On January 12th, Rand Paul pushed a bill through the Senate called the Federal Reserve Transparency Act of 2015 (S.2232.). Unfortunately, the bill was not passed as it did not receive the required 60 Yea’s. The official vote was 53 Yea’s – 44 Nay’s.
The voting line divided the parties almost perfectly, with the exception of those who didn’t show, which should be considered Nay’s.
Even though Rand Paul’s efforts ended in a defeat, one must raise the question, “Why would he, or any other politician for that matter, want to audit the Federal Reserve?”, which is America’s only (yet fourth in history) central bank.
The Federal Reserve Act was signed by Woodrow Wilson as an answer to the economic crash in 1907. This act gave the power of money supply (printing, inflation, and interest rates) to the Federal Reserve bank.
There is a second piece to this article which will explain in further detail exactly how the Federal Reserve Works, but here is a tiny excerpt to provide a tiny glimpse into the inner works.
“Commercial banks create checkbook money whenever they grant a loan, simply by adding new deposit dollars to accounts on their books in exchange for a borrower’s IOU. Banks create money by ‘monetizing’ the private debts of businesses and individuals. That is, they create amounts of money against the value of those IOUs.”
That explanation shows, that, since all banks answer to the Federal Reserve, they are required to not actually give loans based on the money they are in possession of, but they create out of thin air, to put on the books in order to issue the money the borrow. Still confusing?
Customer: “I need to get a loan for $1,000.”
Bank: “Sure! Now we currently only have $500 in actual cash, but I can issue you a $1,000 loan per the Federal Reserve, even though half of that money doesn’t exist.”
Customer: “Sounds great!”
Bank: “Yes it is! Because as you pay it back, you’ll pay us back money we didn’t actually give you plus interest, we just wrote down that you needed this much and put it on our books!”
The customer in this crude example is not you or I, but the U.S. Government, and the bank is your friend, The Federal Reserve.
National debt is consistently being created because, we can’t catch up with it, because the Federal Reserve is controlling the flow of money. So we are taking loans from the Fed, to pay for things, with currency they control, and with them adding interest of money that doesn’t exist!
It’s like digging yourself into a hole, then giving the shovel (power) to your friend outside the hole. Then he says, ‘I need a bigger mound of dirt up here in order for you to get out,’ but for a bigger mound of dirt you need to keep digging the hole.
This is where the motivation comes to have an unbiased, bi-partisan audit of the Federal Reserve system. It’s an effort to calculate the national economic damage and prove to the public that being in debt to a system like the Federal Reserve, is playing with fire, walking on thin ice, smacking a horse’s ass, and playing near a hot stove.
While yes, the word Federal is derived from government-appointed board officials to conduct policy. However, these officials only make up 7 of the 12. The other 5 are bank presidents that are on yearly rotation, and the president of the actual Federal Reserve. How can people, with so much money and power at stake, not be corrupt in making our monetary policy?
I leave you with just one question: If the Federal Reserve is indeed for our own good as it’s marketed and ingrained in us in schools, why wouldn’t they want to be transparent and partake in an audit?
If you wish to dive deeper into the Federal Reserve, we’ll have more history and actions of the Fed in articles. If you want to do your own research, here is a great place to start.