Despite all the blame being thrown around for the financial crisis our country is in, very few in the mainstream press have discussed the role of the Federal Reserve System in getting us to this point.
The Federal Reserve operates in a shroud of mystery, unaccountable to the people from whom it is hidden. As Senator, I would seek to shed light on the organization, so that all Americans could better understand the dangers of unsound monetary policy and the damage that the Federal Reserve has done.
Established in 1913 by an act of Congress, the Federal Reserve System controls the nation’s money supply and influences interest rates throughout the entire country.
They essentially have the power to create money out of thin air—and with the power that brings, it’s not surprising that so few in Washington are willing to question the Fed. No wonder Thomas Jefferson warned us that a central bank would be more dangerous than a standing army.
When the Fed lowers interest rates by creating more money, it devalues the money you currently have in your pocket, in your bank account, and in your paycheck. It also leads to the boom-bust cycle by luring investors into projects that are foolish in the long-term.
The recent housing bubble was a direct result of the Fed’s decision to keep interest rates artificially low, far lower than the market could sustain. While this explanation for booms and busts is popular among economists, including Nobel-prize winner F.A. Hayek, few in the mainstream media or the political establishment are willing to question the Fed.
Thankfully, H.R. 459, the Federal Reserve Transparency Act, passed the House with 319 co-sponsors. This Act will make it possible to audit an institution that has created trillions of new dollars in recent years. The American people have a right to know to whom these trillions were given, and it is an important first step toward reigning in a powerful and unaccountable Federal Reserve.
As Senator I would work to ensure that the Federal Reserve is held accountable and that transparency is restored to our monetary system.