Audit the Fed

unsung

Time to call Senators and apply the pressure.

MotoDC

In my head I want it, but in my heart I'm afraid.

Cosmo

Okay... we'll have the fed audit the Fed. Just like we have banking auditing banks and Wall Street auditing Wall Street.
They'll tell us, "Everything looks good to me."

MotoDC

Cosmo wrote:

Okay... we'll have the fed audit the Fed. Just like we have banking auditing banks and Wall Street auditing Wall Street.
They'll tell us, "Everything looks good to me."

You're probably just fooling around, but just so others aren't misinformed, that's not how it works. Independent specialized auditors audit the banks. The banks are Wall Street. Ergo Wall Street doesn't audit itself. Especially after the Enron fallout when Arthur Andersen went <pfft>, auditors have become very independent of their clients. Unfortunately risk mgmt, SOX controls, and external audits are only so valuable if there is a culture of deceit in place (a la GS issuing MBS out one door and shorting them out the other).

Cosmo

MotoDC wrote:

Cosmo wrote:

Okay... we'll have the fed audit the Fed. Just like we have banking auditing banks and Wall Street auditing Wall Street.
They'll tell us, "Everything looks good to me."

You're probably just fooling around, but just so others aren't misinformed, that's not how it works. Independent specialized auditors audit the banks. The banks are Wall Street. Ergo Wall Street doesn't audit itself. Especially after the Enron fallout when Arthur Andersen went <pfft>, auditors have become very independent of their clients. Unfortunately risk mgmt, SOX controls, and external audits are only so valuable if there is a culture of deceit in place (a la GS issuing MBS out one door and shorting them out the other).

...
So, they audit the Fed... then, what?
My guess, business as usual.

peacefrompaul

Cosmo wrote:

MotoDC wrote:

Cosmo wrote:

Okay... we'll have the fed audit the Fed. Just like we have banking auditing banks and Wall Street auditing Wall Street.
They'll tell us, "Everything looks good to me."

You're probably just fooling around, but just so others aren't misinformed, that's not how it works. Independent specialized auditors audit the banks. The banks are Wall Street. Ergo Wall Street doesn't audit itself. Especially after the Enron fallout when Arthur Andersen went <pfft>, auditors have become very independent of their clients. Unfortunately risk mgmt, SOX controls, and external audits are only so valuable if there is a culture of deceit in place (a la GS issuing MBS out one door and shorting them out the other).

...
So, they audit the Fed... then, what?
My guess, business as usual.

Business as usual, but, it's a step in the right direction. Assuming the audits are accurate it will certainly bring more light to what the Fed is doing with money... instead of just being completely left in the dark. Something with that kind of power needs to be held accountable in my opinion.

brianlux

I'm thinking of that book, Lying With Statistics...

.....

Jason P

Cosmo wrote:

...
So, they audit the Fed... then, what?

Then ... they wave the shiny objects to distract us. Abortion, gun control, gay marriage, border fence, etc.

mikepegg44

http://www.youtube.com/watch?v=6qSYhVMrSXI&feature=youtu.be

Paul explaining why we need to audit the fed on 7-24-12



If anyone is wondering why do it.

Basically, this isn't about taking over the Fed, it is about transparency. It is about knowing their thought processes behind the moves they make. the secrecy isn't necessary, it just makes it easier to not answer to the people their decisions affect every day



For those who don't like Paul. You may respect Kucinich.

http://youtu.be/H5vrlzbe1Zs

inlet13

Not completely related, but I really enjoyed Ron Paul's points yesterday to Geithner on LIBOR.

http://www.activistpost.com/2012/07/ron-paul-grills-geithner-on-libor-and.html

DriftingByTheStorm

Dear Sweet 9lb 8oz baby jesus in your little golden diapers,
PLEASE let the Senate KILL THIS BILL.

I don't want to go down in a blaze of glory.

[no good can come of this]

peacefrompaul

DriftingByTheStorm wrote:

Dear Sweet 9lb 8oz baby jesus in your little golden diapers,
PLEASE let the Senate KILL THIS BILL.

I don't want to go down in a blaze of glory.

[no good can come of this]

Explain

DriftingByTheStorm

peacefrompaul wrote:

DriftingByTheStorm wrote:

Dear Sweet 9lb 8oz baby jesus in your little golden diapers,
PLEASE let the Senate KILL THIS BILL.

I don't want to go down in a blaze of glory.

[no good can come of this]

Explain

You want to prove the system a farce,
you may get your wish granted if this bill passes.

If you got a REAL audit,
you would find the entire western world falling flat on its face
as treasuries and the dollar both synchronized nose dive in to an empty pool.

It doesn't really sound helpful to me.

If you want a portion of this in plain english, for example,
the bailout was performed under the EXPLICIT condition that the Fed NOT be required to disclose the recipients of funds, or that it NOT be required to disclose which "assets" (ie. bad debt) it was purchasing, and from whom.

To actually go ahead and disclose that data would be putting all parties involved in those transactions at the mercy of the reprisal of the markets.

In short, our markets continue to function ONLY because of "sleight of hand" and the smoke and mirrors of the fed. You want to remove those parlor tricks and lay the system bare, you will have a new house of horrors to behold. It won't be pretty. :(

inlet13

DriftingByTheStorm wrote:

peacefrompaul wrote:

DriftingByTheStorm wrote:

Dear Sweet 9lb 8oz baby jesus in your little golden diapers,
PLEASE let the Senate KILL THIS BILL.

I don't want to go down in a blaze of glory.

[no good can come of this]

Explain

You want to prove the system a farce,
you may get your wish granted if this bill passes.

If you got a REAL audit,
you would find the entire western world falling flat on its face
as treasuries and the dollar both synchronized nose dive in to an empty pool.

It doesn't really sound helpful to me.

If you want a portion of this in plain english, for example,
the bailout was performed under the EXPLICIT condition that the Fed NOT be required to disclose the recipients of funds, or that it NOT be required to disclose which "assets" (ie. bad debt) it was purchasing, and from whom.

To actually go ahead and disclose that data would be putting all parties involved in those transactions at the mercy of the reprisal of the markets.

In short, our markets continue to function ONLY because of "sleight of hand" and the smoke and mirrors of the fed. You want to remove those parlor tricks and lay the system bare, you will have a new house of horrors to behold. It won't be pretty. :(

Couple things...


1) Markets, in general, preceded the Fed and central banks. So, "markets" can and will function even if the Fed did not.

2) If the Fed was put under the microscope - The Fed "may" need to take a break from it's manipulation of markets. At worst, markets simply won't be propped up artificially via inflation or different forms of money printing and the giant shell game of loans/bailouts. That's if they stopped. At the end of the day, however, the real difference is truth. The citizen would know what's going on with their dollar.

3) We'll be just fine if people know what the Fed is doing with our currency. Anyone who says otherwise is too dependent on the Fed. In a lot of ways, I see the rationalization of those against a Fed audit as similar to those who didn't want the Penn State scandal to break.

markin ball

What are the reasons given by those in congress for voting
'no" on this? Surely, it cannot be "Well, if we really knew what the hell was going on, the whole system collapses and worldwide depression hits".

DriftingByTheStorm

inlet13 wrote:

Couple things...


1) Markets, in general, preceded the Fed and central banks. So, "markets" can and will function even if the Fed did not.

2) If the Fed was put under the microscope - The Fed "may" need to take a break from it's manipulation of markets. At worst, markets simply won't be propped up artificially via inflation or different forms of money printing and the giant shell game of loans/bailouts. That's if they stopped. At the end of the day, however, the real difference is truth. The citizen would know what's going on with their dollar.

3) We'll be just fine if people know what the Fed is doing with our currency. Anyone who says otherwise is too dependent on the Fed. In a lot of ways, I see the rationalization of those against a Fed audit as similar to those who didn't want the Penn State scandal to break.

Markets function WITHIN A POLITICAL CONTEXT.

If you consider a "bank holiday" to be "functioning" then sure.
But i don't consider a run on banks, followed by bank holidays, citizens unable to access funds, currency collapse, and US Treasury Bond Market Collapse to be "functioning" within an RATIONAL context of the word "functioning".

If you get shot in the head, you continue to "function" in that a function of being shot in the head is death, but ...

???

inlet13

DriftingByTheStorm wrote:

inlet13 wrote:

Couple things...


1) Markets, in general, preceded the Fed and central banks. So, "markets" can and will function even if the Fed did not.

2) If the Fed was put under the microscope - The Fed "may" need to take a break from it's manipulation of markets. At worst, markets simply won't be propped up artificially via inflation or different forms of money printing and the giant shell game of loans/bailouts. That's if they stopped. At the end of the day, however, the real difference is truth. The citizen would know what's going on with their dollar.

3) We'll be just fine if people know what the Fed is doing with our currency. Anyone who says otherwise is too dependent on the Fed. In a lot of ways, I see the rationalization of those against a Fed audit as similar to those who didn't want the Penn State scandal to break.

Markets function WITHIN A POLITICAL CONTEXT.

If you consider a "bank holiday" to be "functioning" then sure.
But i don't consider a run on banks, followed by bank holidays, citizens unable to access funds, currency collapse, and US Treasury Bond Market Collapse to be "functioning" within an RATIONAL context of the word "functioning".

If you get shot in the head, you continue to "function" in that a function of being shot in the head is death, but ...

???

Free-markets do not need to function within a political context. If I lived in a government-free island, when I buy a apple from my neighbor for one banana, there's no government involvement whatsoever. Yet, we made a market transaction. Markets are made up of supply and demand. Now, when discussing our current financial sphere, it's broadly become a situation that is bounded by government... and ummm... that's the problem.

You're simply upset because of "what you believe" to be the financial ramifications of seeing what they are actually doing. My response is - "IF" there were ramifications to this, they would only set in motion a chain of events that will eventually play out anyway. Basically, you're acknowledging that there's a house of cards and that if we don't show it anyone - we may be fine. I'd respond it is a house of cards - I agree. But, if we prolong it and keep it hidden, the zone of impact will simply build and build and the damage that will be caused by it's collapse will only be worse.

Fear-mongering over a bill to audit a bank that controls our money supply, our currency is irrational. If they were simply focused on fighting inflation, I think you'd may have a point (although I'd disagree). But, once they got involved in stabilizing the economy... ummm... no. That's our money. We're paying for them to do this shit. We deserve the right to see what they're doing.

But, continue with the fear-mongering if you wish...

I'll continue to say it though... those who line up against this bill are eerily similar to those who thought it was best to withhold scandal information at Penn State. In the long run, both camps only make the problems and (the quote unquote) "solutions" worse and more captivating to the general public's scrutiny.

DriftingByTheStorm

inlet13 wrote:

DriftingByTheStorm wrote:

inlet13 wrote:

Couple things...


1) Markets, in general, preceded the Fed and central banks. So, "markets" can and will function even if the Fed did not.

2) If the Fed was put under the microscope - The Fed "may" need to take a break from it's manipulation of markets. At worst, markets simply won't be propped up artificially via inflation or different forms of money printing and the giant shell game of loans/bailouts. That's if they stopped. At the end of the day, however, the real difference is truth. The citizen would know what's going on with their dollar.

3) We'll be just fine if people know what the Fed is doing with our currency. Anyone who says otherwise is too dependent on the Fed. In a lot of ways, I see the rationalization of those against a Fed audit as similar to those who didn't want the Penn State scandal to break.

Markets function WITHIN A POLITICAL CONTEXT.

If you consider a "bank holiday" to be "functioning" then sure.
But i don't consider a run on banks, followed by bank holidays, citizens unable to access funds, currency collapse, and US Treasury Bond Market Collapse to be "functioning" within an RATIONAL context of the word "functioning".

If you get shot in the head, you continue to "function" in that a function of being shot in the head is death, but ...

???

Free-markets do not need to function within a political context. If I lived in a government-free island, when I buy a apple from my neighbor for one banana, there's no government involvement whatsoever. Yet, we made a market transaction. Markets are made up of supply and demand. Now, when discussing our current financial sphere, it's broadly become a situation that is bounded by government... and ummm... that's the problem.

You're simply upset because of "what you believe" to be the financial ramifications of seeing what they are actually doing. My response is - "IF" there were ramifications to this, they would only set in motion a chain of events that will eventually play out anyway. Basically, you're acknowledging that there's a house of cards and that if we don't show it anyone - we may be fine. I'd respond it is a house of cards - I agree. But, if we prolong it and keep it hidden, the zone of impact will simply build and build and the damage that will be caused by it's collapse will only be worse.

Fear-mongering over a bill to audit a bank that controls our money supply, our currency is irrational. If they were simply focused on fighting inflation, I think you'd may have a point (although I'd disagree). But, once they got involved in stabilizing the economy... ummm... no. That's our money. We're paying for them to do this shit. We deserve the right to see what they're doing.

But, continue with the fear-mongering if you wish...

I'll continue to say it though... those who line up against this bill are eerily similar to those who thought it was best to withhold scandal information at Penn State. In the long run, both camps only make the problems and (the quote unquote) "solutions" worse and more captivating to the general public's scrutiny.

:roll:
please.
i don't want the sky to come crashing down unnecessarily and I am the one that is fear mongering?

Economies became Political-Economies a LONG time ago, before the Fed and before the foundation of the United States of America, to ignore that and preach about some theoretical island where government doesn't exist is ridiculous. Governments do exist. There ARE ramifications for actions taken, and the ramifications of a publicly disclosed audit on the Fed would be ... in as plain a language as possible ... disastrous ... not just for some large banks ... but to the entire United States system of government, and ultimately, TO THE PEOPLE THEMSELVES.

To address some of your specific points.
Yes, we live in a house of cards.
No, everything is not alright.
I do not wish to live with my head in the sand.
I believe that giving our leaders time to "figure out" a "solution" is better than pulling the rug out from underneath everyone and their grandmother.
I don't wish to sweep anything under the rug. I just don't want to pull it out from underneath us.
I believe that finding a CONSTRUCTIVE solution is far better than setting in motion a DESTRUCTIVE-NON-SOLUTION to make some stupid political point. "Nya nya, we told you the Fed was a sham."

Woopity woo. Everyone with half a brain knows that.
Inflation is contained by a slow velocity of money.
Absent a total loss of confidence (what you are ASKING FOR HERE with this audit) that velocity will remain low.
I happen to believe that the velocity of money is relatively static in normal times, and i think this is what our financial leaders happen to know privately. This is why the debt (& the money supply) has essentially doubled with little consequence. Normal people have normal spending patterns. Most of this money is contained "towards the top" (or has been "sterilized" ... lol) ...

even so, do i think the course we are on is sustainable?
No.
Do i think an audit is ANY sort of SOLUTION?
Categorically: NO.

But truly, i have hope (unwarranted or not) that there is some greater plan, and that if we can only get there without triggering an unnecessary collapse, we should all be the better for it.

Playing devil's advocate, on the other hand, perhaps it is possible our leaders see NO "normal" way of achieving this alleged "plan"\goal (A Global Fiscal Union?) and perhaps it is that this audit IS the plan ... a planned implosion if you will ... panic and unrest PART of the plan ... the crisis then used to INSTIGATE the plan ... Problem - Reaction - Solution.
I guess we will know if & when the senate does or does not vote "Yay" to this bill.

riotgrl

Drifting and inlet you are speaking a bit above my economic skills - can ya dumb it down?

Are you saying let it collapse and start all over via a Fed audit which will expose the corruption (I guess that is what you mean) and then reinstate a true free market system? What would be the fall out if that were allowed to happen? The end of banks, businesses, collapse of our currency? What about trade with other nations? Would we be trading at local levels? Would we have to recreate our entire global economic system? Obviously, I know you don't have THE answer but I assume you have a BELIEF about what might happen.

Or allow the powers to be, the Fed, the govt. etc. to work on creating a solution to be implemented a bit at a time to ease the chain reaction that might occur if the rug was yanked all at once. Would this slow trickle solution really resolve the fundamental problem of lack of transparency at the Fed and the market manipulation that often occurs and the govt./corporation economic and political ties that allow market manipulation?

mikepegg44

DriftingByTheStorm wrote:

I guess we will know if & when the senate does or does not vote "Yay" to this bill.

If this isn't tabled and killed in senate committee I will be SHOCKED. Even though Reid thought it was a great idea back in the 90's

I don't think transparency of action is going to cause all the problems you think it will. I don't know the markets as well as you however so I will concede that you have some greater understanding. I just don't understand the idea that we borrow ourselves money and we think this is ok. Our debt is becoming less and less attractive to international buyers. If I believe anything conspiratorial about it I believe that the EURO is being kept artificially low amid "concerns" and delayed solutions in order to keep the strength of the dollar relative. Which really will be better for both markets rather than one over the other. If the Euro were in a different position we would be in a lot more trouble wouldn't we?.

Most Americans will not care one iota about the results of the fed audits. The fact that the house of cards isn't serving the entire population in what could be considered remotely equally is good enough reason to me to take away the wizard's power.

Aren't long term rates being as low as they are bad for the value of a dollar? or am i missing something there? Long term rates on bonds being low is good for the fed and the US gov't, but is it the best thing for me who has a few thousand in savings? This is coming from someone who is teaching themselves about markets so forgive me my rather simple questions.

inlet13

DriftingByTheStorm wrote:

:roll:
please.
i don't want the sky to come crashing down unnecessarily and I am the one that is fear mongering?

Economies became Political-Economies a LONG time ago, before the Fed and before the foundation of the United States of America, to ignore that and preach about some theoretical island where government doesn't exist is ridiculous. Governments do exist.

Ha ha...

Back-up. You said "markets"... now you're changing your verbiage to "economies". My point is simply put - in a free-market, supply and demand dictates prices and consumption. That's it. Government involvement can manipulate that. There's nothing theoretical about that. It's factual.

I think you were originally referring to markets as financial markets. My point was to try to draw out the notion that everything is completely and totally dependent on ups and downs in financial markets (like the stock market). While, I agree there are connections, the sphere of influence that financial markets play within vs. the sphere in main street is very, very different.

DriftingByTheStorm wrote:

There ARE ramifications for actions taken, and the ramifications of a publicly disclosed audit on the Fed would be ... in as plain a language as possible ... disastrous ... not just for some large banks ... but to the entire United States system of government, and ultimately, TO THE PEOPLE THEMSELVES.

"You" believe it would be "disastrous".

Re-read what you just wrote.... how could one not say you're not fear-mongering?

Also, just to note, your basically saying that if the truth gets out we're f'd. In that context, it's not the Fed that's f'ing us. It's not the government. It's the audit that would be f'ing us. From my mindset, if that's what you meant, it's delusional. Anyway, yes, there are ramifications for actions. Perhaps if the Fed was so scared of doing things that will be "disastrous" if a tax-payer could see them, they shouldn't have done them? That's my take. They are public officials.

DriftingByTheStorm wrote:

To address some of your specific points.
Yes, we live in a house of cards.
No, everything is not alright.
I do not wish to live with my head in the sand.
I believe that giving our leaders time to "figure out" a "solution" is better than pulling the rug out from underneath everyone and their grandmother.
I don't wish to sweep anything under the rug. I just don't want to pull it out from underneath us.
I believe that finding a CONSTRUCTIVE solution is far better than setting in motion a DESTRUCTIVE-NON-SOLUTION to make some stupid political point. "Nya nya, we told you the Fed was a sham."

Woopity woo. Everyone with half a brain knows that.
Inflation is contained by a slow velocity of money.
Absent a total loss of confidence (what you are ASKING FOR HERE with this audit) that velocity will remain low.
I happen to believe that the velocity of money is relatively static in normal times, and i think this is what our financial leaders happen to know privately. This is why the debt (& the money supply) has essentially doubled with little consequence. Normal people have normal spending patterns. Most of this money is contained "towards the top" (or has been "sterilized" ... lol) ...

Everyone with "half a brian" knows that inflation is contained or maximized by BOTH velocity of money AND the money supply. Changing either, impacts inflation.

Anyway, I don't think confidence is high - GDP is going to come in low. In fact, I think we're in recession or will be in one within the next six month. I think everyone "with half a brain" knows confidence sucks now as is.

Government manipulation is the "current problem". Look at the government dependent countries who were over-levered for proof.

Also, what I think you and I disagree is that you believe money supply growth means "real asset growth". I don't. I believe it means nominal asset growth. Right now, if not for QE the stock market would be half what it is. Some may claim that's proof for why QE and the like have worked. I claim that's pure ignorance. The "real" value is the same - actually I argue it would be worse. Inflating it, doesn't making it better. Nor does it make us better off. In fact, it's what every single desperate country does before they collapse.

DriftingByTheStorm wrote:

even so, do i think the course we are on is sustainable?
No.
Do i think an audit is ANY sort of SOLUTION?
Categorically: NO.

I guess we just disagree. I think it is the solution because it may stop (at least temporarily) the prolongment of this sort of Keynesian stimulus (be it monetary or fiscal). The problem with Keynesianism was best summed up by Keynes... "in the long run we're all dead". They keep on fixing. But, the f things up along the way. Who gives a shit about the long run, right? Until we're in it. Then we just do it all over again. F that.

DriftingByTheStorm wrote:

But truly, i have hope (unwarranted or not) that there is some greater plan, and that if we can only get there without triggering an unnecessary collapse, we should all be the better for it.

I don't want a collapse. In fact, I think the longer we draw this out, the more likely a collapse is.

To me - the more government leaders think they can control the uncontrollable - markets - the worse the "downturn" will be. Will it be a collapse? I believe the answer is Yes... only because I think our government is too stupid to realize they make matters worse with the more they try to help with government policy (stimulus, QE, etc.).

DriftingByTheStorm wrote:

Playing devil's advocate, on the other hand, perhaps it is possible our leaders see NO "normal" way of achieving this alleged "plan"\goal (A Global Fiscal Union?) and perhaps it is that this audit IS the plan ... a planned implosion if you will ... panic and unrest PART of the plan ... the crisis then used to INSTIGATE the plan ... Problem - Reaction - Solution.
I guess we will know if & when the senate does or does not vote "Yay" to this bill.

Ha ha... I can only laugh at this part and think you don't want what you wrote here to be labeled fear-mongering.

Anyway, long story short.... we disagree. I don't think it will get through the Senate. So, you're hopes of us remaining blind to what the Fed does will probably win out.

Jason P

I think both Inlet and Drifting make good points. Do we take the poison pill now, fall into a coma, and hope we learn to talk and walk again in five years? Or do we let the cancer grow untreated and pray it doesn't go stage 4 when we least expect it.

:think:

inlet13

riotgrl wrote:

Drifting and inlet you are speaking a bit above my economic skills - can ya dumb it down?

Are you saying let it collapse and start all over via a Fed audit which will expose the corruption (I guess that is what you mean) and then reinstate a true free market system? What would be the fall out if that were allowed to happen? The end of banks, businesses, collapse of our currency? What about trade with other nations? Would we be trading at local levels? Would we have to recreate our entire global economic system? Obviously, I know you don't have THE answer but I assume you have a BELIEF about what might happen.

Or allow the powers to be, the Fed, the govt. etc. to work on creating a solution to be implemented a bit at a time to ease the chain reaction that might occur if the rug was yanked all at once. Would this slow trickle solution really resolve the fundamental problem of lack of transparency at the Fed and the market manipulation that often occurs and the govt./corporation economic and political ties that allow market manipulation?

I'll only speak for myself - but, yes.

I, personally think a collapse is inevitable because our system continues it's addiction and I can't see it stopping.

The truth is the addiction has good thoughts behind it. The government leaders worked their whole lives to get put in place to "do something". They want to help. Sometimes, it's best they "do nothing" though. It's hard to get that, but when "doing something" involves manipulating your currency, increasing debt, creating instability within prices, .... etc.... it "can" be bad to do something. Because really they are just building bubbles, which inevitably pop.

I think a law like this is something that will get public attention. When the audit is released people will freak out about how their tax money (in a form) is being allocated to foreign countries! That sort of thing. The Fed is running wild trying to save the day with a bunch of geeky economists who probably never worked outside of academia or government their entire life. Once again, they have good intentions, but to me, they aren't smart enough to know their own limitations. They have too much power to not think they can actually cause harm.

This isn't the first step towards chaos. It's one step closer to reality. Will there be pain? Yes. There's going to be pain regardless. In my opinion, this will minimize the pain, but bring it closer... which is hard to do in this day and age.

inlet13

Jason P wrote:

I think both Inlet and Drifting make good points. Do we take the poison pill now, fall into a coma, and hope we learn to talk and walk again in five years? Or do we let the cancer grow untreated and pray it doesn't go stage 4 when we least expect it.

:think:

This is pretty much it. I wouldn't use those words exactly, but it's close.

Austrian economics vs. Keynesian economics.

My problem is - we should have realized this during the first "recession". Cause here comes another...

riotgrl

inlet13 wrote:

riotgrl wrote:

Drifting and inlet you are speaking a bit above my economic skills - can ya dumb it down?

Are you saying let it collapse and start all over via a Fed audit which will expose the corruption (I guess that is what you mean) and then reinstate a true free market system? What would be the fall out if that were allowed to happen? The end of banks, businesses, collapse of our currency? What about trade with other nations? Would we be trading at local levels? Would we have to recreate our entire global economic system? Obviously, I know you don't have THE answer but I assume you have a BELIEF about what might happen.

Or allow the powers to be, the Fed, the govt. etc. to work on creating a solution to be implemented a bit at a time to ease the chain reaction that might occur if the rug was yanked all at once. Would this slow trickle solution really resolve the fundamental problem of lack of transparency at the Fed and the market manipulation that often occurs and the govt./corporation economic and political ties that allow market manipulation?

I'll only speak for myself - but, yes.

I, personally think a collapse is inevitable because our system continues it's addiction and I can't see it stopping.

The truth is the addiction has good thoughts behind it. The government leaders worked their whole lives to get put in place to "do something". They want to help. Sometimes, it's best they "do nothing" though. It's hard to get that, but when "doing something" involves manipulating your currency, increasing debt, creating instability within prices, .... etc.... it "can" be bad to do something. Because really they are just building bubbles, which inevitably pop.

I think a law like this is something that will get public attention. When the audit is released people will freak out about how their tax money (in a form) is being allocated to foreign countries! That sort of thing. The Fed is running wild trying to save the day with a bunch of geeky economists who probably never worked outside of academia or government their entire life. Once again, they have good intentions, but to me, they aren't smart enough to know their own limitations. They have too much power to not think they can actually cause harm.

This isn't the first step towards chaos. It's one step closer to reality. Will there be pain? Yes. There's going to be pain regardless. In my opinion, this will minimize the pain, but bring it closer... which is hard to do in this day and age.

Thanks for clarifying!

So you said, building bubbles, are you referencing, what I suppose a layperson like myself, would term the "business cycle"? So if we eliminate the Fed, we eliminate the boom/bust cycle? Will this reduce inflation? Will this stabilize our currency?

Also, you mention that people will freak out once they realize how their tax money is being allocated to foreign country's. How so? Through aid? Loans? Don't we have huge debts owed to various foreign nations as well (China being the most well known example but I believe nations like Japan and Germany also own a great deal of our debt or at least have in the recent past). How will the end of the Fed help/hinder us in that regard?

inlet13

riotgrl wrote:

Thanks for clarifying!

So you said, building bubbles, are you referencing, what I suppose a layperson like myself, would term the "business cycle"? So if we eliminate the Fed, we eliminate the boom/bust cycle? Will this reduce inflation? Will this stabilize our currency?

Let's not get ahead of ourselves. This bill does absolutely nothing to "end the Fed". I know it's lumped in with Ron Paul, and he has a book on that subject, but this is simply "seeing what the Fed is doing". The Fed isn't going anywhere in the next 20+ years if you ask me.

Building bubbles? I would say controlling interest rates is one way the Fed builds bubbles. Why? Well, let's think about it with prices. If government forces prices for apartments in NY to be lower than they are (under market conditions), what happens? The answer is excess demand. This can happen in reverse as well. In a sense, the Fed does the same thing by manipulating interest rates. It creates surpluses and shortages. That's one way.

This isn't the same as the business cycle which is expansions and recessions within the economy (or production). But, it's close. Basically, the bubble can extend the expansion or when it pops worsen recessions. Or it can create new ones.

I believe business cycles would continue to exist in a world where there was no Fed. But, I believe Keynesian practice creates unnecessary booms and busts, that are fueled by government alteration of markets.

riotgrl wrote:

Also, you mention that people will freak out once they realize how their tax money is being allocated to foreign country's. How so? Through aid? Loans? Don't we have huge debts owed to various foreign nations as well (China being the most well known example but I believe nations like Japan and Germany also own a great deal of our debt or at least have in the recent past). How will the end of the Fed help/hinder us in that regard?

Bailouts/Loans in a variety of forms. People were quite upset when our government bailed out American businesses. Do you think they will feel the same (or perhaps get angrier) if the Fed bailed out foreign companies/banks? Or foreign central banks/nations? What was the price tag, etc?

Keep in mind - there's a distinction between secrecy and openness. If it's all kosher, why not just tell us?

DriftingByTheStorm

Well I won't keep going at this argument w\ inlet, because we've done it before, incessantly, and even though WE ARE BOTH ANTI-KEYNESIAN at heart, we simply disagree vehemently about "what to do now" given that THE WORLD *IS* KEYNESIAN, and the ramifications of "getting off the dollar dope", as it were.

Riotgirl, yes he is referring to "the business cycle".
No, getting rid of the fed would not end it. Mal-investment exists because of inherent human greed. Yes it is EXACERBATED by inflationary policy, but the flip-side of the coin is that a metal-based currency is at the mercy of The Gold Markets, and if you think that Federal Reserve currency manipulation is bad, you've got another thing coming if you think gold-backed currency isn't subject to rampant and potentially disastrous manipulation by a whole host of players, including our very own banks (go watch Money Masters, it was done here in the last century and caused all kinds of pain and sorrow for the common man) ...

If you think i stand alone in that commentary on the Gold Standard, you need only google "Cross of Gold" and read the following:

Williams Jenning Bryant wrote:

If they dare to come out in the open field and defend the gold standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.

-Full Speech (i disagree with large parts of this speech otherwise, however. ie. income tax NOT just, imho. and bimetallism flawed as well)

so unless we are proposing ditching BOTH the Federal Reserve AND Gold Backed Currency for something ELSE??? ... then i say "poo to that" and "no thanks".

REGARDING THE CURRENT BILL,
the "worst" part of it (in terms of ramifications, i'm sure Inlet LOVES this part) is the striking of Subsections B and F of 31USC714 ...

watch The Bernanke explain his reason for opposing this bill here ... which is essentially that it will give congress the ability to impinge on Federal Reserve "independent authority" by allowing them to NOT just audit BOOKS but TO AUDIT ACTIONS.

You can watch the Sometimes Anti-Keynesian Hero Rick Santelli argue his point here against the Statist Defender, Steve Liesman (with a quick quip in by Kudlow) regarding this language in the bill.

What they are talking about in both videos is the language in HR 459 Section 2 Subsections C & D which respectively strike every restriction imposed on Federal Reserve Audits within United States Code Title 31 Section 714.

Subsection C of The Audit The Fed Bill (HR 459) strike ALL of Subsection "b" of USC31-714 starting with the following language
"Audits of the Board and Federal reserve banks may not include—"

So "MAY NOT INCLUDE" is REMOVED FROM LAW
What is UNDER "May not include" is essentially EVERYTHING the Fed wants to "hide" from "you".
ALSO INCLUDING **POLICY DECISIONS**

MADE AUDIT-ABLE BY HR459 wrote:

(b)
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;

This is particularly concerning, because if you think the Fed makes bad decisions BY ITSELF, wait until Congress sticks it's nose in as well.

In the second video i link, Kudlow's quick quip is "it won't affect CURRENT POLICY ... because there is a 6 month lag" ... THIS IS DEBATABLE, as it is not clear in the HR459 language as to whether the institution of an Audit over POLICY would therefore induce the Fed to TABLE THE POLICY until the audit is complete or not. I think that is still a point of contention. Not sure.

Well whatever.

You know my position.

Just to let others decide,
this is the full list of items PREVIOUSLY BARRED FROM AUDIT, that in striking Subsection "b" of USC31 714 the GAO is now fully allowed to audit and pass on to congress ... YOU decide if this would be net positive or net negative for "the system itself":

Items Now Up For Audit wrote:

(1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;
(2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;
(3) transactions made under the direction of the Federal Open Market Committee; or
(4) a part of a discussion or communication among or between members of the Board and officers and employees of the Federal Reserve System related to clauses (1)–(3) of this subsection.

peacefrompaul

mikepegg44 wrote:

DriftingByTheStorm wrote:

I guess we will know if & when the senate does or does not vote "Yay" to this bill.

If this isn't tabled and killed in senate committee I will be SHOCKED. Even though Reid thought it was a great idea back in the 90's

And here we thought only Mitt flip flopped (which he does) :roll:

peacefrompaul

Jason P wrote:

I think both Inlet and Drifting make good points. Do we take the poison pill now, fall into a coma, and hope we learn to talk and walk again in five years? Or do we let the cancer grow untreated and pray it doesn't go stage 4 when we least expect it.

:think:

Pill for me... Thanks very much. Well said

inlet13

This bill would NOT turn over monetary policy to Congress - not at all. Anyone who says otherwise, or tries to sway the discussion in that direction (like the fellas in videos from 2009 Driftin' posted), is full of it. It would simply monitor what they are doing behind closed doors. Right now, we don't know, if this bill passed we would have a better idea.

Big Ben and his friends would still have power to do what they want. They'd just have more public awareness of what they are actually doing.... which scares the shit out of them.

If anyone doubts that the Fed's and it's fiat currency's has affects, just casually take a look at these charts....

http://www.whichwayhome.com/index.php/g ... harts.html

...let's just see what they are up to.

MotoDC

DriftingByTheStorm wrote:

peacefrompaul wrote:

DriftingByTheStorm wrote:

Dear Sweet 9lb 8oz baby jesus in your little golden diapers,
PLEASE let the Senate KILL THIS BILL.

I don't want to go down in a blaze of glory.

[no good can come of this]

Explain

You want to prove the system a farce,
you may get your wish granted if this bill passes.

If you got a REAL audit,
you would find the entire western world falling flat on its face
as treasuries and the dollar both synchronized nose dive in to an empty pool.

It doesn't really sound helpful to me.

If you want a portion of this in plain english, for example,
the bailout was performed under the EXPLICIT condition that the Fed NOT be required to disclose the recipients of funds, or that it NOT be required to disclose which "assets" (ie. bad debt) it was purchasing, and from whom.

To actually go ahead and disclose that data would be putting all parties involved in those transactions at the mercy of the reprisal of the markets.

In short, our markets continue to function ONLY because of "sleight of hand" and the smoke and mirrors of the fed. You want to remove those parlor tricks and lay the system bare, you will have a new house of horrors to behold. It won't be pretty. :(

This is kinda what I meant when I said my head wants it but my heart is afraid.

I knew Drifting would swing by and take care of the details.