Rand Paul attracts his own economic attack piece in the New Republic. He is obviously a viable candidate.
We have already noted that Rand Paul’s “Audit the Fed” bill seems to have a chance to succeed, because it is now being attacked. This attack is now being taken up by The New Republic: “Rand Paul Has the Most Dangerous Economic Views of Any 2016 Candidate.”
Speaking in front of more than 150 Iowa activists, Paul ripped into the Federal Reserve and promoted his “Audit the Fed” bill, which he introduced earlier this week. “I think there needs to be some sunshine,” he said, according to reports of the event. “I’m going to fight ’em, and we’re going to get a vote on audit the Fed.” I’m not sure if Paul will get that vote—ultimately, that’s up to Senate Majority Leader Mitch McConnell. But I do know that “Audit the Fed” is a terrible idea. First, the Fed already is extensively audited by the Government Accountability Office (GAO), the Office of the Inspector General (OIG) and even private sector auditors like Deloitte. Each week, the central bank also releases its balance sheet and even has an interactive guide of its balance sheet available for further explanation.
However, the GAO and OIG audits exclude a few parts of the Fed’s policymaking, including transactions by the Federal Open Market Committee. Paul’s bill removes those exclusions and requires “recommendations for legislative or administrative action” from the Comptroller General. Sounds innocuous, right? It’s not. That would significantly damage the Fed’s independence, which exists so that politicians cannot influence the central bank for their own political purposes. In other words, “Audit the Fed” would lead legislators to interfere with monetary policy matters and put the entire economy at risk.
So we are supposed to believe, in an era that worships voting and upholds democracy as the most important political value, that we must have a supreme power in these “monetary policy matters” that is completely unaccountable to any elected representative.
First of all, this claim is simply grossly unfair to Rand Paul who has no wish to allow the government to interfere with monetary policy matters. He wants a commodity used as a currency that cannot be manipulated through secret, inauditable transactions by the FOMC. The article goes on to attack the gold standard for stupid reasons, but just because the writer doesn’t believe Paul’s plan would work doesn’t mean he is being right to portray him as an advocate of influencing the central bank for “their own political purposes.”
Also missing from this analysis is any explanation why the “political purposes” of elected legislators are worse than those of secret decision-makers of the Federal Open Market Committee. The Fed’s “independence” simply means it has a free hand to do what it wants to the nation without any accountability.
The vocabulary that is invoked in phrases like “monetary policy matters” deserves to be expunged. The only real reason for a word like “policy” is to have a euphemism for oppression. Policy is oppression and policymakers are oppressors. They are trying to confuse the public by portraying “policy” as a desirable product we want our leaders to produce or make for our good.
The word is designed to make people want despotism as a public good.
People have traded with one another for millennia without any kind of “monetary policy.” In a barter economy the commodity that is most socially useful in trade (because it is stable and divisible and transportable) ends up becoming money. That’s why prisoners trade in cigarettes, since there is no other commodity that can circulate as freely.
The New Republic actually pretends that money only has value because our Federal government accepts dollars as payment. Do you honestly believe that, if the Federal government demanded payment in two-ply toilet paper, that such toilet paper would be used as money throughout society? The money isn’t value because it is taxed; it is accepted in taxation because it is valuable.
The one decent point made by the New Republic is that the predictions of hyper-inflation are embarrassing. But there are hard-money advocates who never expected hyper-inflation and who, in fact, argued that it was extremely unlikely. Look up inflation at Mish’s Global Economic Analysis blog for one example. Mish hates the Federal Reserve and hates inflation, but he has explained why we see so much deflation around us.
If liberals are attacking Rand Paul, they must believe he is a real threat. We will see more of these unconvincing defenses of the Federal Reserve as more time passes.