But the battle is far from over. The enemies of transparency and those who benefit from the Fed’s secret dealings will do everything in their power to stop the audit from happening.

Barney Frank already mentioned to a staffer “that he will continue to look for opportunities to alter the Paul amendment.” And Fed-funded “economists” will try to convince the public of the importance of Fed “independence” (that is, secrecy), and threaten us with economic disaster in case the Fed is opened up to independent scrutiny.

It’s time to remind ourselves of what we are up against. The Federal Reserve banking monopoly has the power to create money out of thin air, while all we have is each other, the Internet, and public opinion on our side. It’s a monumental battle of gigantic proportions, and so far only the first round has gone to us.

On October 31, Ron Paul described the upcoming milestones:

Ron Paul: “Like I said, I’m not surprised [Mel Watt's attempt to derail HR 1207] has happened, but let’s say we are successful and we get it amended [we did!], we still ought to:

• bring it to the House floor, and then they’ll have a chance to water it down again.
• It goes through rules committee, that’s another place.
• It has to go through the Senate; it’s going to have a harder time in the Senate.
• Then it has to go to a conference committee and that’s another problem.
• And then it has to go to the President.
• And even if it goes through all that, we still have the courts to deal with, and courts have never been friendly to those of us who want honest money.”

Add in the fact that Barney Frank’s HR 3996, also known as the “Financial Stability Improvement Act of 2009″, hasn’t even been voted yet in the Committee (the vote was scheduled for yesterday but was postponed to early December).

Keep spreading the message about Audit the Fed and stay tuned for further action alerts from Ron Paul and the Campaign for Liberty.

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The Paul-Grayson initiative is an amendment to Barney Frank’s HR 3996, also known as the “Financial Stability Improvement Act of 2009″. The Committee was going to vote on that bill today, but Barney Frank surprisingly postponed the vote until after the Thanksgiving recess:

(Rep. Barney) Frank told the panel that most of the members pushing him to postpone the vote were members of the Congressional Black Caucus who said that the political environment wasn’t right for a vote this afternoon.

“It’s my understanding,” Frank said, “that the issues being addressed are not internal to this bill.” In other words, the Democrats were not expressing particular problems with the bill itself, but the larger problems in the economy made them reluctant to support a bill that could be portrayed as too friendly to Wall Street.

Ron Paul sent out the following press release shortly after the amendment passed:

FOR IMMEDIATE RELEASE

Washington, D.C. – Congressman Ron Paul (TX-14) is pleased to announce that his and Congressman Grayson’s amendment based on HR 1207 has passed in the Financial Services Committee by a vote of 43-26 and will be included in major banking reform legislation.

The Paul/Grayson amendment:

• Removes the blanket restrictions on GAO audits of the Fed
• Allows audit of every item on the Fed’s balance sheet, all credit facilities, all securities purchase programs, etc.
• Retains limited audit exemption on unreleased transcripts and minutes
• Sets 180-day time lag before details of Fed’s market actions may be released
• States that nothing in the amendment shall be construed as interference in or dictation of monetary policy by Congress or the GAO

“While HR 3996, if passed, will grant sweeping new powers to the Federal Reserve, at least with this amendment attached, it won’t be acting in secret anymore. This is a major victory for Federal Reserve transparency and government accountability,” stated Congressman Paul.

How they voted (HR 1207 co-sponsors in bold):

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Over the course of today’s hearing, Chairman Barney Frank unsurprisingly came out in support of the opposing Watt amendment, arguing that perception is important and that the Paul-Grayson amendment would increase inflationary pressure on the dollar.

marcaeld uploaded a video of Ron Paul introducing the Paul-Grayson amendment:

Alan Grayson and Mel Watt discuss the two amendments:

Earlier today, Ron Paul and Alan Grayson sent the following letter to members of the Committee:

Dear Financial Services Committee Colleague:

It is encouraging to see the issue of Federal Reserve transparency receiving so much attention during this current markup. Today we plan to offer an amendment to the Financial Stability Improvement Act that expands on the many extant proposals to enhance Federal Reserve transparency. Our amendment is based on HR 1207, the Federal Reserve Transparency Act, which has broad bipartisan and grassroots support. The bill is cosponsored by 309 Members of Congress, including all Financial Services Committee Republicans and 13 Financial Services Committee Democrats.

The amendment removes restrictions on GAO audits of the Federal Reserve, as HR 1207 does, but makes a few changes to take into account some of the concerns that the Fed has made known in public testimony. Specifically, the Paul/Grayson amendment:

• Exempts unreleased transcripts and minutes from meetings of the Board and FOMC to address the Fed’s concerns that free and open debate in their meetings would be stifled.
• Sets a 180-day time lag for release of details of market actions the Fed has undertaken, to address the Fed’s concerns that Congress or GAO is second-guessing its actions.
• Removes boilerplate language that allowed GAO to make recommendations on monetary policy and adds a section stating that nothing in the amendment shall be construed as interference in or dictation of monetary policy to the Fed.

Unlike proposals that target the Fed’s 13(3) facilities, the Paul/Grayson amendment opens up the entire $2 trillion Federal Reserve balance sheet to a GAO audit. The Fed’s recent purchases of nearly $800 billion in mortgage-backed securities (MBS) have occurred under the MBS Purchase Program, authorized under section 14(b) of the Federal Reserve Act. This program, which is expected to reach a size of $1.25 trillion, would remain exempt from audit even if all the current 13(3) audit proposals were to go into effect. Targeting facilities that are in the process of being drawn down and that are authorized under a specific subsection of the Federal Reserve while allowing other facilities to spring up in their place is counterproductive to true transparency. All purchases and loans that appear on the balance sheet should be subject to audit, without loopholes for the Fed to evade scrutiny.

More importantly, the Paul/Grayson amendment does not create any additional burdens. Some competing proposals, while making a good effort at expanding the number of 13(3) facilities open to audit, take a step backwards by imposing new restrictions on GAO that are more burdensome than the restrictions currently written into law. We cannot accept these new restrictions. Unlike competing proposals, this amendment amends existing restrictions on GAO audit authority, a necessary precondition for a complete audit. Competing proposals leave these restrictions in place, and even add new ones.

We also reject the false dichotomy between transparency and independence. The Paul/Grayson amendment would achieve the necessary transparency of the trillions of dollars of Fed interventions while keeping Congress from directly intervening in the decision-making process. Independence should not be synonymous with secrecy. We urge our colleagues to support the Paul/Grayson amendment.

Sincerely,

Ron Paul, Member of Congress
Alan Grayson, Member of Congress

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A few weeks ago, the Campaign for Liberty sent out an alert that Representative Mel Watt was attempting to water down HR 1207 in the House Financial Services Committee.

The latest reports we have received have informed us that a vote on the Watt amendment could come today!

There’s still time for us to stop this attack on Audit the Fed! Click here to get a full list of Financial Services Committee members, along with their contact information.

Financial Services leadership seems determined to include Audit the Fed as part of a regulatory reform package instead of passing it as a standalone bill.

While C4L will still do everything in its power to fight for a standalone vote on Audit the Fed on the House floor, it is critical we challenge Watt’s amendment in Committee.

It will become much easier for our representatives to claim they still support Audit the Fed on the House floor if the Watt version passes, when, in reality, Representative Watt’s amendment puts restrictions on Government Accountability Office audits of the Fed.

For example, Watt’s amendment prevents the GAO from auditing or reviewing decisions to authorize, modify, extend, or terminate loans or liquidity facilities.

Congressman Paul will offer an amendment in Committee restoring an audit of the Fed’s entire $2 trillion balance sheet, but we have received word that some of the Democrat members may be waffling on their support for his amendment.

Help us turn up the pressure on these members! Below is the list of Democrats on the committee who have cosponsored H.R. 1207. Please call them and urge them to vote “Yes” on Ron Paul’s amendment. Click on their names to get their web contact information.

1. Rep. John Adler, NJ (202) 225-4765

2. Rep. Travis Childers, MS (202) 225-4306

3. Rep. Steve Driehaus, OH (202) 225-2216

4. Rep. Alan Grayson, FL (202) 225-2176

5. Rep. Rubén Hinojosa, TX (202) 225-2531

6. Rep. Suzanne Kosmas, FL Toll Free: 1-877-956-7627

7. Rep. Dan Maffei, NY (202) 225-3701

8. Rep. Brad Miller, NC (202) 225-3032

9. Rep. Walt Minnick, ID (202) 225-6611

10. Rep. Ed Perlmutter, CO (202)-225-2645

11. Rep. David Scott, GA (202) 225-2939

12. Rep. Brad Sherman, CA (202) 225-5911

13. Rep. Jackie Speier, CA (202) 225-3531

When contacting these members, remember that up to this point, they have been allies on this issue. A civil yet firm tone should be kept during these calls. They should be thanked for their cosponsorship, told that Mel Watt’s changes to the bill are unacceptable, and urged to hold the line and honor their promise to support transparency at the Fed by voting “Yes” on Ron Paul’s amendment.

And don’t forget to click here to get a full list of Financial Services Committee members.

For more information on the Watt amendment, check out this article by The Huffington Post’s Ryan Grim.

We are continuing our work to achieve a standalone vote on H.R. 1207 on the House floor, but we must first stop the Watt amendment in the Financial Services Committee.

Make sure the Financial Services Committee members hear from you as soon as their offices open Thursday morning!

A vote could come any time today. Call, email, and fax the Financial Services Committee members to vote “Yes” on Congressman Ron Paul’s amendment.

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by Ron Paul and Jim DeMint

For nearly a century the Federal Reserve has operated in the shadows, away from the prying eyes of Congress, journalists and the American people. Created in 1913, the Fed was given enormous responsibility to protect the value of our currency. Yet in the last 96 years the U.S. dollar has lost more than 95% of its purchasing power. The Fed’s unprecedented actions over the past year in attempting to stabilize the financial system have now forced it into the spotlight, and caused millions of people around the country to question the opacity of the Fed’s financial transactions.

While the Fed is more transparent now than it was 20 or 30 years ago, there is still a long way to go. If the Fed were fully transparent, organizations such as Bloomberg and Fox News wouldn’t have to sue its board of governors to receive materials that should be available through Freedom of Information Act requests. These include information on which banks and companies received loans and for what amounts after the 2008 financial meltdown.

One puzzling assertion made by the Fed and its supporters is that the Federal Reserve has some sort of independence from the government and independence in undertaking monetary policy. Nothing could be further from the truth. The Federal Reserve is a government-created banking monopoly, and its top decision makers are appointed by the president and confirmed by the Senate. If they do not perform satisfactorily in the eyes of politicians, they will not be renominated.

The Fed has also, for the past three decades, been required to engage in monetary policy with the goal of maintaining stable prices and full employment. Since the natural trend over time is for prices to decrease, a mandate to maintain stable prices is a mandate to pursue an expansionary monetary policy and inflate the money supply to counteract the lower prices we would expect from increased productivity.

Continue reading…

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We asked the question that’s on everyone’s mind: “Should Ron Paul should run for President in 2012?”

Our readers submitted 9,312 votes and 376 comments while the poll was open from Oct. 27 to Nov. 16.

These results are virtually unchanged from our February poll and June poll: 94% (up from 93%) of our readers want Ron Paul to run for President in 2012. 3% (no change) don’t want him to run. And 3% (down from 4%) are undecided or said “it depends”.

In light of these highly encouraging results it is important to emphasize that Ron Paul recently said that he hasn’t made a decision yet – it would be much too early to do so.

POLL #2: Chuck Baldwin, Andrew Napolitano and Peter Schiff Top VP Choices

From Nov. 5 to Nov. 16, we ran another poll asking our readers to select up to 5 candidates to join the Ron Paul ticket as running mate in 2012.

Chuck Baldwin raced to the top in a late finish, with 29% of our voters expressing their desire for him to be Ron Paul’s VP in 2012 (up from 9% in our June poll). Judge Andrew Napolitano, who wasn’t included in the last poll, had been an early favorite and finished a strong second with 27% of voters giving him the nod.

Peter Schiff, the undisputed winner of our June poll, came in third with 21% of the vote (down from 29%). Jesse Ventura was fourth with 15% (down from 21%). Rand Paul was chosen by 12% of our voters (same as last time), virtually tying with Lew Rockwell (12%), who hadn’t been included in our previous poll, and Sarah Palin, who also got 12% (up from 11%) with a slightly lower vote count.

Michele Bachmann made a strong debut at 8%, while Pat Buchanan remained stable at 7% (same as last time), slightly surpassing newcomer Glenn Beck (also 7%). Gary Johnson increased his percentage from 4% to 5%.

Other candidates experienced a significant drop, including Dennis Kucinich (18% to 9%), Mike Huckabee (12% to 6%), Mitt Romney (11% to 4%), Jim DeMint (7% to 4%), and Wayne Allyn Root (6% to 2%).

The poll attracted 9,425 voters and 256 comments. Each voter could select up to 5 candidates. The detailed results are as follows:

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Competition With the Government?

by Ron Paul

Last Saturday many concerned Americans watched in horror as the House passed the healthcare reform bill. If this bill makes it through the Senate, it would massively overhaul the way healthcare is delivered in this country. Today, obviously, we don’t have a perfect system, but this legislation takes all the mistakes we are making with healthcare and makes them worse. Most of what is wrong with healthcare stems from decades of government intervention and the resulting unintended consequences.

But the government’s prescription for the ills caused by intervention is always more intervention. We see this not only in healthcare policy, but also in foreign policy, in economic policy, and in monetary policy – basically, in all areas of public policy. It was even claimed that the House bill would increase competition in healthcare, and thereby improve the private sector’s business model for insurance.

It is fascinating that politicians would use the language of the free market in this way to justify more corporatism. This demonstrates a couple of things. One, that politicians truly do not understand the very basic tenets of a free market. By definition, a free market is free from government intervention. But once a little intervention is accepted as legitimate, politicians will blame the problems created by their intervention on the free market and present themselves as saviors that must intervene even more.

It also demonstrates that politicians know that Americans still believe the free market is a good thing. People know and understand that competition among businesses is better for the consumer than a monopoly. However, competition between a private business and a government or government-favored entity is not real competition.

In real competition, your competitor can go bankrupt if they do a bad job. Everyone knows a government program is forever, no matter how poorly it performs. In real competition, efficiency is necessary for survival. In government programs, waste is rewarded as budgets are often determined by how much money a department is able to consume in a year. In real competition, one business does not have regulatory or taxation authority over its competitors. In real competition, businesses get sued and punished for breaking contracts and defrauding people, and are kept accountable in this way. But just try to sue the government when you are unjustly harmed by it!

The reason real competition is a good thing is because good businesses get bad ones out of the consumer’s way. Can the government put someone out of business? Most certainly! But it will have the opposite effect: an otherwise good business will be replaced by a poorly performing government agency, or a government-favored monolithic business that behaves almost like a government agency.

If Washington really wanted to give consumers more choices they would remove legislative and regulatory barriers to competition across state lines for health insurers. They would remove barriers for new and innovative models of healthcare and tort reform. They wouldn’t have run so many church and charitable hospitals out of business. Washington is keenly interested in healthcare reform, but it is certainly not going to increase competition or to expand your options for healthcare.

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Channel: CNBC
Show: Squawk Box
Date: 11/13/2009

Joe Kernen: But Chris Dodd has a bill taking aim at the Fed. The overhaul bill that he proposes would reduce the role of the Federal Reserve. However, Congressman Ron Paul has been on that crusade for some time now, calling for more transparency at the central bank. He joins us this morning.

Congressman, great to see you. Hello.

Ron Paul: Thank you, nice to be with you this morning.

Joe Kernen: Let me start with… you remember Treasury Secretary Geithner and what he wanted to do. He wanted to vastly embolden the Fed in a lot of these areas and give them more power. What was your initial reaction to what he wanted to do?

Ron Paul: Well, it was terrible because I start with the idea that regulations won’t solve our problems. In Washington the only choice is whose going to be the big regulator. So it’s not much of a choice for me. I certainly don’t want to give the Federal Reserve more power, so I don’t like it when Geithner says, “Give the Fed more power”. So I’d much rather have somebody else do it even though I think that’s not going to solve the problem.

Joe Kernen: Really? So the Dodd Bill sets up a lot more different regulators, although there might be a single on, you don’t like that one much more?

Ron Paul: Oh no. See, the problem is that we have a flawed system. We have artificially low interest rates, we have the lender of last resort, we have this horrendous moral hazard in our system. Instead of correcting the problems and changing policy, what we do is we say “We can tinker with the symptoms with regulations” and that even further interferes with the market forces. We need the market to work and we have not allowed the market to work for many, many decades. Interest rates are always artificial, “too big to fail” was always there. There was always the lender of last resort. As long as you have that, regulations will not solve the problem. Take, for instance, after ENRON went down we immediately passed Sarbanes-Oxley saying “we didn’t have enough regulations.” It had nothing to do with it. Where did some of the companies go then? There were too many regulations so they had to leave this country.

So I would say that we’ve embarked on the wrong course and whether you put the regulations in the Fed or outside the Fed, it’s not a whole lot different. But we certainly don’t want to give the Fed more power. It’s much easier for the Congress to assume the responsibility of oversight if it’s outside the Fed. For some reason up until recently the Fed was sacred. You weren’t even allowed to ask questions, let alone get the answers. And now, of course, the momentum is in the direction of “even the Fed ought to be transparent” and I think that, of course, is very important.

Joe Kernen: What’s your bill? You got how many co-sponsors and do you still like your bill, because I saw somewhere that you said it’s already been gutted?

Ron Paul: Well, the intention is that one time they said they would put it into Barney Frank’s bill. It never actually got in there. So the plan now is to get an audit put in to the bill. But it will be a pseudo-audit, it won’t amount to much. We have 309 co-sponsors and we have all the Republicans on the bill as well as about a 130 Democrats. So it’s very, very bipartisan. There has been a national poll – which I’m surprised that there even would be polling on this subject, I would never have dreamt about it a couple of years ago. But 75% American people say, “Yeah, we should know what’s going on with the Fed”. So that 75% of the electorate saying that we should do our job and look at the Fed is the reason why there is well over 2/3rds of members of Congress supporting this bill. This bill would pass tomorrow if we brought it up under suspension, but the powers to be, the Fed, is working frantically, they’re editorializing, they’ve hired a lobbyist. They do not want us to know what they’re doing and they use all kinds of frivolous arguments why the Congress is not allowed to know what they’re up to.

News Anchor: What makes you so confident, Congressman, that the GAO is competent enough to audit the Fed reliably? And what do you make of those who say that Congress already has the right to ask a lot of questions to the Fed; they do it every time the chairman comes to the Hill?

Ron Paul: But they’re not allowed to ask the right questions. You’re not allowed to ask what kind of arrangements they make with a foreign bank or foreign central banks or foreign governments or international financial organizations or the details of the discount window, which companies got their benefits. So no, we’re not really allowed to. Now, the GAO may be far from perfect, but they probably have one of the best reputations in Washington if you’re going to look into something. It’s been bipartisan and somebody asked me once, “Who’s going to regulate the regulator,” you know, who’s going to regulate and check out the GAO. I think that’s a decent question, but under the circumstances there is not much else that we can do. They are the ones that we should look to to looking into the Fed.

News Anchor: Congressman, you said we’re on the wrong course. I wonder if you can tell for us what you feel is the right course. I mean, you’ve written a book called “End the Fed”. So you want to end the Fed, but my guess is when you talk about the market working you also want to end deposit insurance. Is that part of the problem also?

Ron Paul: Oh, sure. I think deposit insurance… immediately people say “Oh, my accounts won’t be insured”. No, they will be insured by private companies and each and every individual bank would be monitored instead of having massive bank failures and financial crises and each and every individual bank…

News Anchor: Can I just ask you this: You’ve seen the pictures of the 1930s when we had runs on banks. Is that something that’s acceptable to you that people should be afraid they would lose money in the event of a bank failure?

Ron Paul: Well, if you had private insurance there wouldn’t be. But the bank runs is a consequences of Fed policy. You know, the Fed has been around since 1913 but their first crisis came from the inflation through World War I and we had the depression of 1920-1921 and it lasted about a year. But back then they didn’t believe that you should bail out everybody and pump more credit in. They allowed the liquidation of the malinvestment, they allowed the debt to be eliminated and then go back to market interest rates and go back to work again.

But today, ever since the depression, Hoover and Roosevelt set the standard along with Keynes. Keynes is really the individual we follow and it’s not a market phenomenon. We don’t have market interest rates. We have guarantees that people are going to make mistakes; we have guarantees that we’re going to have too many houses. But what do we do now? We had a program where both Congress and the Fed encouraged the housing industry. Finally the bubble burst, which so many of us predicted would happen. So what are we trying to do in Congress right now? We’re trying to stimulate housing and to keep prices up. What we need to do is let the prices of houses drop and we don’t want to stimulate anything, we want the prices to adjust, we want these houses that were overly priced to get low enough so poor people can buy houses once again. And now we come up with cash for clunkers and all this silly stuff here. We have no confidence whatsoever in the market economy.

News Anchor: And just one more thing which is that when you talk about the right course, if I am not mistaken, you want to go back to the gold standard? Is that the right way to run monetary policy, in your opinion?

Ron Paul: No, but I’d like to go forward to a commodity standard. There were a lot of always in the old gold standard because there was bimetallism and fixed price between gold and silver. It’s still on the books that gold and silver is legal tender and we ignore it. If you use gold and silver as legal tender today, you go to jail. There is nothing in the law that says a Federal Reserve note equals a dollar. We can’t even define a dollar. No, we should have a definition of a dollar. How can you have a measuring rod which you can’t define? It’s totally foolish.

I really like the idea of allowing the market to determine what backs the currency, make sure there are no-fraud laws, and really look into the matter whether or not we should have fractional reserve banking. Yes, you have the Fed creating money out of this air, but then this is magnified by fractional reserve banking which is really fraudulent. And all it does is build financial bubbles guaranteeing the business cycle and the collapses, and as long as you patch it together, the longer you do that, the bigger the bubble. And now we’re in the midst of a big correction.

News Anchor: So just to be clear, no fractional reserve banking means a dollar loaned out equals a dollar on reserve, right? Or a dollar of capital? Is that what you would do?

Ron Paul: Yeah, if you put a hundred dollars in the bank today, the bank immediately has $190. No, if you put a $100 in today you have to say it has to stay there for 3 months and then you can loan it out for 3 months. But you don’t expand the money supply. The money supply, the Fed creates a trillion and in a few months it’s nine trillion. And that’s where the distortions come from and of course, everybody loves it when it’s going up because the prices of houses are going up and everything’s happening that seems to please a lot until the correction comes. Politicians love it. You can fight wars that you don’t have to pay for, you can run the welfare state that you don’t have to pay for. So if you believe in limited government, you have to look at monetary policy and decide that you just can’t create money out of thin air. That is the culprit and you can’t solve the problem by regulations.

News Anchor: Speaking of policy, Congressman Watt has this amendment that would audit the 13-3 powers of the Fed, the special stuff that allowed them to do so much of what happened over the past year. You’re saying that does not go far enough. Is that right?

Ron Paul: Oh, no, that’s just… the Fed has already agreed to that. The Fed’s position is, “Yeah, we’ll let you look at that. We’re going to wind those programs down anyway”, but the big stuff that is done behind the scenes, the Fed is part of the Plunge Protection Team and they can create the credit and they can make all the deals overseas. And that’s what we need to look at. But I would agree with that bill, because it is more than we’re getting now. This is what got the attention of a lot of people when members of Congress started asking about 13-3 and these extensions of loans and who’s getting the money. That’s very, very important. But that’s still only minor compared to what I’m talking about.

News Anchor: Ron, you’re a doctor too, right?

Ron Paul: Yes, that is correct.

News Anchor: So you got comments on health care, I bet. And how about the dollar, we’re orchestrating a pretty nice decline there, too, aren’t we? That’s interesting. But we’re out of time. Are you ever in this area?

Ron Paul: On occasion, and the dollar is the big issue.

News Anchor: Well, get in here.

Ron Paul: I’d like to come in and talk to you.

News Anchor: Come in here for two hours. We’ll let you just go off.

Ron Paul: I don’t know if I can stand you guys for 2 hours.

News Anchor: You can do the talking. We’ll just let you loose and we’re going to advertise it before we do. Thank you, Congressman. We appreciate it.

Ron Paul: Alright, thank you.

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