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The Merits of HR 1207 - Audit the Fed

The Merits of HR 1207 - Audit the Fed

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Published by Carneades
A paper advocating the passage of HR 1207, the House bill which would require an audit of the Federal Reserve.
A paper advocating the passage of HR 1207, the House bill which would require an audit of the Federal Reserve.

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Published by: Carneades on Sep 25, 2009
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05/11/2010

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http://TheValueatRisk.blogspot.com
 
September
 
24,
 
2009
 
The
 
Merits
 
of 
 
HR
 
1207
 
 –
 
“Audit
 
the
 
Fed”
 
Bill
 
A blast-out email I received this morning from Rep. Alan Grayson (D-Fl) confirmed that HR1207 - the "Audit the Fed" bill - has gained significant traction in the House of Representatives,having gained over 290 co-sponsors. In anticipation of tomorrow morning's debate concerningHR 1207, to be heard before the House Financial Services Committee, I'd like to briefly sharethe fundamental reasoning which underlies my support of this bill.First and foremost, I am a pragmatic libertarian; i.e. I understand that certain externalities arebound to occur when the universe of private transactions are allowed to take place in completeabsence of regulation. In other words, I agree with preventing one man from polluting his ownland (private property) if that pollution can flow down the river to another man's property.Similarly, I am of the opinion that the global financial system has grown sufficiently complex towarrant the existence of the Federal Reserve. True, the founders of this nation did not establishanything resembling a central bank. However, these men could never have envisioned the currentscenario, whereby the dollar serves as the world's reserve currency, let alone that a financialinstrument such as a "collateralized debt obligation" would even exist.Having established the Federal Reserve's right to exist, I think we need to seriously consider thequestion: Under what conditions will the Federal Reserve be allowed to exist? Certainly, I seenothing wrong with a Federal Reserve capable of intervening during times of acute stress in thefinancial markets. However, accompanying this incredible power should be at least somemodicum of transparency. To use a popular cliche, "Sunlight is the strongest disinfectant". Thisconcept of transparency is the ultimate equalizer in a democratic society; conversely, a lack of transparency by the Government is the most necessary element of tyranny.Some may argue that to audit the Federal Reserve is to deprive it of the independence necessary

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