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Time to audit the Fed

BY MATTHEW WILLIAMS | JUNE 22, 2012 6:30 AM

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Whether it's deserving or not, the president tends to take the majority of the heat for the nation's poor economy. Many Americans think that the president's policies have a greater effect on our economy than they actually do, whether the president is George W. Bush or Barack Obama.

However, there's a government institution that hides behind the curtains, leaving its existence — let alone inner workings — to be fairly unknown to the average American. It has a huge effect on the well-being of our society, because it handles so many of America's economic matters. That institution is the Federal Reserve.

The Fed, as it's known, should be further audited so Congress can affirm that the institution is making the appropriate monetary policies, ensuring that the money Iowans work so hard to make isn't taken or devalued.

The Federal Reserve conducts the nation's monetary policy, supervises and regulates the banking institutions, maintains the stability of the financial system, and provides financial services to depository institutions, according to the Fed's website.

Basically, the Fed is the central bank for the United States.

Because the Fed has in its hands arguably more power to determine the value of the U.S. dollar than does any other government institution or department, it needs more oversight. That there is so much information regarding the Federal Reserve kept behind closed doors raises obvious concern of whether the American dollar will increase or decrease in value.

Dustin German, a UI student who actively supported Ron Paul's policies toward the Federal Reserve, is also in favor for auditing the Fed. "It needs to subjected to the same treatment just as any other federal institution is," he said.

In regard to the Federal Reserve's effect on Iowa, he said, "Anything at the national or federal level is going to affect all 50 states."

Matt Hawes, the vice president for the Campaign for Liberty, an organization determined to bring more oversight to the Fed, said since its 1913 creation, the Fed has never been held accountable to the American people's representatives in Congress.

"During that time, we've seen an extreme decline in the value of our dollar and watched as the Fed committed taxpayers to one bailout and special deal after another, yet the Government Accountability Office is prohibited by law from fully auditing the Fed's monetary policy actions," he said.

The lack of a thorough audit of the Federal Reserve is "simply ridiculous," he contended.

The Fed has continued to pump more money into our economy even with $15 trillion in debt hanging over our heads. Economists can argue whether this is good or bad, but there are without doubt potential dangers that pumping more money into our economy can cause. We must better audit the Federal Reserve to make sure the institution isn't just pulling money out of thin air, because that will lead to greater inflation — damaging our economy in the long run.

Ben Bernanke, the chairman of the Federal Reserve, has had the support of both former President George W. Bush as well as President Obama. People outside the Oval Office have both praised and criticized Bernanke.

No matter what your opinion on Bernanke may be, the American people have the right to know what's happening within the Fed. Plus, if Bernanke is making the appropriate decisions, the Chairman could use some good publicity to quiet his critics.

"During the [recent financial] crisis, Chairman Bernanke was able to say no to Congress when asked to provide information on who received $2 trillion in taxpayer-backed loans," Hawes said.

With the great impact that the Federal Reserve has on our economy, there needs to be more transparency with this very powerful institution. The American people have the right to know the inner workings of the Fed, because the institution's decisions affect the value of the money that Americans work so hard to obtain.


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