by Ron Paul
Last week it was revealed that when Treasury Secretary Tim Geithner was Chairman of the New York Federal Reserve, he urged AIG officials not to disclose to the Securities Exchange Commission relevant details of agreements with banks to bail out Goldman Sachs.
Apparently he felt at the time that regulators and the public would be angry that taxpayer money was used to fully compensate bankers who made some horrifically bad investment decisions. These banks should have suffered the consequences of the huge risks they were taking. After all, they kept plenty of rewards when times were good. Instead, the Fed found a way to socialize these major losses so these banks could survive and continue making more bad decisions, at the expense of the American people and the value of the dollar.
Geithner claims that they had to take politically unpopular actions to save the economy from collapse. Half of that is right – it was politically unpopular, but it is extremely premature at best, to claim the economy has been saved.
It was just reported that the economy shed 85,000 more jobs in December. Unemployment stands at 10 percent officially, and 22 percent according to more traditional calculations. It is hard to argue that this sort of government waste has done anything but harm to our economy.
Raiding Main Street to bail out Wall Street is a foolish idea. Main Street productivity and the strength of the dollar is the bedrock of the economy. You cannot gut this foundation without eventually toppling everything else.
This is what too many policy makers either don’t understand or refuse to face. Or even worse, perhaps they do understand, but don’t care!
In any case, this revelation makes precisely my point about the need for Fed transparency. This claim that the Fed should have “independence†is a canard. They very much enjoy their comfortable pattern of bailing out friends and devaluing the currency with no oversight and no accountability.
Geithner specifically asked officials at AIG not to disclose to the SEC or to the public particulars about this special deal for his friends. We only know these details now because AIG was eventually forthcoming when Congress demanded some answers.
We should be getting this information, and information on all such dealings, straight from the Fed. The Fed should be accountable to Congress because it is a creature of Congress.
The Constitution gives Congress the authority to oversee the integrity of the monetary unit. We have unwisely and unconstitutionally delegated this authority to the Federal Reserve, which has in turn devalued our dollar by 95 percent and counting.
When the Federal Reserve engages in harmful policies, Congress is still ultimately responsible. If the Fed is not made accountable through a GAO audit at least, it will continue to be accountable to no one, and that is unacceptable.
Geithner expects to be praised and thanked for his actions instead of rebuked and fired. He expects to be given more power to engage in “experimental†monetary policy in the future. But he has just given us a very good idea of what the Fed and Treasury would do with more power, what they consider good monetary policy, and why they like their so-called independence.
Ron Paul is a republican member of Congress from Texas.
Get a rope…
Without a viable Republican candidate in 2012 to restore the Constitution, either Obama or Cheney will continue to gut it in the future. The whole thing is going downhill fast.
With or without a "viable" candidate in 2012, I can predict this – after the election, government will continue to grow and your liberty will continue to be taken away.
This is why we need to fight this on the state level. A federal reserve is not constitutional. It has no right to exist under the constitution and because of that any state can create its on "federal reserve" if it wanted to. This way any state can do it there way and if they mess up then that state suffers the consequences not the entire country.
I think Geithner and Bernake should be replaced and the Fed's books opened for inspection. This is money all of us have worked for. This money is not the private playground of a few. We gave money to a French bank and who else?
Ron Paul has run for Pres, low funds made a small impact… and he doesn't have anything for the media to turn into a controversy, being neither a woman or a mixed fellow. The rest of the country needs to wake just like we all do. Talking about issues only helps mental health seekers.
The Fed likes secrecy for the same reason counterfeiters do. Oh, wait a minute …
this is right on the mark. the fed might not need to be abolished, but it does need to be democratized. there is an inappropriate relatioship between the fed and wallstreet that needs t0o be monitored by some oversite body.
russ
I have a question about the constitutionality of the Federal Reserve. Note that I’ll gladly reword the question if wording proves too confusing.
Ok, Thomas Jefferson had made it clear that the Founding States had rejected the idea of the federal government having banking powers.
“It is known that the very power now proposed as a means was rejected as an end by the Convention which formed the Constitution. A proposition was made to them to authorize Congress to open canals, and an amendatory one to empower them to incorporate. But the whole was rejected, and one of the reasons for rejection urged in debate was, that then they would have a power to erect a bank, which would render the great cities, where there were prejudices and jealousies on the subject, adverse to the reception of the Constitution.” –Jefferson’s Opinion on the Constitutionality of a National Bank : 1791. http://avalon.law.yale.edu/18th_century/bank-tj.asp
And regardless that the First Bank of the United States established by Congress was private, Jefferson fought against it anyway.
So given that the states ultimately control what’s in the Constitution, why did Justice Marshall seemingly ignore the wishes of the states against such a bank in McCulloch v. Maryland, using the “necessary and proper” clause (Article I, Section 8, Clause 18) against the states? And why didn’t the states “overturn” the Court by amending the Constitution to expressly prohibit Congress from establishing a national bank?
There is so much corruption in D C that even when a right thinking representative is elected to Congress, it isn't long before they are driven into a corner that they eventually start making deals, and then become one of the cronies. If they don't tow the party line, they are discredited and shunned. Then all of the leaders just ignore them. The committee chairs become unavailable and they become irrelevent.
THis is a strong argument for term limits. New blood will bring our country back from the brink.
This was not supposed to be a career. THey were supposed to be "serving the public".