force in America is embodied in the first three words of the Constitution, “We the People” – and through their voice, we can work towards delivering the government transparency and accountability the American people need and deserve.