Audit the Fed

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.

MotoDC

inlet13 wrote:

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...

I think Drifting already addressed this, but this debate is not keynes vs austrian. I can't think of a post from Drifting that was keynesian; though I could be wrong, certainly his posts here are not JMK-inspired. I think he recognizes the rotten core but isn't sure this is the way to fix it.

Anyhow, inlet, I generally agree with your economic viewpoint on things, but I kinda think you're being a bit too "professional economist" on this one. You keep talking about free markets and apple sales on secluded islands...but that isn't the world we live in. You're using the economist's favorite tool, at least implicitly, of assuming away the messiness of reality. The fact is our economy does function in a political context and exposing the rotten core of this house of cards may cause more pain than we're able to stand in the short term.

To be clear: audit the Fed. I'm afraid, but it will be for the best.

inlet13

MotoDC wrote:

I think Drifting already addressed this, but this debate is not keynes vs austrian. I can't think of a post from Drifting that was keynesian; though I could be wrong, certainly his posts here are not JMK-inspired. I think he recognizes the rotten core but isn't sure this is the way to fix it.

I don't think he did address it. And I'm sorry but you're very wrong about it NOT being a debate between Keynesian ideology and Austrian ideology. That's exactly what it is.

Certain individuals may not like to be labeled Keynesian. I get that. But, when they back Keynesian policies, they are in fact backing Keynesian policies (which lumps them in that camp, at least temporarily). Backing the bailouts, which an individual like Drifting does... makes them back Keynesian policies. Backing QE, which an individual like Drifting does - I think... makes them back Keynesian policies.

John Maynard Keynes wasn't quite as bad of a guy as people, like me, make him out to be. When he originally put forth his stance on issues, he believed government could be used to push us out of recessions. However, he frequently acknowledged the problems with his approach - like debt and creating new issues in the long run, for instance. I'd say certain individuals fall into the early-Keynesian viewpoint - maybe someone like Drifting at times. Then there's idiots like Krugman and new Keynesians. These individuals broadened the original Keynesian viewpoint and hijacked Monetary and Fiscal policy to use it to the utmost degree. I don't agree with Keynes at all then or now because I believe his viewpoint alone created the neo-Keynesians. But, long story short, I acknowledge that there are different degrees of Keynesianism. I'm not 100% certain where Keynes would side on this issue if he were alive today. To me, the problem with Keynes was his viewpoint was hijacked and extended.

MotoDC wrote:

Anyhow, inlet, I generally agree with your economic viewpoint on things, but I kinda think you're being a bit too "professional economist" on this one. You keep talking about free markets and apple sales on secluded islands...but that isn't the world we live in. You're using the economist's favorite tool, at least implicitly, of assuming away the messiness of reality. The fact is our economy does function in a political context and exposing the rotten core of this house of cards may cause more pain than we're able to stand in the short term.

To be clear: audit the Fed. I'm afraid, but it will be for the best.

I don't understand the "professional economist" line, academic maybe since the apple on island example... but, professional economist? Most "professional economists" probably fall into the Keynesian camp since they are forecasters. Anywho, to bring this back into line, I was responding to a post where someone said "our markets continue to function ONLY because of sleight of hand and the smoke and mirrors of the fed" (Drifting - on the first page of this thread).

Re-read that quote. I responded saying ummm... no. They don't. What is written there is factually false. I explained what "markets are" using perhaps an example you don't like. Markets are not a function of the Fed. Anyone who says otherwise is misguided.

As far as whether the heavy majority of markets exist in a political reality right now - I don't disagree. I think they do exist in a political reality where government can't get it's meddling hands involved. I mean - that's really the entire issue here. Central banks, and government in general, involving itself in market transactions. That's the debate.

However, I think one should be careful when "believing" that the government is NECESSARY for markets to function. That is completely and totally false. A casual reader may not know that. I know Drifting knows that, that's why I was correcting him from misleading anyone.

riotgrl

Ok, audit the Fed. I am for that, I agree that we need transparency and that this is a first step and perhaps we can begin to fix some of the issues that many of you have mentioned here and in other threads about similar topics. But at the end of the day isn't this a much larger issue that really won't be fixed by transparency at the Fed or even with the end of the Fed? Meaning isn't capitalism a dying system that will not sustain us through the 21st century? Or at least not in its current form? Really, our current capitalist system is based on the theory of globalization (which has created a whole host of other problems IMO) which assumes that we have to continue to find new markets, our corporations will be extremely large (and probably publicly traded which means that the bottom line is profits to pass on to shareholders) and, to me, this all means that at some level the US government (and really any government that is involved in the global economy) has to protect business and monetary policy in order to protect our larger economy. Drifting made mention of something along these lines when he mentioned you'll have similar problems whether it's Fed backed monetary policy or gold backed assets. Again, I realize we have to start somewhere, but can we look at a move towards local economies? Still capitalism, yes? But more regionalized, more cooperative, and maybe more stability? I know this is really off topic but just thinking out loud

DriftingByTheStorm

inlet13 wrote:

everything you just said

1. i am not keynesian

2. all i am saying is that the "fix" for the situation of being in a DYING KEYNESIAN SYSTEM is quite simply more keynesian rubbish -- inflation, QE-to-infinity, and smoke and mirrors (ie. The Fed continually buying more and more US debt as the market steps back from treasuries) ...

3. I know that this is not THE FIX, which is why i've labeled it "fix" in quotations.

4. There has to be a more sensible approach that minimizes short term economic harm that is not simply, "this system is stupid, lets kick it's legs out and start over from scratch".

5. The ramifications of pulling the plug on The Great Keynesian Experiment in the manner you seem to suggest (going cold turkey) would entail severe deleveraging and debt deflation of a kind never seen in history.

6. I think ultimately some sort of "revaluation" must occur, but I would prefer this revaluation be orderly instead of everyone and their grandmother getting fucked by a plunging dollar.

7. I don't think this makes me Keynesian, it just makes me not short-term suicidal.

8. I MUST CONCEDE YOUR PREVIOUS POINT REGARDING THE AUDIT BILL
-- after having read and reread the bill, YOU ARE CORRECT. In so far as I can see, Bernanke and his lackey Liesman are pulling one helluva spin job, as the language of the bill does not seem to authorize BUT A SINGLE AUDIT (the language refers to "AN AUDIT" not "the authority for recurring audits") and that audit (the report) is on a 6month lag from the implementation of the bill. To this notion, I am actually shocked that Kudlow (who i usually take for a shill even though he claims to be a "free market" guy, but during the GFC did have his own anti-keynesian moments) would admit this.

ANYHOW, on this point, i guess you are correct to call bullshit,
although i would caution that the combined language of the Audit Bill along with the USC31-714 DOES MAKE IT EXPLICIT that the audit can include REVIEW OF "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;" AS WELL AS "making such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.

So, no. The bill won't hand fiscal policy over to the Congress, but it does allow the Comptroller General to step in, and REVIEW POLICY AND MAKE RECOMMENDATIONS FOR POLICY based on that review.

This alone would probably be strong enough language to scare the markets pretty bad. They generally tend to not like when anyone interferes with their "dope line", period. The very fact of this bill passing would be a strange signal to the markets that the loonies are running the asylum, and that seemingly the US Government has essentially lost confidence in itself. Why else would you pass a bill to audit your own financial backbone? (oh yes, i get that there are PLENTY of reasons in reality to do so, but it is a negative statement on your own condition that you would as a government signal to audit your own duly authorized central bank)

Also, just addressing the point over the bailouts,
***no one was screaming louder than me on this board about the impending disaster of the financial collapse well before it initiated in earnest***
my only gripe was, essentially AFTER THE FACT, IN THE MIDST OF TURMOIL people started clamoring to stop the bailouts. This is akin to not heeding fire codes for the last 100 years and allowing shanties to be built and crammed in to a downtown, ignoring all warnings about the possibility of fire, fully authorizing more shanties, and then, WHEN THE FIRE STARTS, saying "oh no. DON'T USE WATER, LET IT BURN". Sure we'd be better off without the shanties, but there are women and children living in those things!

IF you want to argue against keynesian policies do so before the fire breaks out, and use sensible policies to step off the dope ... don't send the patient in to death-inducing withdrawal. That was all i was getting at during the bailout. I was not pro-keynesian. I was just anti-reactionary-stupidity.

DriftingByTheStorm

inlet13 wrote:

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.

I have REPEATEDLY ***AGREED*** WITH YOU on this point.
I have made this point myself REPEATEDLY.
The stock market is and has been up since 2008 FOR ONE REASON
QE \ Inflation \ Money Given Directly To Banks To Invest & Support Their Own Self Interested Prior Investment In The Stock Markets.

I've actually gone much farther than that and argued that LONG TERM "GROWTH" In the stock markets is nothing more than an inflation bubble, reflecting little if any REAL growth.

I don't know where you got the crap you threw in my mouth up there, but it is NOT what i said, EVER.

TWO EXPLICIT EXAMPLES OF ME SAYING THIS IN A POST, ONE WITH A FUCKING CHART:
post here

from above post wrote:

DriftingByTheStorm wrote:

You don't think stock market valuations might be representative of some sort of "bubble" formulated around the greatest period of inflation \ monetary debasement in United States History? (Money Supply Soars to All Time High)

another post

above post wrote:

DriftingByTheStorm wrote:

Reality check (look at the GREEN line):
DJIA, ***INFLATION ADJUSTED***

inlet13

DriftingByTheStorm wrote:

inlet13 wrote:

everything you just said

1. i am not keynesian

2. all i am saying is that the "fix" for the situation of being in a DYING KEYNESIAN SYSTEM is quite simply more keynesian rubbish -- inflation, QE-to-infinity, and smoke and mirrors (ie. The Fed continually buying more and more US debt as the market steps back from treasuries) ...

3. I know that this is not THE FIX, which is why i've labeled it "fix" in quotations.

4. There has to be a more sensible approach that minimizes short term economic harm that is not simply, "this system is stupid, lets kick it's legs out and start over from scratch".

5. The ramifications of pulling the plug on The Great Keynesian Experiment in the manner you seem to suggest (going cold turkey) would entail severe deleveraging and debt deflation of a kind never seen in history.

6. I think ultimately some sort of "revaluation" must occur, but I would prefer this revaluation be orderly instead of everyone and their grandmother getting fucked by a plunging dollar.

7. I don't think this makes me Keynesian, it just makes me not short-term suicidal.

8. I MUST CONCEDE YOUR PREVIOUS POINT REGARDING THE AUDIT BILL
-- after having read and reread the bill, YOU ARE CORRECT. In so far as I can see, Bernanke and his lackey Liesman are pulling one helluva spin job, as the language of the bill does not seem to authorize BUT A SINGLE AUDIT (the language refers to "AN AUDIT" not "the authority for recurring audits") and that audit (the report) is on a 6month lag from the implementation of the bill. To this notion, I am actually shocked that Kudlow (who i usually take for a shill even though he claims to be a "free market" guy, but during the GFC did have his own anti-keynesian moments) would admit this.

ANYHOW, on this point, i guess you are correct to call bullshit,
although i would caution that the combined language of the Audit Bill along with the USC31-714 DOES MAKE IT EXPLICIT that the audit can include REVIEW OF "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;" AS WELL AS "making such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.

So, no. The bill won't hand fiscal policy over to the Congress, but it does allow the Comptroller General to step in, and REVIEW POLICY AND MAKE RECOMMENDATIONS FOR POLICY based on that review.

This alone would probably be strong enough language to scare the markets pretty bad. They generally tend to not like when anyone interferes with their "dope line", period. The very fact of this bill passing would be a strange signal to the markets that the loonies are running the asylum, and that seemingly the US Government has essentially lost confidence in itself. Why else would you pass a bill to audit your own financial backbone? (oh yes, i get that there are PLENTY of reasons in reality to do so, but it is a negative statement on your own condition that you would as a government signal to audit your own duly authorized central bank)

Also, just addressing the point over the bailouts,
***no one was screaming louder than me on this board about the impending disaster of the financial collapse well before it initiated in earnest***
my only gripe was, essentially AFTER THE FACT, IN THE MIDST OF TURMOIL people started clamoring to stop the bailouts. This is akin to not heeding fire codes for the last 100 years and allowing shanties to be built and crammed in to a downtown, ignoring all warnings about the possibility of fire, fully authorizing more shanties, and then, WHEN THE FIRE STARTS, saying "oh no. DON'T USE WATER, LET IT BURN". Sure we'd be better off without the shanties, but there are women and children living in those things!

IF you want to argue against keynesian policies do so before the fire breaks out, and use sensible policies to step off the dope ... don't send the patient in to death-inducing withdrawal. That was all i was getting at during the bailout. I was not pro-keynesian. I was just anti-reactionary-stupidity.

Bottom line:

A person, regardless of who they are or how they spin, if they support notions that fall into an ideological camp,... it only makes sense that they are occasionally lumped in with that camp.

Keynesianism by definition is supporting more Keynesian policies.You're arguing you're not a Keynesian, but a sentence or two later you once again back Keynesian policies. Keynesianism is a label for an ideology. It's not equivalent to a political party where you sign up for it. You either believe in the mindset or don't, or are mixed.

You confuse the F out of me because you say you're not Keynesian, but then literally back Keynesian policies two sentences later. You can't have your cake and eat it too.

But, regardless, who cares if I say you're falling into the Keynesian camp here. I understand that we agree we're f'd. We disagree how to handle it. You're belief is don't limit the Fed's or governments power to control this. My belief is we should limit it because... they are the f'ing problem (Debt/GDP).

I agree that things aren't all or none, nor should they be. Where you and I part ways is I don't see Keynesian issues dissipating quickly - - - - -ever. We won't just "get off the dope" and the truth is, I think you know this. This "bill" is not getting off the dope at all. It may, however, be the beginning of a weaning process.

The part that bothers me is... I don't think you really want a weaning. When I read what you write, you consistently back what the Fed is doing - but, then toss in back hand comments about how we're F'd anyway. It doesn't make sense. If you think what they are doing is worthy of your support - You must think it could work, right? If so, you're a aligning yourselves with Keynesian policy by definition. It's so hard to argue someone is a (insert ideology here) when (insert ideology here) is based on supporting different notions.

Anyways, Keynesian policy breeds more Keynesian policies. You argue we should have been preaching against Keynesian policy before it was used (I was - at least in regards to bailouts). I argue back I'm happy to have new friends on my side, Keynesian policy has been used repetitively since the at least since the Great Depression. It's not new with the bailouts. And unless we change our desire for it, it will be used again. Now's as good of a time to say... let's try a different approach.

For the time being, I support weaning... This audit is a good first step.

DriftingByTheStorm

Sigh.
I am NOT PRO-KEYNESIAN.
The lines you are taking out of context as backing keynesian policy and being "pro-keynesian" are intended to convey the notion that THIS (keynesian) SYSTEM IS ***NOT WORKING*** but our EXIT FROM THIS SYSTEM MUST BE ORDERLY, not a panic-inducing cold-turkey switch.

If you need further proof that i am not and have never been inherently pro-keynesian:
post

Another Anti-Keynesian Drifting Quote wrote:

Let us do as Milton Friedman suggested as his ultimate solution and simply abolish the Federal Reserve and END THE PRINTING OF NOTES, thus caping inflation at the base currency level (the dollar) and allowing the markets to create OTHER forms of paper currency to account for any further need to inflate credit.

and another post about Uncle Milt

and another quote:

Little Old Me Said wrote:

I thought the last line of that Friedman article in my last post said it best.
I was looking for good nuggets (since its been a while since i read it) and scrolled all the way down real quick, good thing too:

Uncle Milt wrote:

Clearly the problem is not the person who happens
to be chairman, but the system.

... clearly.

???
I just think there has to be SOME ORDERLY WAY OF ARRIVING AT THIS ULTIMATE SOLUTION.