UPDATE: The House of Representatives just passed Ron Paul's Federal Reserve Transparency Act by a vote of 327 to 98. Find out if your Representative voted for this important piece of legislation here.
The bill now heads to the senate, where it will be up to the majority senate Democrats to bring it to vote. Sadly, it may not get that far. Stay tuned.
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Originally slated for a vote on Tuesday, Ron Paul’s Federal Reserve Transparency Act was pushed back to Wednesday on the House of Representatives’ suspension calendar. This means that the vote will require a two-thirds majority for passage (290 out of 435), debate will be limited to 40 minutes, and it will be a closed rule, thus preventing amendments from being added. For all intents and purposes, the vote should be quick, painless, and successful because Paul’s “Audit the Fed” bill has 274 cosponsors, and House Democratic leaders have said they will not whip against the bill, even though they have attacked the bill as dangerous. From there it will go to the senate, where the prospect of passage is not so rosy.
During debate on the Fed Transparency Act yesterday, House Minority Whip Steny Hoyer (D – MD) gave a foolish floor speech against bill, and circulated a letter to House Democrats urging them to vote “no.” It read in part:
“In order for the Federal Reserve to do its job effectively, it should not be subject to short-term political pressures. The experience during debate on the debt ceiling last summer should demonstrate to the American public that House Republicans cannot be allowed to hold our economy or our critical economic institutions hostage in order to further their extreme agenda.”
One must wonder, what job would that be? If the job of the Fed is to act as the primary rescue vehicle for troubled banks by infusing them with money at virtually zero interest while debasing the currency, and while millions of Americans struggle to get manageable interest rates on mortgages, car loans, and credit cards from those very banks who get interest-free loans, then by this standard the Fed has done a bang-up job.
But if the job of the Fed, as its mandate says, is to achieve full employment and stable prices, it has failed abysmally. Even worse, it helped facilitate the very mess we currently find ourselves in. After the September 11 attacks, the Bush administration and the Fed were so frightened the country would slip into recession, they slashed interest rates to below 2% and kept them there for three years hoping the easy flow of credit would spur consumer demand. It did, especially in the housing market. The bubble fueled by the Fed’s loose monetary policy and the monstrous speculative casino on Wall Street that is the derivatives market burst in spectacular fashion, bringing down with it the global economy.
And now leading House Democrats oppose an audit of the Fed because it might hinder the Fed’s ability to do its job.
Given the above considerations, that wouldn’t be such a bad thing.
As for Hoyer’s contention that the Fed mustn’t be subjected to short-term political pressures, the reality is, everything is political, as a fiery Dennis Kucinich (D – OH) pointed out yesterday on the House floor.