Outspoken libertarian-leaning senator Rand Paul (R-Kentucky) took out a full op-ed in Bloomberg Business this morning expressing his long-held position that, at minimum, Congress must have greater access to the Fed’s financial information through more transparency from largely independent the central bank.
This is far from the first time that Senator Paul has made the Federal Reserve audit a central part of his policy agenda (and his general platform as a member of Congress): the junior senator has already raised the issue before, and vehemently supported two previous bills calling for an audit of the Fed that each passed the House before dying in the Senate. Nonetheless, a new bill proposed by Senator Paul is enjoying broad support in both chambers of the legislature, though there are still hard-line supporters that want no part in scrutinizing the decisions of the Fed—or, more importantly, of its reliance upon unconventional policies while the national debt piles ever-higher.
Proponents of not subjecting the Fed, the institution that controls our country’s monetary policy with near-perfect impunity, to an audit generally fall back on the argument that the central bank must be free from political wrangling and the whims of politicians. While this is a noble ideal, much like the belief that the judicial system operates with the same blindness to political partisanship, it is not only unrealistic in practice but also is a blanket statement for letting the Fed do whatever it wants.
Senator Paul points out that the central bank has greatly expanded its power and influence over the last 8 years or so, as the emergency situation created by the financial crisis (which occurred under the Fed’s nose when it was supposed to be providing oversight) prompted many in government to concede more and more control to the Fed. Even though the nation’s leading bankers and economists continue to tout the gradual recovery of the economy, these emergency powers have never been returned.
Family Matters for Rand Paul
In relentlessly making his case for increased Congressional oversight of the Federal Reserve, Rand Paul is carrying on the legacy left by his recently-retired father, long-time U.S. Representative Ron Paul (R-Texas). Particularly during the height of the financial crisis, the elder Paul was notorious for his combative back-and-forths with Fed Chairman Ben Bernanke during Congressional hearings. Ron Paul was invariably the leading voice in all discussions on limiting the free reign of the Fed to expand its balance sheet and engage in extreme measures such as quantitative easing; a common line of questioning from Mr. Paul involved questioning Bernanke on the Fed’s mandate to maintain currency stability, during which Paul would flash an American Silver Eagle coin and explain the benefits of hard money.
Rand Paul has certainly taken up the torch on the issue of the Federal Reserve from his father, who made the issue an important part of his platform during presidential runs in 2008 and 2012. Fittingly, Rand has thrown his hat into the ring for the 2016 Republican presidential nomination; it seems clear that auditing the Fed will remain a topic of some interest in the political sphere so long as Rand Paul remains in the presidential race.
All other considerations aside, it is encouraging to see someone give a voice to the movement to better regulate the Federal Reserve—the central bank that is not federal.