Fed Audit Will Show What They’re Hiding

In this speech to Congress, Ron Paul refutes Ben Bernanke’s interpretation of HR 1207, the bill to audit the Federal Reserve, and explains why only an audit will protect the public’s interest.

Date: 7/30/2009

Ron Paul: Mr. Speaker, the big guns have lined up against HR 1207, the bill to audit the Federal Reserve. What is it that they are so concerned about? What information are they hiding from the American people? The screed is: transparency is okay except for those things they don’t want to be transparent.

Federal Reserve Chairman Ben Bernanke, argues that HR 1207, the legislation to audit the Federal Reserve, would politicize monetary policy. He claims that monetary policy must remain independent, that is; secret. He ignores history because chairmen of the Federal Reserve in the past, especially when up for reappointment, do their best to accommodate the president with politically driven low interest rates and a bubble economy.

Former Federal Reserve Board Chairman Arthur Burns, when asked about all the inflation he brought about in 1971 before Nixon’s reelection, said that the Fed has to do what the president wants it to do, or it would lose its independence. That about tells you everything.

Not by accident Chairman Burns strongly supported Nixon’s program of wage and price controls the same year, but I guess that’s not political. Is not making secret deals with the likes of Goldman Sachs, international financial institutions, foreign governments and foreign central banks politicizing monetary policy?

Bernanke argues that the knowledge that their discussions and decisions will one day be scrutinized will compromise the freedom of the Open Market Committee to pursue sound policy. If it is sound and honest and serves no special interest, what’s the problem?

He claims that HR 1207 would give power to Congress to affect monetary policy. He dreamt this up to instill fear, an old statist trick to justify government power. HR 1207 does nothing of the sort. He suggested that the day after an FOMC meeting, Congress could send in the GAO to demand an audit of everything said and done. This is hardly the case. The FOMC function under HR 1207 would not change.

The detailed transcripts of the FOMC meetings are released every 5 years, so why would this be so different and what is it that they don’t want the American people to know? Is there something about the transcripts that need to be kept secret, or are the transcripts actually not verbatim?

Fed sycophants argue that an audit would destroy the financial markets’ faith in the Fed. They say this in the midst of the greatest financial crisis in history brought on by none other than the Federal Reserve. In fact, Chairman Bernanke stated on November 14th 2007, “A considerable amount of evidence indicates that Central Bank transparency increases the effectiveness of monetary policy and enhances economic and financial performance”.

They also argue that an audit would hurt the value of the U.S. dollar. In fact, the Fed, in less than a 100 years of its existence, has reduced the value of the 1914 dollar by 96%.

They claim HR 1207 would raise interest rates. How could it? The Fed sets interest rates and the bill doesn’t interfere with monetary policy. Congress would have no say in the matter and besides, Congress likes low interest rates.

It is argued that the Fed wouldn’t be free to raise interest rates if they thought it necessary. But Bernanke has already assured the Congress that rates are going to stay low for the foreseeable future. And again, this bill does nothing to allow Congress to interfere with interest rate setting.

Fed supporters claim that they want to protect the public’s interest with their secrecy. But the banks and Wall Streets are the opponents of HR 1207, and the people are for it. Just who best represents the public’s interest?

The real question is: why are Wall Street and the Fed so hysterically opposed to HR 1207? Just what information are they so anxious to keep secret? Only an audit of the Federal Reserve will answer these questions.

  • Nate Y

    I see Sean is still busy making absolutely no sense whatsoever. Completely understandable considering he finds company with the likes of Keynes, Krugman, and the inflationists.

    • sean

      according to you. I don’t support government spending, I just tell you why the government spends so much money. I do make sense, would you like to correct something I have said? haha, oh ya, you don’t know any better.

  • Matthew

    I didn’t say raising rates weren’t designed to not pop them I just said there is more to it than that.

    So your saying “BANKS create money based on their holdings”? And then you are saying “You can’t expect to do so without borrowing and creating money.” So the point being money is being created. The Fed will open their books to a limited extent but that isn’t enough. What are they so afraid of? A mandatory compliance to hand over their books. Just knowing they are pushing so hard and bringing out economists and hiring Enron PR specialists and holding town hall meetings just makes me want this bill to pass even more!

    • sean

      Yes, the fed is the caregiver to banks and supply them with credit.. Without the fed, there is no caregiver i.e. no credit. Most small businesses run on credit. There would be a huge job loss, no student loans, no car loans, no home mortgages, nothing. Nobody will be able to borrow money. We would have to fully rely on the big 5 to print and create money.

      The fed has said they will open ALL of their books.

      Maybe if we didn’t spend so much money overseas, than we would have money that we wouldn’t need to borrow.


      • sean

        The big 5 pretty much acts as a central bank and much more. As seen throughout history, every time the people call for anarchy and are successful, some group steps up and takes their place.. This is true with the central bank as well. Whenever we did get rid of the central bank in the early 1800s, the New York Bank took over the roll and responsibilities of the central bank, which lent money to banks that exceeded their limit, set the trends for interest rates, and helped fund government expenditures. What many people don’t understand is that if we get rid of this quasi government/private institute, we would end up with a fully private institute determining the wealth of our nation.

        • sean

          Don’t bite the hand that feeds u.

          • VR

            More fear-mongering, Sean?

  • Freedom

    If Bernarke follows through with his threat about inflation, what will or could happen? How will it affect we the people, and how can we prepare for it to happen? Whew, a lot of questions.

    • Ross

      Freedom,Bernanke has already created the inflation and the depreciation of the dollar.When the Fed is finished creating their whore,monopoly money to buy up depreciated assets,it will then begin to filter down to the consumer,thus causing hyper-inflation unless they increase interest rates.

      The problem with increasing interest rates in this perverted market,is that it destroys sound productive businesses in order to save the bubble financial economy in which the banks and Wall St live.

      They got away with during the Great Depression,but this time the internet and a more educated pop have their measure.

      75% of the pop support the Auditing of the Fed.Ron Paul has strong support from the armed services.The Fed only has the power of inflationary cyber money.The people of the USA are the providers of goods and services.Who really has the power?The people just need the awareness and the guts to take them on.

      Parasites are pussies when the real game of survival comes into play.

      • sean

        If growth is booming, yes they are going to have to raise interest rates. That is the most important tool the fed has to keep BANKS from inflating the money supply. Inflation is the cost of growth.


        • sean

          Your saying that raising interest rates destroys sound businesses… So you would rather banks inflate the money supply and lend all the money they can print out? I don’t understand if you are for or against inflation, or if you just don’t understand what you are talking about.

          They don’t raise interest rates to “save” the bubble. Raising interest rates pop the bubble. They raise interest rates to stop the bubble and inflation from growing too big.

          Bubbles can be formed with or without the fed. Bubbles come from too much investment which ultimately leads to not enough return.

          • sean

            All investors got hurt from the economic collapse. Nobody benefited, especially not wall street or the banks. Wall street lost trillions of dollars and several banks failed and were bought out. A few financial firms may have gotten some loans from the government, but they have to pay back those loans with interest.. Nobody won.

        • Matthew

          Inflation does arise from growth but if it is government money then all would benefit because it would be recycled but it’s not now. This is how you get a 16 trillion dollar deficit because the money supply keeps growing.

          As you said only a fraction of the trillions (68 billion) the Fed creates is given back to the Treasury. Once all this new money hits main street it would hurt even more the standard of living, ie prices.

          Thank God Ron Paul asked if Ben if they are going to monetize the debt and he said no – but the problem is we don’t know by what other means they will compensate. WE DON’T KNOW THE MAJOR THINGS ON THEIR BOOKS AND HOW THEY OPERATE INTERNALLY.

          They’re not a government entity

          It is all related you can’t just say the Fed can slow growth and stop inflation. It is a never ending cycle of government, private sector, and the fed printing money. The raising and lowering of taxes and government programs are second-hand related.

          “Raising interest rates pop the bubble.”

          That is not always true especially in a global market when ARMS are based on Libor just as an example. What about Oil, Gold, and other commodities? It is far more complicated than that.

          • sean

            Raising interest rates do pop bubbles. It’s called negative amortization.

            Again, the fed doesn’t create money. It BORROWS money and BANKS create money based on their holdings. The reason why we have to BORROW so much money is because we spend it overseas. We don’t save as individuals or as a country. We have to import 500 billion dollars worth of oil a year, or 10 million barrels a day. You can’t expect to do so without borrowing and creating money. Somehow we have to pay for those 3.6 billion barrels of oil we import every year.

            Ben Bernanke has said several times that he is more than willing to open his books.

          • sean

            The national deficit rises at the same rate as the trade deficit. The government borrows money to replace money spent overseas.



            Check this out, this is the reason why we got away from the gold standard in 1971..


            Because of oil (and other goods) we have had an 8 trillion dollar trade deficit in the past 25 years.

  • VR


  • VR


    • E Perez Jones

      Can you explain this better: censorhip of health claims (supplements or standard medicine?), and health information (public databases, pages, books, schools?). How the watch on health services and products relates to constitutional governemnt???

  • Ross

    The World’s 50 biggest banks are worth $59 trillion or $191,000.00 for every person in the USA.This gives us some idea of the enormous power they weild.

    Most of these banks are in Europe.The Bank of England owned by the Rothschilds is worth over $3.8 trillion alone.The USA ranking is 4th with Bank total worth of over $6.8 trillion.Great Britian comes first with a total value of $ 10.665 trillion.

    You have to ask how the institutions that produce nothing tangible or really useful,have become so powerful? Well to those who have studied the banking system,it is their power to create money as debt in their computers.

    The IMF recently created $1.4 trillion and called it cyber money.They have only 7% of this in gold to cover this and all the other money they have created over the yrs.

    What they do is over inflate the currency,raise interest rates to bring on a recession[share prices fall and become undervalued] and then generate more inflated money for their own use to buy up cheap assets.This is why Bernanke won’t say where the money has gone.To add insult to injury they charge the US tax payer interest on cyber money to bail out their own mates.It is nothing but a scam!

    The US $ has not devalued much yet because it has not reached the consumer, but when these trillions of $ do filter down,we will see inflation and devaluation of $.If they raise rates to stop inflation,the already weak economy will further collapse.

    • Mike

      Good point. Whatever these banks have in deposit multiply that by 10 because that is how much money they can loan out with interest. Now that’s their true power. It’s called fractional banking which also needs to be ended. You are right my friend this is a total scam. Our dollar has devalued by 96 % since the inception of the fed. Now that’s a scam.

  • Mike

    Audit the Fed! Show what they are hiding. Ron Paul is the last hope for America and the countless millions of unborn generations to come. Once he is gone that’s it my faith in politics is over. I had lost faith but Ron Paul has brought it back. He speaks the truth and understands the history of the Federal Reserve and what they have done to this country since its inception in 1913. Just look at Bernanke sweat at the thought of an audit. The people have the right to know. The people want to know. And once the people know what the Federal Reserve (which is not federal and has no reserves) has done in the treason to the American peoples wealth may god help the change that will sweep every corner of America. This period we are in and Ron Pauls movement is epic and legendary already for what it has done. It is of such great importance that the masses and even those that think they understand the Federal Reserve have no idea the change that can come from this. Audit and end the Fed. Also Ron Paul run for president once more you are only stronger than before and now have extremely more leverage from what you spoke of in 2007. You were right the voters were wrong. From no income taxes which is illegal, to the bullying IRS, all those departments of non-sense and overspending, may God help you Ron Paul. Ron Paul President of the United States 2012. A real change you can believe in.

    • Matthew

      I’m all for no IRS – but that will never happen because the truth is our nation is broke. It will only happen once spending is under control and we can start paying down the debt then it will be politically correct to abolish the IRS and side with Supreme Court ruling.

      • Mike

        The IRS and their harassing ways needs to stop. There have been court rulings in the favor of those that have been charged by not paying taxes since that is illegal. The constitution says only taxable income is only from corporate gain not from labor of the individual. The IRS need to be ended and that will leave money in the pockets of the individual. When the income tax is revoked because it is illegal that will put 30% of peoples income back in their hands. Now that’s a tax cut and that will help the people and our country. The sooner the better we dont have to wait for a system that has been overspending for decades and a never ending debt that only gets bigger and bigger. The politically, moral, and ethical thing to do is stop taxing peoples labor. Income taxes do not help America for they are only payments to the grand scale interest rate we pay on our national debt. This debt is not free money printed by the Fed it comes with an interest and the American tax payers pay the tab. The borrower is the slave to the lender. This needs to end. Don’t side with the nonsense of these made up rules side with the only thing that matters, the American Constitution.

  • Sean
  • Christine

    How to Abolish the Federal Reserve

    Will this work?
    Would this keep congress’ spending under control?

    • Sean

      That video is kinda old. Our whole system has changed.
      Check out this video..


      • Sean

        ugh, not that video, watch this.


      • Christine

        Yeah Sean, Shadow Banking…sounds too much like Shadow Government. No matter how much marketing or how many sales pitches you do on that one, I think that is pretty much a “No Sale”.

        • Sean
          • sean

            The federal reserve has not been inflating the money supply nearly as much as private banks have from the free market.

          • VR

            Shadow banking is government birthed, and government sponsored.

            Another symptom of government manipulation (central planning).

          • sean

            The shadow banking system is not government birthed or government sponsored.. The shadow banking system came from foreign investors into the free market, which had no rules or regulations from the government on loans (free market) and that’s why they failed.

          • VR

            I see, so that is why they prop it up.

          • longshotlouie

            Sean replies:
            August 3rd, 2009 at 8:53 am

            Baaaaaaaa, BAAAAAAAAAAAA

          • sean

            They propped it up after it failed.. It was a sloppy FREE MARKET system before it collapsed.

          • longshotlouie

            It was caused by manipulation of the market, hence, no free market.

          • sean

            There was no manipulation of the shadow banking market from the government or the fed. There was no involvement what so ever. You are a long shot away from being correct.

            These are investment firms, not banks. They had nothing to do with the government or the fed.

          • VR

            longshotlouie replies:
            August 3rd, 2009 at 2:46 pm

            It was caused by manipulation of the market, hence, no free market.


          • sean

            again. There were no rules or regulations on the investment firms from the government or federal reserve. It is by definition a free market operation.

          • VR

            Interference in markets by government has all kinds of repurcussions. No one said that the interference was in shadow banking, just that it arose from a government-manipulated market.

            When you manipulate one place, the results show up somewhere.

          • sean

            The government manipulated the market with interest rates, the shadow banking system did not. Therefor it was not manipulated by the government.

          • VR

            Read your reply, critically.
            There’s a hole in your bucket.

          • sean

            We don’t have a free market “economy” but by definition, shadow banking is a free market system, which means there was no regulation or direct intervention from the government.

          • Christine

            I’m feeling partially sarcastic, creatively imagining while searching for answers to this whole idea of money controlling everything we do and say.

            Sometimes it just amazes me to think that we allow these sheets of paper that represent the idea of money (what we can and cannot have/do) to cause so much ruin and harm to man/womankind and the earth!

            The whole concept of money interferes with freedom, and large corrupt egos use it as a tool to make all other’s life experiences less than they otherwise could be. There doesn’t seem to be a way for us to use the idea of money properly, ever, so that we ensure peace and happiness, yet we keep wasting time and effort trying to.

            We have these wild ass financial systems that few understand, that have perverted so much, that we do not control, even as we go off to work each day to generate and replentish our supply of mo money, the money that is increasingly taxed before we can even use it ourselves for basic needs.

            When trying to resolve an issue, sometimes we just have to step back and take look at ourselves. What have we become? What are we doing? A bunch of people who are wasting their life experiences being controlled by someone else’s idea of money, means of exchange, with a belief that those with it have power and control, and we do not. Perhaps some day we will seriously take a look at this belief and realize that there is a different way to pursue our happiness that actually works. We are only interested in what works well for all. When we no longer need to feel superior over another, we might be ready to begin. We’re creative beings. I’m sure we can come up with something better than this!

            A world without this whole financial system or chip. Just us and whatever career we wish to use to express our talents and to make a positive contribution to the world. We contribute because we enjoy spending our days doing whatever “it” is that we are gifted at doing. All contributions freely provided. That is the reward. All basic needs covered. It’s just a new way of life, of being in this world. Everyone has a home, medical care, nutritious food, vacation, clothing, etc. We wouldn’t even think of someone having to do without. Self-control, responsible, peaceful, caring individuals, sharing.

            So much of what we waste our time doing would simply fall away and not be needed any longer, less drag on the population with no reward in the system for criminal activities, etc. because the people universally share what they have, benefit from everyone’s contributions, and no one is without the best. Real freedom of choice.

            I suppose even in this system the elite would still manifest big ego so that someone would have to trim their nose hairs and massage their feet, but how many of those appointments can they take in a week? …and there are so few of them by comparison to the masses. They would disappear as their nothing little selves, misfits, that don’t know the first thing about making a positive contribution with skill and talent.

          • Mike

            “sean replies:
            August 3rd, 2009 at 1:12 pm

            The federal reserve has not been inflating the money supply nearly as much as private banks have from the free market.”

            It’s nice to see that you admit that the Federal Reserve is partially responsible for inflation.


    • Lindsey Brutus

      Christine: This would work but it would create a lot of inflation until we replaced all the interest bearing bonds. Then things should stabalize. Short term pain for long term gain is what I would call it.

      • sean

        It wouldn’t work. You can’t just pay off the debt because who would then own the assets?

        The problem is not too much debt, it’s too much congestion. It’s managed all wrong.

      • Matthew

        I agree but the problem is with soooooo much debt its more like long-term adjustments for long-term gains. It’s not really a pain more like a lifestyle adjustment – albet a big one. As of right now our countries debt is, or was a year ago, roughly equal to its total debt.

        As far as paying off the debt and whom gets the assets? Case in point if you are paying off debt it depends how you do it. The Fed could just print money and pay off debt slowly while increasing prices overall. Or the government could raise taxes across all classes or the rich, etc. There are so many ways at looking at it.

        I do not like the Fed for more than one reason but the main reason I don’t like the Fed is because of the inflation tax that decreases our standard of living.

        Congestion? Yes, but managing it right would do what… pay off debt ultimately.

  • Matthew

    Sean you don’t have a clue. The Federal Reserve does not give the money back to the Treasury Department – that is very, very little. If they do it would be a more perfect system.

    The total government deficit as of last month was $63 trillion. The GAO has been screaming to balance the budget but the deficit goes up the more the Federal Reserve prints money. The money it print is not backed by gold or oil but Treasury Bills, unlike certain countries like Switzerland which has only about 50% of its deficit floating the rest backed with Gold.

    This is exactly why the Fed Spokesperson/Chairman will ALWAYS agree with the current policies for Federal Programs to not only “keep the Fed independent” but to print more money for one simple reason. They keep the money. The Fed is a private corporation/bank if you take a look at GAO reports you can tell where the derivatives go – the top 5 banks.

    • Sean

      “The Federal Reserve is a nonprofit company. After their expenses are paid, any remaining profits are paid to the Department of the Treasury. The Department of the Treasury then uses that money to fund government spending. It’s a relationship that produces a considerable amount of money. The Federal Reserve System contributed in excess of $29 billion to the Treasury in 2006, according to the Federal Reserve Board (FRB). So, the Federal Reserve not only helps to make and implement policies, it also serves as the government’s bank and generates a portion of the revenue used to fund the country’s activities.”


      • Sean

        The fed prints the money that the congress demands. If the congress was in charge, it could just print money without a majority vote.

        • Matthew

          “Actually 60% of bankruptcies were from people with medical debt.”

          Where in the world did you hear/read that? What is your credible source?

          “If the congress was in charge, it could just print money without a majority vote.”

          The beauty or evilness of the system is money gets printed regardless of what Congress says because they are dumb as dirt. The Fed tells Congress “we need to stop inflation so we higher rates; then, we need to protect our banking system so had to increase reserves.” It did ever occur to you that regardless of the party or time through various decades year-after-year the deficit has increased?

          “The Federal Reserve is a nonprofit company. After their expenses are paid, any remaining profits are paid to the Department of the Treasury.”

          The truth behind those closed books is the key. The Federal Reserve is classified as a non-profit you say but that doesn’t mean anything. If they “help” the economy by backing mortgages. Do you ever wonder why it is so interested in buying back the mortgages from the former Fannie and Freddie? 28 billion is nothing, absolutely nothing compared to 50 trillion dollars in total deficit. What, did you think Congress would approve a for-profit company to takeover monetary policy? It’s just a classification and they still can run it as a for-profit company and NOT PAY TAXES ON THE MONEY THEY CREATE!

          (but you can find many other news sites with same info)
          “The $248 billion federal budget deficit figure results from what basically amounts to a cash flow analysis,” Williams explained. “On a cash basis, the Treasury takes all the tax revenue, including Social Security taxes, as current income. The trick is that Treasury essentially steals the money that comes in on Social Security taxes, without accounting for any offsetting Social Security liability. When you run your accounting that way, the Treasury gets to report a federal budget deficit that dramatically reduces the real figure.”

          What’s different about the anticipated 2006 Financial Report of the United States?

          “Congress a few years ago mandated that the Treasury had to report one report each year that used GAAP accounting,” Williams told WND. “Then, when you figure in all liabilities including Social Security and Medicare, the real 2006 deficit is huge by comparison. What I expect to show up on Friday is a real federal budget deficit of $3.5 trillion or more, not the $248.2 billion earlier reported.”

          “Even worse,” Williams continued, “the U.S. Government’s negative net worth widened to $49.4 trillion in 2005. For the first time, total government liabilities have topped $50 trillion, and the number is continuing to grow. The United States is bankrupt, whether the Bush administration wants to admit it or not.”

          You need to due your research you haven’t got a clue.

          • Sean

            I’ll say it again for the millionth time. The government spends money to replace the money spent over seas and stimulate the economy. It’s called Keynesian economics.

            You have no clue.

            28 billion is a substantial amount of earnings for one year. You obviously don’t understand how much money that is, you have no clue.


    • Matthew

      28 billion is a lot compared to a deficit of 1-2 trillion for that year. The problem is we don’t know EXACTLY what is on their books which is what we are fighting for. Why are they fighting so hard?

      “Actually 60% of bankruptcies were from people with medical debt. These were from people who were insured but didn’t have proper coverage.”

      That study is interesting but it is before the collapse of the market. A couple of key points about that article:

      “The study may overestimate the number of bankruptcies caused by medical bills yet underestimate the financial burden of health care on American families, because most people struggle along but don’t end up declaring bankruptcy, according to Cunningham.”

      “The recession didn’t happen until a year after our study,” says Woolhandler. ”

      Did you not see this part? So what you are saying is medical debt collapsed the economy with the fact that they mortgaged it because they were able to get cheap money?

      I agree medical insurance is a big problem in the nation and is now 12-15% GDP but I don’t understand why you are bringing it up in a conversation about the Federal Reserve?

      Americans love to spend and pass the blame, look at California, so with the supply of low interest rates and new, unique mortgage terms it was just a matter of time.

      • sean

        2007 is when the recession first occurred. It was the same year that homes devalued and foreclosures rose. A lot if not most of the problem came from people with outstanding medical debt.

        That is why every economist and their mother are trying to tell us to fix health care to fix the economy.

        Ben Bernanke has said over and over and over that he would share all of the booking information. He just doesn’t want them to audit future monetary (interest rate) decisions.

        • Matthew

          As far as health care it is a major concern but I’m not going there, I just quoted what was in the article. That is far off topic from the meaning of this topic “Fed Audit Will Show What They’re Hiding.” So I’ll leave it at that.

          As far as sharing information on the books – very little have the Fed agreed to WILLINGLY. The Fed can use powers of the government such as over riding freedom of information act – just like the President – which makes me furious.

          It has taken 75% of Americans wanting to audit the Fed to get the Fed to willingly concede their books. When asked questions about the trillion portfolio of banks by a Congressmen the auditor couldn’t come up with an answer:

          Consider this breathtaking, terrifying exchange:

          “Rep. Alan Grayson (D-Fla.): Have you reached any conclusions about the Fed expanding its balance sheet by over a trillion dollars since last September?

          Federal Reserve Inspector General Elizabeth Coleman: We have not reached any conclusions.

          Grayson: Do you know who received that money?

          Coleman: For, the, we’re, we’re in the process right now of doing our review, and, um…

          Grayson: Right, but you’re the Inspector General. My question to you specifically is do you know who received that one trillion dollars plus that the Fed extended and put on its balance sheets since last September? Do you know the identity of the recipients?

          Coleman: I do not know. We have not looked at that specific area at this particular point on those reviews…

          Grayson: Well, I have a copy of the Inspector General Act here in front of me, and it says among other things that it’s your responsibility to conduct and supervise audits and investigations related to the programs and operations of your agency. So I’m asking you if your agency has, in fact, according to Bloomberg, extended $9 trillion in credit—which by the way works to $30,000 for every man, woman, and child in this country. I’d like to know, if you’re not responsible for investigating that, who is?

          Coleman: We actually, we have responsibility for the Federal Reserve’s programs and operations, to conduct audits and investigations in that area. Um, in terms of who’s responsible for investigating—would you mind repeating the question one more time?

          Grayson: So are you telling me that nobody at the Federal Reserve is keeping track on a regular basis of the losses that it incurs on what is now a $2 trillion portfolio?

          Coleman: I don’t know if—you’re mentioning that there’s losses. I’m just saying that we’re not, until we actually look at the program and have the information, we are not in the position to say whether there are losses or to respond in any other way…”

          The GAO already can audit the Fed, as it should, but major limitation – the major limitations – are excluded:


          It isn’t just about the books it is about internal e-mails so see how they came about making decisions such as Goldman Sachs. A prime example is how the SEC was out of the loop when Treasury Secretary Paulson and Ben made the deals with BAO and Goldman Sachs which are now/where in Congressional hearings. Guess what, no paper work, no phone calls – only leaked information. That is not freedom of information.

          • sean

            I was talking about other factors that went to the economic collapse besides the federal reserve, like health care and the real estate market.

            ya, i was watching the hearing when alan Grayson asked the questions. I watch all the treasury and fed hearings.

            They are keeping track of the books. The money went to like 14 of the central banks as they have told congress before. It is not costing tax payers any money.

          • Mike

            But it DOES cost taxpayers money. When the Fed inflates the money supply (loaning money it conjures out of thin air to central banks) they weaken the purchasing power of existing dollars. This is a hidden tax. The people who receive that new money first get the benefit, because prices have not risen yet. As demand for the various goods and services increases, so accordingly does their prices. So by the time the last people in the chain to receive the new money get it, prices have increased and that dollar cannot buy what it used to because prices have increased. Inflation.

  • longshotlouie

    Bubbles represent wealth?

    Excuse me if I don’t hang around to watch you chase your own tail.

    • Sean

      Ya. The main reasons the fed lowered interest rates back in the early century was because of all of the investment money pouring in from foreign nations. They tried to make it cheaper to borrow so we wouldn’t have to pay foreign investors more money, or higher interest returns.

      • Doug

        Meanwhile us with savings accounts don’t get any interest on our money!!! Why? So the gov’t can borrow and spend this country into oblivion.

        • Sean

          Yes, savings accounts do get interest on money. There is a difference between federal interest rates and banking interest rates.

          If we didn’t spend so much money overseas, than we wouldn’t have to borrow it from overseas.

          We wouldn’t need to borrow money if we not had an 8 trillion dollar trade deficit in the past 25 years.

          • Doug

            Ahh here I was thinking that money (all money even the money in my account) was just cheap! That would be great if one had nothing to do with the other. Aren’t all interest rates artificially low because the monetary policy or (lack of) has not be implemeneted honestly? I wonder who has benefitted from how the fed has handled itself over the years?

          • Sean

            Well federal interest rates are added on top of banking interest rates. The fed mainly raises interest rates when banks are lending too much money and there is too much economic activity which leads to price instability. That’s pretty much what monetary policy is, it’s a tool to raise interest and slow down the economy. The problem is that it is a harmful tool because it hurts people who own mortgages who have to renegotiate contracts every so many years. There was no consumer protection and Bush wanted more people to own homes so he allowed people with poor credit to buy one.. Actually 60% of bankruptcies were from people with medical debt. These were from people who were insured but didn’t have proper coverage.

            Both interest rates, and medical problems, and the devaluation of homes added up to a large amount of foreclosures which brought down our whole system.. These investment firms were losing money. They call them “shadow banks.” They buy assets from banks and give them a steady supply of credit. Once the investment firms failed, bank credit froze. Businesses couldn’t make their usual payroll so they fire people.

            For the most part, interest rates are high, but they can become artificially higher when raised.

          • VR

            Hey Sean, that’s what happens when you attempt to manipulate the market.

          • Sean

            The Federal Reserve doesn’t benefit from the system. All the money the fed gets through interest rates, they give to the government to finance their debt problem. Our whole nation is in debt because of our unbalanced trade and commerce activity. We don’t produce enough goods but we continue to borrow and spend money. The government is currently trying to work with our trade deficit by working with china. But currently it’s so bad that if the government just ended the war or stopped spending money, we would have to borrow more and spin more individually, or we would suffer dangerous deflation.

          • Sean

            If they didn’t manipulate the market, banks and investment firms would pump unlimited amounts of money into our system, devaluing our currency.

          • Matthew

            Not quite. Monetary policy is more than the manipulation of interest rate, i.e. fed fund rate vs. prime rate. There is also a mandatory reserve rate on bank holdings which inflate the currency supply; there is also the printing of money and selling Treasury Bonds to foreign banks or the three big 5 domestic banks.

            As far as consumer protection you are right there is very little when comparing the federal laws to certain state laws.

          • Christine

            The foreclosures were due to lowering the standards of buyer qualifications, yes, but buyers were also given loan programs that doubled monthly payments to un-affordable, ie. $1300 to $2600/mo. Some were talked into the ARMs (Adjustible Rate Mortgages) when they qualified for other conventional loans. If buyers had taken the conventional loan, they never would have faced the inevitable un-affordable payments and foreclosure. Nice trick, eh? This whole money maniuplation thing sickens me. And then the government wonders why they can’t regain our trust and confidence. Sh_t. The reasons are mounting.

            Who beneifts? Whomever gets the asset, the equity built up in the home, the downpayment, and the new mortgage when the cycle starts all over again..down payment, equity, interest payments, taxes.

            If they didn’t maniuplate the market, our government would be a lot less corrupt.

          • Sean

            There is a mandatory reserve rate but that doesn’t mean the fed necessarily feeds them the money. Banks get there money from investment firms, all the ones that collapsed.

            The fed sells treasury bonds to fund government spending..

            Ya, there was a lot of crooked dealings from the banks, and real estate agencies. It is a huge burden on the people, and not the investors which really isn’t fair.

          • Matthew

            You sound like an investor that got burned?

          • Sean

            No, peter schiff, ron pauls economic advisor, is an investor that got burned, or burned all his clients, from buying foreign securities.

  • longshotlouie

    WASHINGTON (Reuters) – Top U.S. officials said on Sunday more steps may be needed to firm up economic recovery — including extended jobless benefits — and declined to rule out future tax increases to tame massive budget deficits.

    Former Federal Reserve Chairman Alan Greenspan said on ABC strengthening confidence in the economy could be dashed if home prices were to take another turn downward. He said he didn’t believe that a steep drop was in store, but home prices had stabilized only temporarily.


    So that is their soft peddle. The truth is somewhere beyond that.

    • Sean

      Ron Paul was for letting the houses decline in value, and that’s what triggered the economic collapse.

      Alan Greenspan also said he expected more job loss till the end of the qt and then the economy will start recovering.

      • longshotlouie

        Declining home values were a symptom, not causal.
        When the bubble burst, homes simply started moving back to their real market value.

        Like Dr. Paul, I have no problem with home prices going down (and yes this does effect me negatively, with two homes).
        Lower home prices mean that more people can afford homes.

        Not sure that Greenspan has a grip anymore.

        • Sean

          A decline in home value means that people lose equity, which is very bad for homeowners, especially newer home buyers. They can have their life savings wiped out from a loss in home value. Consumers start saving instead of spending which reduces economic activity.

          A decline in home value means that shareholders lose money and investment firms crash. In 2007, homes lost 9.8% of their value,

          You have no idea what you are talking about.

          • Sean

            “Here’s what happened: in the irrational exuberance of the housing bubble, many people were allowed/encouraged/suckered into buying houses with very little money down, at prices much higher than justified by fundamental. Now the prices are coming back to earth, and many of these people find themselves owning houses worth considerably less than their mortgages.

            This leads to both involuntary and voluntary foreclosure. Involuntary foreclosure comes when people who thought they could deal with unaffordable mortgage payments by refinancing find that you can’t refinance when your home is worth less than you owe.

            Voluntary foreclosure comes when people simply walk away, either because the mortgage is “nonrecourse” — the bank can seize the house, but no more — or because they figure, probably correctly, that the bank won’t really try to pursue them.

            Hal Varian (Berkeley prof and now chief economist at Google) puts it simply, and in somewhat exaggerated form, by saying that everyone will just default on their existing mortgage and move one house to the left, buying a new house for less than they save by walking away from the mortgage they have. Things don’t work that smoothly, but that gets the principle right.

            And what that means is that a substantial portion of the decline in housing values that’s now in progress will eventually show up as losses, not to homeowners, but to investors. We’re talking about some significant fraction of, say, $6 trillion (a 30% decline in home values from their peak). A trillion dollars in investor losses sounds quite reasonable to me.”
            -Paul Krugman

          • longshotlouie

            Yepper, if you make a bad business decision you could get hurt.

            So your solution is to offer faux wealth so that people feel better? What is it about the term ‘bubble’ that you do not understand? A bubble does not represent wealth.

            Are you still dragging out the corpse of the habitually wrong Krugman?

          • Sean

            I’m just saying that declining home prices are not good for an economy. The bubble did represent wealth. The bubble was payed for by investors. Thats why our whole economic system collapsed when the bubble burst.

            I’m not promoting the bubble, and I’m not saying that it wasn’t the initial cause. Again, you are trying to turn my words into something else, which is a good way to argue but a poor way to debate.

            I think Peter Schiff should of listen to Paul Krugman when he decided to invest all of his clients money into foreign securities.

          • Sean

            You have a poor economic understanding. The bubble is debt to us, but investments to shareholders. It does represent wealth.

            The reason why you can go get a business loan, or a mortgage is because some investor will pay for it. Both sides advantage.

          • Matthew

            Three prior administrations had tried to restart the economy by lowering rates and pushing for new homes – all ended up in major trauma to the economy; FYI. only one was a Democratic majority, surprisingly (just kidding).

            “The bubble is debt to us, but investments to shareholders. It does represent wealth.”

            As far as bubble is concerned it is not hard to fool the American public into saying your rate will be this much; payment will be this much, etc.. The genius behind the investors causing this bubble is trying to increase the bubble to the farthest reach possible by creating new mortgages such as negative equity mortgage, ARMS, etc…

            Since The Federal Reserve owns, or is if you will, 38% of all banks in the nation – of which the top 5% own 90% of the country. The Federal Reserve loves the boom it creates and it loves the bust it creates.


            “The reason why you can go get a business loan, or a mortgage is because some investor will pay for it. Both sides advantage.”

            Yes, but at what cost? It is not as cut and dry as you make it out to be.

          • Sean

            ya it is cut and dry. You have it backwards because you read stupid charts and no literature.

            The federal reserve doesn’t own 38% of the banks, banks own local federal reserve banks, which is controlled by the government, or the board of governors.

            If anything, this whole problem was caused by the shadow banking system because it didn’t have the same kind of lending rules as banks. It isn’t controlled by the government.

          • Matthew

            I said “owns or is” making the point the Federal Reserve is owned by the shareholders of the banks that own 90% of our nations debt. The Federal Reserve is its own entity – just like a publicly traded company is itself but owned by various shareholders. The Fed is an entity owned by the shareholders of its member banks.

          • sean

            The federal reserve is comprised of numerous banks that all cooperate. They are governed and monitored by the government, or the board of governors which are elected by the president.

            They don’t own any debt. Only the consumer holds debt to the investor.
            The government owns debt, which is something different..

      • Actually, what caused both the bubble and its bursting when housing price values crested and then declined was the mortgage instrument itself. Because it allows investment with other people’s money, or leveraging, it is an essentially speculative tool. I have been advocating an alternative and non-leveraged house ownership transfer contract, the Adjustable Equity Mortgage (AEM). You can read about it at http://www.carlpeterklapper.org/solution.html . Converting the existing and foreclosed mortgages into AEMs allow fair and manageable adjustments to be made when housing prices moderate or decline.

        Bottom line: Converting mortgages into AEMs would allow housing prices to reach market levels without catastrophic effect.

  • Ginger Duckett

    Listen to this song!!

    People unite, get organized, call your Senators and COngressmen daily to co-sponsor the bill. Then call Pelosi and demand a vote!!


  • Sean

    If the bill does get passed, it’s going to be watered down and exclude monetary policy. That’s what the fed is afraid of, not their bookings. You people are conspiracy nuts and don’t understand whats really going on and what this bill is really about. Ron Paul isn’t a conspiracy buff, he is trying to give the congress more authority to overlook the future decisions of the fed, which is a good thing.

  • Doug

    Here is a video that kind of sums up why I am fed up with how the Republican party has conducted itself for the past decade. Please watch and listen to what Ron Paul has to say here.

  • Lancelot

    Are we shocked here. Come on people, a bill that makes the bad guys look bad and good guys look good. A bill that actually gives us truth. Did we really think it was going to get passed lets get serious here. I have already annoyed my congressman to cosponsor this bill and he has. Lets just say if this bill actually gets passed i will have my faith restored in this country.

  • longshotlouie

    Giving money and power to government is like giving whiskey and car keys to teenage boys.

    – P.J. O’Rourke

  • longshotlouie

    Schiff-a-thon !! Listen In !!


  • VR
  • Sean

    Ben Bernanke says that he is open to sharing ALL the information on the books and dealings with central banks. The reason why he doesn’t want the bill to pass is because it would be an official takeover of monetary policy. Watch..

    Your “plan” is not going to “End the Fed.” There is no wrong doing. The congress is just going to “manage” the fed for now on. That’s what the bill is about.


    • PDN

      Ron Paul, and a minority of his allies, want to end the Fed and replace it with nothing, allowing private currencies and precious metals to compete with each other on the free market.

      Some in his coalition do want to take over the Fed and have Congress run it, but others just want to know more about what the Fed has been up to.

      They all have one thing in common: they want to audit the Fed (as do 75% of Americans).

      What happens after that will have to be negotiated.

      This bill, HR 1207, is simply about auditing the Fed, not taking it over. Bernanke is afraid because it there might be more bills to follow if the audit reveals some bad stuff we’re not supposed to know about.

      Here’s another good video:


    • NUMB3RS

      Thanks for the video, Sean.
      It was fun watching Bernanke stammer, stutter, and sweat.
      Is your body covered in wool, or just your eyes?

      • Ross

        You’re right about Sean,NUMBE3RS,Bernanke’s sheep are really getting nervous,since the truth will be too outrageous for the American public to bare.

        The pressure they are putting on Bernanke must be enormous. Can you imagine a raging bull that has total power over the herd for 96yrs ,suddenly being dethroned by the truth of it’s impotence and greed? The Fed would find that reality too impossible to believe. It could well work in Ron Paul’s favour

        • Sean

          Obviously there is no “truth” to your stupid quest. They are already sharing the books and explaining how they are doing currency swaps with central banks… This bill will only “manage” the fed for now on. Ron Paul is trying to overturn auditing “monetary policy” which has to do with interest rates, not the books.

          • Sean

            Do you even know what monetary policy is?

          • Matthew

            I agree. Under the U.S. Constitution Congress has the sole power to regulate monetary policy – not the President, not GAO, not Supreme Court. What gets mixed up in the media is the notion that with recent events Congress is taking over banks with TARP, or the Treasury if you will. This is very far from the truth that the Federal Reserve, in combination with the Treasury, decides who lives and dies (such as Sachs, Bank of America, etc.).

            There is definitely a conspiracy to hide the truth. Private Banks, or publicly traded if you will (which are owned by mostly themselves and wealthy individuals), own and operate the Federal Reserve. $236.8 trillion dollars of derivatives are held by only 5 Banks. And the government has a total deficit of 63 trillion – guess who printed all that money? Can you guess which banks benefited?

            While there are tons of sources to back this up – INCLUDING THE GAO, here are some links:


            US debt as of July 6, 2009


            If you think otherwise you might want to consider why you think this? Whom is leaning you thinking? The Fed? The people that say “the government must intervene?” Of course, the government, i.e. Congress, must intervene and overturn the 1913/14 Bill as well as all the new spending! The Ron Paul Revolution is the last hope for America.

            It so fascinating that so many people that are angry about our movement to save America from spending, and creating money, and ultimately killing itself penniless have no clue about the truth.

            I recommend you do your history before commenting.

          • Sean

            haha, it is constitutional. the congress created the the federal reserve. The federal reserve is a GOVERNMENT agency, also known as the 4th branch of government.

            You have no clue.

          • Matthew

            The problem with educating people is it takes too long.

            No. 80-5905
            United States Court of Appeals, Ninth Circuit.
            Submitted March 2, 1982.
            Decided April 19, 1982.
            As Amended June 24, 1982.

            Plaintiff, who was injured by vehicle owned and operated by a federal reserve bank, brought action alleging jurisdiction under the Federal Tort Claims Act. The United States District Court for the Central District of California, David W. Williams, J., dismissed holding that federal reserve bank was not a federal agency within meaning of Act and that the court therefore lacked subject-matter jurisdiction. Appeal was taken. The Court of Appeals, Poole, Circuit Judge, held that federal reserve banks are not federal instrumentalities for purposes of the Act, but are independent, privately owned and locally controlled corporations.

            take a look at the court documents


            The Federal Reserve is not apart of the federal government – that is good marketing by the Fed.

            “The Federal Reserve is commonly referred to as the fourth branch of our federal government.”

            Source: The fourth branch By Bernard Shull

          • Sean

            It is a legal government agency. I’ve actually read this before. Current supreme court justices can overrule that decision and declare the federal reserve a legal government agency.

            Do you know anything about the supreme court? I suggest you educate yourself.

          • Matthew

            First your saying it is a legal gov. agency, then you say the Supreme court justices can declare it a legal government agency – well which is it right now? I think you know the answer.

          • sean

            Supreme court justices did declare it a legal government agency when the federal reserve act passed. It was overturn by a single judge in a single court case. That incident did not rewrite the law, it was just ones interpretation of it, which can differenciate from time to time. What matters is what current supreme justices think about it.

          • Harold

            Sean, if the feds books are open already tell me what foriegn banks got half a trillion dollars of American taxpayer dollars. You apparently have a computer so check this out. The Ninth Circuit Court of Appeals stated in 1982 that the fed banks are private corporations, not government agencies, opperating without day to day direction of the federal government. By the way, what banker family are you a part of.

    • Christine

      The FED has already shown that it is not dedicated America. We have a problem with that.

      I’d like to know how frequently they have pit one nation against another to create a war so the elite bankers can make money…at the cost of human life, increased tax dollars, desroying peace (while both sides are being told they are fighting for peace).

    • Erk
    • Erk

      Sean that is not what the bill is about…the bill only gives the GOA the power to run an independent audit of the reserve and they must report their findings to congress by the end of the year. Thats it. Bernanke is trying to beat around the bush…it seems blatantly obvious to me.

    • Doug

      There is no wrong doing by the FED? How could you possibly know that? Or are you just playing devil’s advocate here?

    • Tony

      Congress has to answer to the people, The FED does not thats the POINT!

      • Sean

        ya, the bill is going to pass, but the important part is going to be cut out. You will be able to see the books, but thats not what the bill is about..

        They are trying to repeal the Humphrey-Hawkins act.

    • E Perez Jones

      How frecuent is the Fed audited, or has it ever been? Or is that what will be included in the proposed monetary policy? In any case, an agency so important should be accountable to somebody since it impacts so many.