Ron Paul's HR 1207 has 256 co-sponsors but Federal Reserve Vice-Chairman Donald Kohn warns that an audit of the Fed could result in financial disaster for the U.S. economy.
On Thursday, the United States Federal Reserve launched heavy defense of its organization and warned that the efforts of Congress and HR 1207 could eventually hurt the economy and cause high long-term interest rates.
Federal Reserve Vice-Chairman Donald Kohn said, in front of the House of Representatives Financial Services Subcommittee, putting monetary policy under political influence would hurt the U.S. economy, “Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation.”
Mr. Kohn’s testimony comes as Congress debate Pres. Obama’s regulatory reform, which would expand the Federal Reserve’s power in monetary policy. The expansion of power will give the Federal Reserve the role to monitor financial risks along the economic platform to withstand such future fiduciary troubles.
HR 1207 Federal Reserve Transparency Act of 2009, which has won majority of support in Congress with 256 co-sponsors, was introduced by Texas Congressman and former 2008 Republican Presidential Candidate Ron Paul. Dr. Paul has been fighting to audit the Federal Reserve since he entered Congress but it received little support.
Presently, the Government Accountability Office has not been able to audit the Federal Reserve System. Mr. Kohn said on this topic, “The Federal Reserve strongly believes that removing the statutory limits on GAO audits of monetary policy matters would be contrary to the public interest by tending to undermine the independence and efficacy of monetary policy.”
Mr. Kohn, and others within the Federal Reserve, believes that government meddling in the U.S. Central Bank could come at a high cost, “The bond rating agencies view operational independence of a country's central bank as an important factor in determining sovereign credit ratings, suggesting that a threat to the Federal Reserve's independence could lower the Treasury's debt rating and thus raise its cost of borrowing.”
In March 2009,
the Federal Reserve printed at least $1.15 trillion and injected it into the economy. Many have forewarned hyperinflation such as:
Ron Paul, Peter Schiff, Jim Rogers and Marc Faber because of the amount of fiat currency printed.
The United States currently holds an
$11.5 trillion national debt and China is the biggest foreign holder of U.S. debt with $740 billion. How much does the Federal Reserve own?
The Fed owns $4.8 trillion in U.S. treasury debt. Ten years ago, the Federal Reserve owned only $2.5 trillion.
Milton Friedman, an Austrian economist and Nobel Prize winner, proved
that the Federal Reserve caused the Great Depression of 1929 and Federal Reserve Chairman Ben Bernanke acknowledged this. Mr. Bernanke said, on Mr. Friedman’s 90th birthday, “I would like to say to Milton and Anna: Regarding the Great Depression, you’re right. We did it. We’re very sorry.”
