Flirting with Danger: Secrecy of the Federal Reserve
I often refer to the Federal Reserve as a secretive and dangerous agency, but many people don’t understand what I’m specifically talking about. Publicly, the Fed participates in hearings in Congress, and it generally seems accountable to the President and Congress. Few understand there is information that Congress and the American people are prohibited to know. Let’s start from the beginning.
Different agencies and groups have been given the task to audit and investigate the Fed since it was created in 1913. The Treasury Department took on the job for the Fed’s first eight years of existence. In 1921, the General Accounting Office (GAO, now the Government Accountability Office) was established with the Budget and Accounting Act of 1921. The GAO is an “independent, nonpartisan agency that works for Congress.” It’s duties consist of performing audits, evaluations, and investigations. In general, it is called the “watchdog” of Congress.
Congress gave the GAO the auditing responsibility over the Federal Reserve until 1933, when Congress decided to give other agencies and firms the responsibility. For more than forty years after 1933, the GAO’s duties did not involve auditing the Federal Reserve. This changed on July 21, 1978, when President Jimmy Carter signed The Federal Banking Agency Audit Act into law. The Act had several major flaws. It returned auditing power over the Fed back to the GAO, except for four different areas that the GAO was prohibited to audit:
(1) transactions conducted on behalf of or with foreign central banks, foreign governments, and nonprivate international financing organizations;
(2) deliberations, decisions, and 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 including transactions of the Federal Reserve System Open Market Account; and
(4) those portions of oral, written, telegraphic, or telephonic discussions and communications among or between Members of the Board of Governors, and officers and employees of the Federal Reserve System which deal with topics listed in this Act.
Yes, it is actually prohibited to audit these areas of the Federal Reserve, and they are not any small items. Perhaps most alarming is the fact that the GAO can’t investigate the Fed’s foreign dealings. Letting their foreign operations go unnoticed is a rather disturbing prohibition, and brings up questions of sovereignty, loyalty, and what’s in the best interests of the country. We are talking about an organization that has monopoly control over money and credit; if anything, they should be one of the most heavily investigated areas of government.
The argument against allowing Congress and the American people to investigate these four items is that it allows the Fed to operate more efficiently and productively without excessive public or private scrutiny. No kidding. I don’t think anyone would argue that being protected against any investigation into four key areas of your operation would hurt efficiency.
This statement from John F. Kennedy serves as a good reminder of what we should expect and tirelessly demand from government:
“We are not afraid to entrust the American people with unpleasant facts, foreign ideas, alien philosophies, and competitive values. For a nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people.”
Money is one of the primary areas where Congress has neglected and ignored its Constitutional responsibility. We have given unimaginable power to a central bank, and prohibited important aspects of that central bank from being audited. This is dangerous in any circumstance, but that danger increases quickly when you add in the fact that we have a fiat monetary system, essentially an inflationary time bomb of monetary destruction waiting to go off.
The most basic question to ask is if this monetary system resembles that of a free society, economy, and people. Huge power over monetary policy is in the hands of the seven unelected members who make up the Board of Governors, which oversees the Fed.
The Fed is not here to create stability for the American people, it is here to ensure stability for government. It is time to reverse the trend and belief that the American people can’t control monetary decisions. Money is power, and that power should not be in the hands of a select few central bankers serving the interests of themselves and the government. That power belongs solely to the individual citizens of a nation, otherwise in the long run it will be abused, expanded, and used as an engine of tyranny.
The Fed deserves no special treatment. Let them be audited, investigated, and open to to public and private scrutiny. Congress and the American people have given them incredible power; a power that, especially if protected and kept secretive behind closed doors, will be destined to bring the country into a time of massive inflation, worthless currency, and great economic and social unrest.
Auditing the Fed is the first necessary step to stripping the outrageous power of an unconstitutional central bank and currency. Can you imagine what the founding men of our nation would say about secrecy in places of such importance and power? Secrecy in government leads to suppression of truth and the birth of tyranny. It is imperative that we once again realize the dangers of mixing secrecy and power.
“History records that the money changers have used every form of abuse, intrigue, deceit and violent means possible, to maintain their control over governments, by controlling money and its issuance.” — James Madison
“Let me issue and control a nation’s money, and I care not who writes its laws.” — Amschel Rothschild
“Those who seek absolute power, even though they seek it to do what they regard as good, are simply demanding the right to enforce their own version of heaven on earth. And let me remind you, they are the very ones who always create the most hellish tyrannies. Absolute power does corrupt, and those who seek it must be suspect and must be opposed.” — Barry Goldwater