Ron Paul: Why The Fed Must Be Audited

The history of the American banking system is a fascinating subject. Filled with intrigue, late-night Congressional approvals, and Presidential populism, our country’s official banks are not without scandal. Before the Federal Reserve Act of 1913, there were two other successful attempts to monopolize the banking system in the United States.

The first venture began in 1795 under then-Secretary of Treasury Alexander Hamilton. At the time, different currencies were circulating throughout the nascent states. Hamilton argued for a central bank to protect Americans from dishonest currency traders and shady land deals. A useful side effect (in Hamilton’s view, at least) was to establish government control over the nation’s currency.

Hamilton helped pass the first charter for the Bank of the United States. Avoiding resistance from the Southern states who opposed it for tax reasons, Hamilton crafted the charter with certain restrictions. According to Wikipedia, to avoid any appearance of impropriety, the bank would:

1.   Be forbidden to buy government bonds.

2.   Have a mandatory rotation of directors.

3.   Neither issue notes nor incur debts beyond its actual capitalization.

These restrictions were reasonable and helpful. At least it had the appearance of integrity. However, it’s a far cry from how the Third Bank of the United States, aka The Federal Reserve is running things now.

Consider the following -

How many bonds has the Federal Reserve purchased since the start of the current economic crisis? One day in March, the Fed added $1 trillion in government and mortgage-backed securities to its balance sheet. How’s that for avoiding conflicts of interest?

Then there’s the issue of mandatory rotation of directors. Current Fed Chairman Ben Bernanke is still the new kid on the block, so we’ll leave him out of it. But Alan Greenspan’s chairmanship ran from 1987 to 2006 – almost two decades. Who cares if the President reappoints the chairman? When was the last time the President crossed the Fed?

(uncomfortable silence)

Oh yeah, the big one – fiat currency. The original Bank of the United States could not issue notes in excess of actual capitalization. But that’s exactly what the Federal Reserve has been doing, almost since its inception. As a result, inflation has been the rule. According to these guys, the dollar inflated 2071% from 1913 to 2008. In other words, that dollar in your grandpa’s wallet in 1913 would now be worth about $0.045 in purchasing power.

Thanks, Alan – thanks, Ben.

Some people have had enough. On Friday, Forbes published a commentary from the unofficial leader of Washington’s underground, Congressman Ron Paul. He called for an audit of the nation’s quasi-government banking system, the Federal Reserve. According to Dr. Paul…

“The Federal Reserve’s recent and unprecedented actions in the realm of monetary policy have provoked a backlash among the American people. Trillions of dollars worth of loans and guarantees have been provided to Wall Street firms, while Main Street Americans suffocate under harsh taxation, the prospect of higher debt levels and increasing inflation. These events have awakened many Americans to problems with the Fed’s loose monetary policy, the bubbles it has created in the past and the potential hyperinflation it might cause in the future.”

I salute Congressman Paul for his courageous stand against the mighty Fed. Ron Paul is no stranger to a fight. He is sometimes the lone dissenter in Pelosi’s House. I only hope others will join him in restoring honor to our nation’s banking system.