28 Sep 2009

The Most Ridiculous Argument Against Auditing the Fed Yet…

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…comes from Barry Ritholz, as relayed by Bruce Bartlett:

While I have been critical of the Federal Reserve (especially the Greenspan years), my beef with them has been their judgment and decision-making process. Congress, on the other hand, is a whole different matter. It[‘]s not their judgment, but rather, the fact they are owned not by the American people, but by lobbyists, and corporate interests. They have become structurally deformed.

How weird is it for me, who spent so many pages blaming the Fed for a lot of the recent crisis, to find myself in a position of defending them from outside political pressure? The choice we face is the recent Fed regime of secrecy, nonfeasance, irresponsibility, and easy money — versus something possibly likely to be a whole lot worse.

To be found in “contempt of Congress” would require an improvement in opinion of them.

If the Fed has been a major source of problems, Congress is much worse. They were the great enablers of the crisis, readily corruptible, bought and paid for by the banking industry. I find Congress to be the worse of two evils — lacking in objectivity, incapable of producing legitimate regulatory review.

So to summarize: The Fed has handed literally hundreds of billions of dollars created “out of thin air” to politically connected financial institutions. Congress asked Bernanke to tell them which institutions got how much money. Bernanke refused to say.

So Ron Paul and friends are pushing a bill that would force the Fed to disclose the recipients of such handouts of freshly printed dollars. And Ritholz says, “No, that’s dangerous, because Congress is owned by the banking industry.”

The Fed is a government-enforced cartel of private banks. It is literally owned by the banking industry. In contrast, Congress is merely rented by the banking industry.

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