Toward Sensible Monetary Policy

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Toward Sensible Monetary Policy        

Last week the 112th Congress was sworn in.  I am pleased that I will be 
chairing the Monetary Policy Subcommittee of the Financial Services 
Committee, which has oversight of the Federal Reserve.  Obviously, this 
position will facilitate my efforts to ensure the Fed provides the American 
people with more information about what they have been doing with and to our 
money.  Not surprisingly, since my chairmanship was announced, apologists for 
the Fed have been recycling the old canard about how increased transparency 
threatens the Fed’s so-called political independence.

By independence, they are referring to the Fed’s ability to greatly impact 
the economy with virtually no meaningful oversight.  We only recently learned 
that the bankers at the Fed were able to use the latest financial crisis to 
bail out Wall Street cronies and foreign central banks with billions of 
dollars that were created and wasted, instead of appropriated and voted on by 
representatives of the people.  The Fed and its supporters in Congress 
vehemently fought even this small bit of transparency and without this one-
time provision in the financial reform act forcing disclosure, we would still 
not have this information.  Indeed, we are in the dark on so much of what the 
Fed has done.  This is extremely dangerous for our country, yet this power 
and secrecy is defended as some kind of public good, which is patently 
ridiculous. 

Our government is based on a system of checks and balances.  With no check on 
the Fed, it is no surprise it has thrown the economy wildly off balance.  The 
solution is not to re-inflate the bubbles the Fed created, or to continue to 
devalue the currency, or to throw billions at failing banks and 
corporations.  The solution is to return sanity and freedom to monetary 
policy.  Forcing the entire country to use a medium of exchange that is 
subject to the whims of elite bankers and their cronies on Wall Street is not 
sanity.  Hoping that an unchecked, all-powerful, behemoth banking cartel will 
solve any economic problem is not sanity.

The problems the Fed was originally created to solve now look miniscule 
compared to the problems it has created.  If “political independence” erodes 
the purchasing power of the currency by 98%, destabilizes the economy with 
radical booms and busts, all while increasing unemployment and tipping us 
ever closer to hyperinflation, perhaps it is time to try a little 
transparency and accountability instead.  Better still – we should try giving 
the people true economic freedom.

Make no mistake:  the Fed is not truly independent of political pressure.  
Its chair is appointed by the president, and it is a creature of Congress. 
Congress has a duty, albeit a neglected one, to exercise oversight of the 
Fed.  However, even if it was politically independent, it is not independent 
of the influences of Wall Street.  One only has to look at the revolving door 
between the Fed and the big banks to know that.   Disclosures on TARP funds 
confirm this.

It is nothing short of cruel and criminal for Congress to stand idly by while 
the life savings of Americans are inflated away to nothing.  It is high time 
Congress insist on getting complete information on what the Fed has been 
doing, and for whom.  My hope is that exposing the truth will demonstrate the 
insanity of the status quo and more people will call for sensible changes, 
such as legalizing competing currencies. 

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