Rand Paul’s Goal in Holding up Janet Yellen’s Appointment
Senator Rand Paul woke up the Washington political scene on October 25th by leaking a story that he intends to place a “Senatorial hold” on the upcoming Presidential nomination of Janet Yellen to be the next Chairperson of the U.S. Federal Reserve; unless Senate Majority Leader Harry Reid allows his “Audit the Fed” bill to go to a Senate floor vote.
By Chriss Street
 |
Since its 1913 founding, the U.S. Federal Reserve has been allowed to operate in such relative secrecy it has been described as “like a hall of mirrors and the Fed is that big one at the end that makes everything else look like its upside-down.” Rand Paul’s goal is to unite conservative Tea Partiers, Liberal Progressive and Millennials in a grand coalition to restrain the crony capitalism between Washington DC lobbyists and Wall Street money interests. |
The Dodd-Frank Wall Street Reform Act’s one-time mandated audit of emergency
lending activities during 2008 Financial Crisis is the only published glimpse into the
secretive financial dealings of Fed. The audit divulged that the Fed had
directly loaned over $16 trillion to selected banks and corporations. Few
doubt the importance of the Fed providing temporary liquidity to stabilize
markets after the huge investment firm of Lehman Brothers filed bankruptcy on September 15,
2008. But for the last five years the Fed has continued to use its money
printing capability to dramatically subsidize bank big profitability with
artificially low interest rates; causing small banks to shrivel and seniors who
rely on the income from savings deposits to suffer badly.
Current Federal Reserve Chairman Ben Bernanke has vigorously opposed annual audits
of the Fed by claiming that any transparency might hamper the Fed’s ability to
quickly and creatively spur an economy that is teetering
on recession. But many Left, Right and Libertarian economists
believe the Fed’s discretionary actions only serve the interests of the
powerful and are often counter-productive to small business and American
workers.
Five years after the banks were bailed out by the American
taxpayers; the U.S. banking system is generating record profits thanks to $3.6
trillion of the Fed’s generosity. But despite the Fed money printing,
over the last two years employment has been treading water by growing at the
same 1.7% rate as the annual population growth. Failing to grow jobs
faster than new entrants join the labor force also caused the duration period
of unemployment to rise from 10-20 weeks from 1980 to 2009, to 35-40 weeks
recently.
The Fed also allowed a substantial increase in risk taking
by financing bank’s dominate position in leveraged derivative
speculation. Powered by the Fed’s cheap money, trading and investment
banking activities generated more than forty
per cent of JPMorgan annual profit of $24.4 billion reported in
July. Without a Fed audit, no outsider can be exactly sure how much risk
American banks are taking with derivatives. But with the world’s annual
economy of only $72 trillion and the outstanding derivatives having
grown rapidly to $700 trillion; the leverage must be enormous.
Since the Federal Reserve System is officially owned by its
member banks and its Board and Chairman are appointed by the Senate, the Fed supposedly acts as
an “independent entity within government.” However, the Federal
Reserve’s activities have almost never been subject to any oversight by
Congress. Consequently, the Federal Reserve seems to be “independent of
government.”
Perhaps the real reason Congress has taken a hands-off
approach is the Fed is highly profitable and under Federal Reserve Act Section 7(b), a big cut of that
profit is paid each year as a dividend to the federal government.
Although under law the Fed’s dividend is supposed to “supplement the gold
reserve held against outstanding United States notes” and pay down the “outstanding
bonded indebtedness of the United States”, Congress has been spending the
Fed’s $80 billion dividend for many years.
Rand Paul under the Standing
Rules of the United States Senate has the right to prevent a
motion for the nomination of Janet Yellen from reaching a vote on the Senate
floor. Majority Leader Harry Reid has used the same Senate rules to
prevent a vote on Paul’s “Audit the Fed”
bill, introduced with 25 bipartisan sponsors in February 2013.
Over 70% of the American public has favored Auditing the Fed for years, but it was
Rand Paul’s octogenarian father, Congressman Ron Paul, that became a rock star
on college campuses championing a millennials’ revolt to force the
audit and eventual abolishment of the Federal Reserve for debasing the dollar
and crony capitalism.
By forcing Harry Reid and his Senate allies who secretly
oppose “Audit the Fed” to go on record with a very unpopular roll call vote,
Senator Paul is demonstrating his principled leadership and the building a
powerful new coalition of American voters.
Listen to Chriss Street and Paul Preston
Streaming 24 Hours Every Day
No comments:
Post a Comment