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The Federal Reserve Needs To Be Audited So The Dollar Can Be Saved

By: Steve Johnson

7/27/2009 - 31 Comments

The Federal Reserve is a bank that controls much of the economy by controlling the supply of dollars and the interest rates which federal banks lend money from.

Essentially, the Federal Reserve acts as a central bank that operates independently (at least in theory) of the political system so that they do not act in favor of a politician or political party. 

The problem is of course that the Federal Reserve does not act as an independent central bank, but instead makes monetary action in accordance with congress and the President – to find a way to continue to spend money that the nation does not have.

Congressman Ron Paul

Congressman Ron Paul has been talking about the need to dismantle the Fed for 30 years, but as long as the money kept rolling - nobody cared.

That is changing very quickly as the deepening recession is causing many to take a deeper look at what the Fed is all about. 

Congressman Ron Paul introduced a bill last month to audit the Fed that is creating quite a stir.  Federal Reserve Transparency Act now has 276 co-sponsors in the House and 17 in the Senate.

The idea is to allow congress to audit the decisions of the Fed by the Government Accountability Office.  So that the congress can be aware of what the Fed is doing. The constitution says the only congress can allocate federal funds and therefore without congressional oversight, the Federal Reserve could very well be acting unconstitutionally.

Chairman of the Fed, Ben Bernanke responded to the call for an audit with the typical argument that the Fed must remain independent, but the bill is not going away.  At the same time, auditing the Fed could create a tremendous wave of fear as exposure of how paper money is being inflated could cause lots of market volatility.

The debate is just getting started, as The Washington Post recently ran an article in defense of the Fed.

To help communicate why the Fed is so dangerous to the economy, Ron Paul is publishing a new book in a few months called, “End The Fed”.

The Fed Fight Back

The Fed are not about to roll over.  In fact the Fed is now attempting to threaten that if they are audited, they may raise interest rates. 

But this is actually what needs to happen before the economy can begin to recover anyway.  The Fed argue that if they are not allowed to freely operate, then they would not be able to save failing international banks like AIG and many other monetary actions to prop up the economic, causing an economic disaster to ensue.

The Fed are saying that they need the power to be able to continue to seal wealth from the public in order to support businesses are the critical to the global economy.  That is what they are doing.

In testimony before congress last week, Chairman Ben Bernanke took credit for saving the world from an economic meltdown.

What he forgot to mention was that the Fed created the economic disaster that they are now saving us from – and in the process they are creating a much bigger economic disaster just down the road - the dollar crisis. 

Congress Also Needs To Be Audits

After the Fed is audited and held responsible for recklessly juicing the economy into the boom-bust cycle that we are in, congress needs to be audited and held responsible for forcing the Fed into a position of creating more money by artificially juicing the economy into the boom-bust cycle. 

We need a revolution in the way money is managed in the US.  We need new rules and new leaders, starting with sound money that cannot be manipulated by any branch of government – and that means returning to the gold standard. If not, the world will move on to another currency that can be trusted.

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The Revolution: A Manifesto

Dr. Ron Paul's THE REVOLUTION: A MANIFESTO is a concise and convincing argument for a return to America's libertarian principles. But the best and most important chapter, without a doubt, is Chapter 6, "Money: The Forbidden Issue in American Politics." Here Dr. Paul details the operations of the Federal Reserve System in stunning clarity. You see, the effects of inflation are not uniform -- the Fed System works as a wealth redistribution system from poor and middle-class to the rich and politically connected. This is the true cause of the increase in inequality and the diminishing middle class.

The Case Against the Fed

This book, written by Murray Rothbard, an economist and historian of fairly well known repute, is a scathing attack on not only the Federal Reserve, but the interests that created this institution. Rothbard explains how the Federal Reserve is the true source in the destruction of wealth, which has led to the destruction of the middle class and continues to sift money into the hands of the wealthiest.

What Has Government Done to Our Money?

Rothbard gives us an exceptionally clear, detailed description of what money is and how it has come to be manipulated by governments and central bankers into almost worthless inflationary fiat paper currency. He then explains how gold became the most respected and trustworthy currency of choice and the prospect of either hyperinflation or the greatest depression the world has ever seen may be arriving in the very near future.

Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse

In discussions of today's economic meltdown and what to do about it, the Federal Reserve is a stealth helicopter: it never shows up on the radar. With the exception of a few esoteric specialists and those Ron Paul Revolutionaries who burst into chants of "Abolish the Fed!" Historian Thomas Woods notes in this important book, the Federal Reserve bears a large part of the blame for the mess we're in. In the first part of "Meltdown," Woods shows how both in theory and in practice, Fed policy fueled an artificial boom and is now leading us to a much larger meltdown.