Ritholtz, Ron Paul, and Midwestern taxpayers can all agree.
Paul is calling for a full audit of the Fed — including the dreaded Maiden Lane holdings, the mess that is the junk paper formerly owned by Bear Stearns. This would be a positive, as taxpayers would learn the truth about how much financial support was given to incompetently run financial institutions. These enormous taxpayer giveaways will shock the conscience of those who read the details. [I fixed Barry's typos--Ed.]
Here's Paul's relevant language, quoted by Ritholtz:
“The main argument [against auditing/disbanding the FRB] seems to be that congressional oversight over the Fed is government interference in the free market. This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time. The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money — the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate, constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.
Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks that, instead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930s. It has also inflated away the value of our currency by over 96 percent since its inception. It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problems it was meant to solve . . .
As far as the foolishness of placing complex monetary policy decisions in the hands of politicians — I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again.”
Like Ritholtz, I have grave reservations about disbanding the Fed; it's a useful tool in world markets and its functions, while different from those of State and Defense, are just as critical to the national welfare.
Having said that, the Overly Elite gang has demonstrated very well its willingness to self-serve, and the Overly Bloviating gang has demonstrated very well its willingness to run and hide.
Screw 'em all.
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