This is closely related to the bank bailout. See that page too.
This is another subject that is way beyond the scope of this website. As a starter, the Federal Reserve system is a hybrid of the banking industry and the U.S. government, but it is strictly neither. It is definitely not controlled by the U.S. government.
Rep. Ron Paul has introduced a bill to audit the Federal Reserve, HR 1207. It has 270 co-sponsors as of mid July, 2009. The entire House of Representatives is only 435 members, so a majority is 218 members. However this bill has not been reported out (approved and sent to the full House of Representatives) by the Committee on Financial Services, where it has been since February 26. Meanwhile the Treasury Secretary Henry Paulson has attacked the bill as a “takeover of the Federal Reserve by Congress”, clearly a spurious and self serving claim.
The Federal Reserve has never been audited. This is an obvious oversight, or perhaps it’s on purpose. The Fed operates in secrecy, in that we don’t even know specifically who the owners of the Fed are. Yet every dollar in our economy is created out of thin air by the Fed, and loaned to the U.S. Treasury at interest.
Back to the history of the Federal Reserve. For years the goal of the Fed was to limit inflation. The way to accomplish this has been to limit the money supply. However, no longer. It’s hard to tell when this policy ended, but it surely ended by the time of the bank bailout, when the government borrowed $700 billion from the taxpayers for nebulous purposes. That was followed by Obama’s reconstruction or development bill, several hundred more billion dollars. We know that today inflation is low. However when all of that money finds its way into the economy, according to the old maxim that limiting the money supply is the way to keep inflation in check, we are due for some massive inflation. The national debt has reached a point where it is extremely unlikely that the U.S. will ever pay it off or even make a significant dent in paying it off. Imagine having debts that are so huge you can never repay them. Whether you are an individual, a family, or even a multi billion dollar corporation, this can force you into bankruptcy. Only Uncle Sam can print new money to pay off debts, but the new money is borrowed so that is just added to the debt. When will it ever end, and how? Perhaps in a total financial meltdown.
This looks like a deliberate plot to devalue the U.S. dollar. The dollar could be replaced by a new currency, the Amero. It’s hard to tell exactly what the full consequences would be, but they would not be in the interests of the American consumer, home owner, middle America or even blue collar worker or lower class.
Research the history of the Fed. You’ll find out its origins in 1913 in a secret meeting by European bankers and their agents on Jekyll Island off of Georgia. The series of financial crises that led to the formation of the Fed were, in fact, caused by the same banks who wrote this bill and benefitted from it.
There is a bill in the House as of July, 2009 sponsored by Rep. Ron Paul, which is to audit the Federal Reserve system. It has never been done. This bill has great potential to at least shed some light, which would be a fantastic and huge first step, on what the Fed is doing and has done with so many hundreds of billions, even trillions of dollars, of taxpayer money.
Several documents to see;
Audit the Fed S 604 letter (a letter to Senators to co-sponsor this bill)
H.R. 1207 (the bill itself, it’s a one page bill)
Resources for learning about HR 1207 (the bill in the House)
Ron Paul on Napolitano Freedom Watch
Ron Paul Statement on HR 1207
Congressman Ron Paul’s website on HR 1207 including his statement when he introduced it, a 6 minute video of Ron Paul
talking about HR 1207, and Ron Paul’s quotes on HR 1207 in interviews.
In a Committee hearing Rep. Alan Grayson asked Federal Reserve Inspector General Elizabeth Coleman about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligations. The Inspector General responded that she does not know and is not tracking where this money is. See the following video of that exchange:
Or search on youTube for “alan grayson minding the store”.
Statement of Congressman Ron Paul
United States House of Representatives
Introducing the Federal Reserve Transparency Act
February 26, 2009
I rise to introduce the Federal Reserve Transparency Act. Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation.
Serious discussion of proposals to oversee the Federal Reserve is long overdue. I have been a longtime proponent of more effective oversight and auditing of the Fed, but I was far from the first Congressman to advocate these types of proposals. Esteemed former members of the Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales were outspoken critics of the Fed and its lack of transparency.
Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce the Fed’s susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.
The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight? Particularly when hundreds of billions of dollars of currency swaps have been announced and implemented, the Fed’s negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy. If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates.
More importantly, the Fed’s funding facilities and its agreements with the Treasury should be reviewed. The Treasury’s supplementary financing accounts that fund Fed facilities allow the Treasury to funnel money to Wall Street without GAO or Congressional oversight. Additional funding facilities, such as the Primary Dealer Credit Facility and the Term Securities Lending Facility, allow the Fed to keep financial asset prices artificially inflated and subsidize poorly performing financial firms.
The Federal Reserve Transparency Act would eliminate restrictions on GAO audits of the Federal Reserve and open Fed operations to enhanced scrutiny. We hear officials constantly lauding the benefits of transparency and especially bemoaning the opacity of the Fed, its monetary policy, and its funding facilities. By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much-needed transparency of the Federal Reserve. I urge my colleagues to support this bill.
The entire bill, HR 1207, is one page long. It’s beauty is its simplicity. Most bills passed by Congress, especially appropriations (spending) bills for hundreds of billions of dollars, are hundreds of pages long. There probably isn’t one person in Congress who reads any given appropriation bill cover to cover. Probably not one of them reads a single bill in a single year. That by itself ought to be changed. But that’s another subject for another day.
This is the bill itself, H.R. 1207:
111th Congress – 1st Session
To amend title 31, United States Code, to reform the manner in which the Board of Governors of the Federal Reserve System is audited by the Comptroller General of the United States and the manner in which such audits are reported, and for other purposes.
1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Federal Reserve Transparency Act of 2009″.
SEC. 2. AUDIT REFORM AND TRANSPARENCY FOR THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
(a) IN GENERAL. – Subsection (b) of section 714 of title 31, United States Code, is amended by striking all after “shall audit an agency” and inserting a period.
(b) AUDIT. – Section 714 of title 31, United States Code, is amended by adding at the end the following new subsection:
“(e) AUDIT AND REPORT OF THE FEDERAL RESERVE SYSTEM. –
“(1) IN GENERAL. – The audit of the Board of Governors of the Federal Reserve System and the Federal reserve banks under subsection (b) shall be completed before the end of 2010.
“(2) REPORT –
“(A) REQUIRED. – A report on the audit referred to in paragraph (1) shall be submitted by the Comptroller General to the Congress before the end of the 90-day period beginning on the date on which such audit is completed and made available to the Speaker of the House, the majority and minority leaders of the House of Representatives, the majority and minority leaders of the Senate, the Chairman and Ranking Member of the committee and each sub-committee of jurisdiction in the House of Representatives and the Senate, and any other Member of Congress who requests it.
“(B) CONTENTS. – The report under subparagraph (A) shall include a detailed description of the findings and conclusion of the Comptroller General with respect to the audit that is the subject of the report, together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.”.
End of H.R. 1207
I recommend the Teach Peace Foundation’s website as a resource on this subject.