Thursday, February 12, 2015

Audit The Fed and Then What?

News
Audit the Fed and then what? The Fed is only a small player in the global game of economic interconnectivity. Contrary to popular opinion, the Fed can't change risk-aversion capital flows through domestic policy without first implementing global reforms; it doesn't have the power or connections to do that.

Most forget that the Fed lowered rates in order to deflect risk-aversion capital flows and support European currencies in 1927. It didn't work back then and it won't work today whether or not the Fed is audited or run entirely by Congress.

Headline: Rand Paul vs. The Fed: Like father, like son

It’s a rivalry almost as old as the Yankees and Red Sox: A politician with the last name Paul versus the Fed. The latest iteration comes from Senator Rand Paul (R-KY) who wants to audit the central bank. He’s raised some $88,000 for the campaign via his “Audit the Fed Money Bomb” web site and hopes to hit $150,000 by next week.

We should note that the Fed is already audited by both the Government Accountability Office and an independent auditor, so Paul’s push is about more than just auditing. Some speculate that Paul’s hoping to find out where the Fed buys its debt from, but more than that, the push is likely meant to give Congress more influence over monetary policy.

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