The Fed Is Not Independent and Never Has Been

BIS2

Source: TheDailyBell.com
February 16, 2017

Yellen defends independence of Federal Reserve … Federal Reserve Board Chair Janet L. Yellen defended the central bank’s independence Wednesday from Republican lawmakers pushing for major changes in how the Fed operates and how regulators oversee the nation’s banking system.

The Federal Reserve is not independent and never has been. It is part of the Bank for International Settlements for one thing. The BIS coordinates central banks around the world. That’s one of the reasons many central banks seem  to do the same things at the same time.

But that’s not the opinion of a House committee which seems to believe that Janet Yellen can do what she wants. GOP lawmakers “challenged Yellen’s handling of the economy and her leadership in implementing the 2010 Dodd-Frank Act.”

“After eight years, there is zero evidence that zero interest rates and a bloated Fed balance sheet lead to a healthy economy,” House Financial Services Chairman Jeb Hensarling (R-Tex.) told Yellen.

Hensarling is going to try to bring legislation that will force Yellen to follow a specific formula requiring the bank to set interest rates in a certain way and then have those rates further scrutinized by the Government Accountability Office.

Yellen  is against this. She says the Fed would be badly crimped by the use of just one single formula.

But the larger issue is that for political reasons the House is wrong about Yellen. She is fully controlled, but the control comes out of England’s square mile city.

The BIS helps coordinate central bank actions around the world. It is for instance so many central banks are trying to keep rates down, even though Yellen may move up a few points.

Meanwhile, London’s city itself is run by the same central bankers and others who ultimately run the Fed. They helped set up central banking some 500 years ago. They still control central banking in the larger sense from what we can tell.

Conclusion: So rather than being free to do what she pleases, Yellen is constrained on all sides. She basically does what she’s told. The only trouble is that it’s not what the current administration wants her to do. But that’s a great deal different than doing what she wants.

Read More At: TheDailyBell.com

Negative Rates and Cash Bans: The Chaos Continues at Jackson Hole

central-banking-dollars
Source: TheDailyBell.com
August 27, 2016

Negative rates should be integral part of central bank policy options … Central banks should make negative interest rates a fully integrated part of monetary policy in order to respond effectively to future recessions, according to an academic paper presented on Friday to some of the world’s top central bankers.  “It is only a matter of time before another cyclical downturn calls for aggressive negative nominal interest rate policy actions,” concludes Marvin Goodfriend, a professor of economics at Carnegie Mellon University and a former policy adviser at the Richmond Federal Reserve bank.  – Reuters

The Federal Reserve meeting at Jackson Hole has been covered by the mainstream media in ways that gave the impression that policy discussions were a kind of theoretical exercise.

Papers were presented on such issues as negative interest rates (see excerpt above) that emphasized an academic context. The idea that comes across is that those involved were earnestly striving to combat US economic dysfunction and current unnaturally low interest rates.

The larger issue here is one that we didn’t find written about: the assumption of the inherent right of policymakers to do what is “necessary” to make the US economy “healthier.”

The debate is certainly cast in theoretical terms but the results will inevitably involve the use of force.

The assumption is that involved in the “monetary debate” will come to a reasoned conclusion that society as a whole will be impelled to adopt. Those who do not wish to adopt such a solution – and who actively resist – may be prosecuted or jailed.

A few days ago, in a lead-up to the conference, the Wall Street Journal published a longish editorial by Dr. Kenneth Rogoff, the Thomas D. Cabot Professor of Public Policy at Harvard University.

Rogoff was also the former chief economist of the International Monetary Fund and the article was taken from an upcoming book, “The Curse of Cash,” to be published in September by Princeton University Press.

Here’s an excerpt:

Money fuels corruption, terrorism, tax evasion and illegal immigration—so the U.S. should get rid of the $100 bill and other large notes … When I tell people that I have been doing research on why the government should drastically scale back the circulation of cash—paper currency—the most common initial reaction is bewilderment. Why should anyone care about such a mundane topic?

But paper currency lies at the heart of some of today’s most intractable public-finance and monetary problems. Getting rid of most of it—that is, moving to a society where cash is used less frequently and mainly for small transactions—could be a big help.

There is little debate among law-enforcement agencies that paper currency, especially large notes such as the U.S. $100 bill, facilitates crime: racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism

The necessity for this sort argument has to do with the inevitable results of the imposition of negative interest rates. Cash will have to become more difficult to obtain and use because people won’t want to pay banks for placing cash in savings accounts. They might instead wish to hold cash at home so they don’t have to pay a fee.

As stated, the larger issue here is one of compulsion – and its presentation within an academic context. The Wall Street Journal editorial, for instance, is part of a book that will shortly be issued. The discussion of negative interest rates in Jackson Hole was accompanied by a white paper produced by a professor of economics.

The underlying reality is that these astonishingly comprehensive solutions don’t provide a choice. Even negative interest can be seen not as a monetary/policy response but as a kind of tax. An article by Christopher J. Waller (here) characterizes low rates as nothing more than a disguised money grab:

Negative Interest Rates: A Tax in Sheep’s Clothing … A negative interest rate is just a tax on the banks’ reserves. The tax has to be borne by someone: The banks can choose not to pass it on and just have lower after-tax profits. This will depress the share price of banks and weaken their balance sheets by having lower equity values.

This is true – and is an outcome of the way the Fed works. Imposing rates via monopoly authority always constitutes a tax, though this is not something regularly discussed when it comes to Fed “policy.”

Generally speaking, mainstream media coverage wants to present monetary discussions in ways that emphasize its theoretical aspects. But the bottom line is that what’s being discussed is not going to end up as suggestions. Whatever is decided on will have the force of law.

And if we look beyond “theory” to reality, the outcome of these kinds of discussions is invariably bad. Central bank monetary mayhem is everywhere you look. The West – the world, really – is locked into a quasi-depression as a result of a century of failing policies and monetary manipulation.

In the US, Janet Yellen wants to pretend that a “recovery” is ongoing. But if so, it one that does without some 90 million potential workers who choose not to participate – either because they cannot or because they wish to participate outside of the formal economy.

We recently posted an article entitled “Is the Fed Being Torn Down in Order to Create a New, Powerful Global Entity?” (here). When one examines the behavior of the Fed, and of central banks generally, it’s hard to conclude that their real mission is the one presented to us.

Step back far enough to contemplate a century’s worth of results and the reality is clear: Central banks are supposed to destroy the economies they supposedly serve. Ironically, the destruction then provides the opportunity for them to expand.

Giving a small group of individuals the power to decide on the value and volume of money is a ludicrous concept from any standpoint. But he problem is abetted by the mainstream narrative that never discusses the underlying lack of logic.

And so we observe Jackson Hole, which is presented to us as a conclave of elite thinking but which is actually nothing more than high-brow propaganda for a system that has already failed and – as compensation for its failings – now contemplates even more radical “solutions” that will give rise to even worse problems.

Conclusion: The mechanism of central banking is purposeful ruin. The end-result of this ruin is global governance. In the short-term this goal is disguised by an academic patina. But the long-term goal, an increasingly apparent one, is a brutal restructuring of the lives of seven billion people to benefit a handful of elite controllers.

Read More At: TheDailyBell.com

The Real Reason Fed Stress Aren’t Credible

bank-stress-test
Source: TheDailyBell.com
June 23, 2016

Why the Fed’s Stress Tests Aren’t Credible … For the sixth year in a row, the U.S. Federal Reserve is conducting stress tests to see whether the country’s largest banks can withstand a severe crisis. If only the results, to be announced this week and next, were more useful.  -Bloomberg

Federal Reserve stress tests for banks are a fantasy.

They don’t address contagion, for one thing. Contagion makes everything much worse.

The Fed is now going to upgrade its stress test analysis.

Here:

More advanced network analysis, such as that used by the Bank of Canada, can do a better job of addressing contagion effects. And to its credit, the Fed plans to increase the amount of capital required for the largest banks to pass the tests.

To its credit? Not really.

It used to be that banks created solvency by acquiring gold and silver. These days banks are considered solvent depending on their fiat “reserves.”

But the reserves are just debt-based paper money printed by the Fed.

The Fed can print as much fiat as it wants. If you are a big commercial bank, the Fed provides you access to lots of fiat.

And if you are in any trouble, the Fed will print more.

During the crisis of 2008, Ben Bernanke supposedly printed $16 trillion and sent it around the world as short-term loans.

Most supposedly were not paid back. This is one of the reasons that the Fed does not want an audit.

The Fed can print as much money as it wants because the dollar is the world’s reserve currency. Countries are forced to hold dollars to buy oil.

So pretending that that banks can be endangered because they don’t have enough reserves is silly.

The Fed is engaged in propaganda here. It is promoting an elite dominant social theme.

Fed officials want you to take the idea of “money” seriously.

They want you to take the idea of a bank collapse seriously.

But the Fed can print as much money as it wants. It can avert almost any crisis (though price inflation may be a problem later on).

Anyway, they don’t want you to know this.

You need to believe that banking is a difficult business. But it’s not.

It’s a foolproof business so long as the Fed owns a monopoly printing press.

In fact, banking is not really a business anymore for the bigger, “commercial” banks. These banks are basically capital redistribution centers for the Fed.

Of course, those who are partial to central banking want you to believe that commercial banks hold most of the money creation power. But they don’t.

The Fed can choke off money at will by raising rates. The Fed is the hub at the center of the wheel.

The monetary system is based on propaganda not reality. But the Fed and the large banks don’t want you to know that.

They want you to continue to think that banking is a business and that banks need to be well run and aware of “risks.”

These stress tests are part of that determination to delude you.

Continue Reading At: TheDailyBell.com

Disband The Fed: The Most Accurate Statement Yellen Could Make

yellen
Source: TheDailyBell.com
June 22, 2016

Fed’s Yellen: US economy faces ‘considerable uncertainty’  … Federal Reserve Board Chairwoman Janet Yellen testifies before the Senate Banking, Housing and Urban Affairs Committee on June 21, 2016 in Washington on June 21, 2016 …  Federal Reserve Chair Janet Yellen warned Tuesday that the US economy faces “considerable uncertainty” from slower domestic activity and from a possible British vote to break with the European Union.  -Yahoo

Here’s a question: Why is the Senate listening to Janet Yellen about the economy?

It’s like the blind leading the blind.

The Senate has no idea what’s going on with the economy.

Neither does Yellen.

She was wrong about hiking rates. She was wrong about the direction of the market. And she’s been wrong about the economy as well. It’s going down not up.

The US is in the midst of a kind of depression.

And there’s no one economy anyway. The economy is made up of tens of millions of people. To generalize about them may be feasible but not necessarily accurate.

More:

Pointing to dragging hiring and business investment recently, and to the risk that a pro-Brexit vote will send shock waves through global markets, Yellen signaled that the Fed has become less optimistic about US growth over the short term and will proceed with great caution on plans to raise interest rates.

She said in testimony to the Senate Banking Committee that US growth has picked up noticeably in the second quarter from the sluggish pace at the beginning of the year. Nevertheless, she said economic growth has been uneven and clear downside risks remain a threat.

This all sounds like gobbledygook to us. She says one thing and then she says another.

She has no more idea what’s going on than the Senate does.

No doubt she was accorded a respectful hearing and provided a cold beverage of her choice.

She was visiting Congress to present her semi-annual testimony on the state of the US economy and Federal Reserve monetary policy.

Reports indicate that every time she made a statement she qualified it by saying the opposite.

On recession, for instance: “She rejected predictions that the US faces a possible recession this year.” But here is her subsequent quote:

“I don’t think [recession is the] most likely case, but we just don’t know what will happen.”

No she doesn’t know what’s going to happen.

And neither do others on the Fed Board or Congressmen themselves.

Is it too much to ask to get rid of the Fed? Just jettison it.

Yellen doesn’t know what she’s talking about, nor have her predecessors.

The only thing central banks can possibly do is damage economies by setting real interest rates too low or too high.

And make predictions that are never accurate.

In fact, central banking doesn’t work because it is impossible to make accurate predictions about the future, especially when it comes to the economies of industrialized states. There are simply too many factors.

Conclusion: The most accurate statement Yellen could make is that she doesn’t know what’s going on with the economy and will never be able to know. Then she should suggest disbanding the Fed before it does further damage. This would be the most accurate statement she could make.

Read More At: TheDailyBell.com

Thanks To Yellen, Gold Will Bounce Back

gold-coins
Source: TheDailyBell.com
May 31, 2016

Speculative traders abandon gold in latest week  …  Gold prices fell Monday, moving in the opposite direction of the U.S. dollar, which soared after comments by Federal Reserve Chairwoman Janet Yellen last week indicated an interest-rate hike could come this summer.    –MarketWatch

Today, gold prices have been clinging to around $1,200 against the dollar. It is becoming increasingly obvious that the Federal Reserve has two goals.

One is to keep the dollar strong against gold and the other is ensure that the world’s quasi-depression continues.

Yellen doesn’t say so, but this will be the result of her actions.

“It’s appropriate — and I have said this in the past—for the Fed to gradually and cautiously increase our overnight interest rate over time,” Yellen said in a recent speech at Harvard University where she received an award. “Probably in the coming months such a move would be appropriate.”

But it’s probably not appropriate. Nothing in the US economy is signaling “recovery.” US statistics are endlessly optimistic anyway.

We’ve reported previously on this: Yellen is raising rates because she wishes to raise rates not because of any particular financial evolution that is forcing her hand.

In a recent CNBC article, “The Fed could be blindsided by ‘stagflation’,” contributor Michael Pento went even further.

Pento doesn’t seen any real US economic strength. And he believes that if Yellen raises rates, any possibility of a recovery is lessened.

“Janet Yellen is creating ’70’s style stagflation with her monetary policies,” he writes.

Since July of 2015 economic growth has been languishing, while CPI has been rising during a relatively similar time span.  In fact, the most recent month over month increase in the CPI of 0.4 percent was the highest since February 2013.

At the same time, Pento writes that the economy only expanded by 160,000 new jobs in April whereas Wall Street had expected a 203,000 gain.

The Fed is seeking higher employment and low inflation. “What is becoming manifest is the exact opposite.”

Is Yellen prepared for an economic scenario that opposes the one that she anticipates? Pento believes neither Yellen nor Wall Street are prepared for such a turn of events.

In fact, “The government’s effort to engender viable growth through debt and inflation is virtually guaranteed to fail.”

Pento believes the medicine of Paul Volcker is necessary: an  environment of much higher interest rates.

This is because he doesn’t believe the economy is improving but asset bubbles are forming nonetheless. It is these asset bubbles that carry the greatest risk.

Yellen’s slow-motion rate increases do nothing to alleviate these risks.

She is adopting the tactic of raising rates slowly while asset bubbles expand quickly – eventually causing an economic meltdown.

Continue Reading At: TheDailyBell.com

CME To Open Account AT FED…

CME TO OPEN ACCOUNT AT FED…
Source: GizaDeathStar.com
Dr. Joseph P. Farrell
April 27, 2016

Now, this unusual story was shared by Mr. T.S., who sent it along with an email posing the question: “is this new account going to be used to bolster Commercial Banks with Funds from the FED in the Event of Margin Failures resulting from Extreme Gold demand forcing the shorting banks to liquidate their margin accounts?” Well, I’ll let you read the short article, and “you can tell me”:

CME Group says preparing to open account at the Fed

So what’s going on here? Well, I suspect that for one thing, Mr. T.S. is right, or at least, close, in that something like what he has proposed may be going on. But there are other possible explanations as well, and one of them is that this, too, is a manifestation of what, in part, may have transpired at that secret meeting of Mr. Obama, Mr. Biden, and Ms. Yellen, at the Fed last week. You’ll recall two days ago that I blogged about the fact that most derivatives trades are currently still “over-the-counter” and not subject to central clearing. You’ll also recall that the initial Obama-Biden-Yellen meeting was due to the Fed invoking “expedited procedures”, and that this meeting was followed up by meetings of major bankers in Washington, and a letter to JP Morgan Chase warning it that its “wind down” plan – sort of a last will and testament for banks about to expire – was simply inadequate, since the bank was exposed to seizures of its liquidity from “foreign jurisdictions” (the Fed’s phrase) and unspecified “third parties”(again, the Fed’s phrase).

Continue Reading At: GizaDeathStar.com

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Joseph P. Farrell has a doctorate in patristics from the University of Oxford, and pursues research in physics, alternative history and science, and “strange stuff”. His book The Giza DeathStar, for which the Giza Community is named, was published in the spring of 2002, and was his first venture into “alternative history and science”.

 

What’s Up With The Emergency Fed Meeting?

Source: GizaDeathStar.com
Dr. Joseph P. Farrell
April 17, 2016

You probably heard that last week, President Obama and Vice-President Biden met with Federal Reserve Chairman Janet Yellen behind closed doors. That fact alone should have raised eyebrows and for those in-the-know it probably did, for as a matter of normal security protocols, meetings or appearances both of the President and Vice-President in one place and at the same time are strictly limited for security purposes. From this one fact alone one may deduce that the meeting was about “serious matters” but the question is: what exactly?

A number of regular readers here have shared various articles addressing this various question, and thus I share them with the wider readership here for your consideration.

First of all, there is the admission of Goldman Sachs and Wells Fargo to having committed some deep financial “improprieties”:

http://www.washingtonsblog.com/2016/04/goldman-wells-fargo-finally-admit-committed-fraud.html/embed?wmode=transparent#?secret=QvHlq3S2Nw

Here are the two admissions of fact in a nutshell:

The settlement includes a statement of facts to which Goldman has agreed.  That statement of facts describes how Goldman made false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which Goldman would protect investors in its RMBS from harm (the quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted):

Wells Fargo & Co admitted to deceiving the U.S. government into insuring thousands of risky mortgages, as it formally reached a … settlement of a U.S. Department of Justice lawsuit.

***

According to the settlement, Wells Fargo “admits, acknowledges, and accepts responsibility” for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance.

The San Francisco-based lender also admitted to having from 2002 to 2010 failed to file timely reports on several thousand loans that had material defects or were badly underwritten ….

And why, asks the first article, should we care? The answer: one cannot have a functioning or sustainable(to use the globalists’ favorite word) economy with no rule of law, or, as the case is, one set of rules for most of use, and another set of rules for the corporate criminal class:

Continue Reading at: GizaDeathStar.com

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Joseph P. Farrell has a doctorate in patristics from the University of Oxford, and pursues research in physics, alternative history and science, and “strange stuff”. His book The Giza DeathStar, for which the Giza Community is named, was published in the spring of 2002, and was his first venture into “alternative history and science”.

How Janet Yellen Now Controls the Global Economy

For those looking for a solution to this situation, the answer is obvious. Run (don’t walk) away from the banksters’ rigged game. Every step toward disassocating yourself from the bankster system is a step away from this insanity.

Source: TheInternationalForecaster
James Corbett
March 30, 2016

As I write these words we are now only hours away from The Most Important Event Ever to Happen in the History of the Global Economy. Investors are bracing themselves. Markets are anticipating. Journalists are spilling Olympic sized swimming pools of ink on writing headline after headline after headline after headline after headline after headline about this, the deciding economic event of our time.

No, the great event is not the announcement of the discovery of free energy. Or a major new technological breakthrough that will revolutionize industry and increase productivity. Or even an innovative new theory for how to pull us from the brink of the global derivative black hole collapse. It’s something entirely more ordinary: words.

That’s right, with just a few magic words uttered at today’s meeting of the Economic Club of New York, Fed chair Janet Yellen will cause entire markets to rise or fall. A single declarative sentence could strike down a small country. An effusive adjective could cause an entire industry to boom, a disparaging remark could cause that same industry to collapse. A rising intonation, an arched eyebrow, a significant pause, even a semi-colon could be the difference between rags and riches for millions of workers around the world.

Sound ridiculous? It is. Yet nevertheless this is the situation we’ve arrived at.

As I’ve noted before time and time again in this column, we have entered the “New Normal” where fundamentals do not matter at all, only perception. Do you believe the Fed has solved the market meltdown of ’08? Then they have solved it. Do you believe the skyrocketing debt and geyser of excess liquidity created in the last decade are not a problem? Then they are not a problem. Do you think Janet Yellen can speak rising stocks or a falling dollar into existence? Then she can.

The long story short: the MSM has been playing up the idea of a “Fed revolt” in recent weeks. Don’t get your hopes up. Sadly, this revolt has nothing to do with an angry public finally learning the truth about the Federal Reserve and running the banksters out of town.

Continue Reading At: TheInternationalForecaster.com

Secret Fed deal abroad spurs stagflation at home

beaten-up-dollar

Source: TheDailyBell
March 30, 2016

Yellen Says Caution in Raising Rates Is ‘Especially Warranted’ …  Fed Chair makes case for go-slow changes with rate near zero … Janet Yellen said it is appropriate for U.S. central bankers to “proceed cautiously” in raising interest rates because the global economy presents heightened risks. The speech to the Economic Club of New York made a strong case for running the economy hot to push away from the zero boundary for the Federal Open Market Committee’s target rate. –Bloomberg

Janet Yellen was back at it yesterday, talking down the need for a rate hike.

She is comfortable with the economy running “hot.”

Say what?

After a year or more of explaining why rate hikes were necessary, up to four or more of them in 2016, Ms. Yellen has now begun speechifying about how rate hikes are not a good idea.

It’s enough to give you whiplash.

It sets the stage for increased stagflation in the US and increased price inflation in China. More in a moment.

Here’s the real story. At the last G20 meeting in February, secret agreements were made between the most powerful economies to lift both the US and Chinese economy.

The details of these deals have been leaked on the Internet over the past few weeks and supported by the actions of central bankers involved.

It is what The Daily Reckoning last week called “The most important financial development of 2016, with enormous implications for you and your portfolio.”

The Fed and other members of the G20, which met in February, intend to maintain the current Chinese system.

They want China to stay strong economically.

The antidote to China’s misery, according to the Keynsian-poisoned G20, is more yuan printing. More liquidity that will supposedly boost the Chinese economy.

As a further, formal yuan loosening would yield a negative impact felt round the world, other countries agreed to tighten instead.

This is why Mario Draghi suddenly announced that he was ceasing his much asserted loose-euro program. No one could figure out why but now it’s obvious.

Same thing in Japan, where central bank support for aggressive loosening has suddenly diminished.

The US situation is more complicated. The dollar’s strength is now seen as a negative by central bankers and thus efforts are underway to weaken the currency.

A weaker dollar and a weaker yen supposedly create the best scenario for a renewed economic resurgence worldwide.

The euro and the yen rose recently against the dollar after it became clear that their central banks had disavowed further loosening.

Now Janet Yellen is now coming up with numbers and statistics to justify backing away from further tightening.

None of these machinations are going to work in the long term. And even in the short term, such currency gamesmanship is questionable in the extreme, as the Daily Reckoning and other publications have pointed out when commenting on this latest development.

In China, a weaker yuan will create stronger price inflation. In the US, a weaker dollar will boost stagflation.

We’ve often made a further point: Everything central bankers do is counterproductive on purpose.

The real idea is to make people so miserable that they will accede to further plans for increased centralization of monetary and governmental authority.

Slow growth or no growth in Japan and Europe, supported by monetary tightening, are certainly misery-making.

Stagflation in the US and Canada is similarly misery-provoking, as is price-inflation in China.

Nothing is what it seems in the economic major leagues.

Central banks are actually mandated to act as a secret monopoly, supervised by the Bank for International Settlements and assisted by the International Monetary Fund.

Deceit is mandated. As with law enforcement, central bankers are instructed to lie and dissemble for the “greater good.”

It’s dangerous too.

The Fed along with other central banks have jammed tens of trillions into the global economy over the past seven years. Up to US$100 trillion or more.

They’ve been using Keynesian monetary theories to try to stimulate global growth.

It hasn’t worked of course because money is no substitute for human action. If people don’t want to invest, they won’t.

In the US, the combination of low growth and continual price inflation creates a combination called “stagflation.”

It appeared in its most serious form in the 1970s but it is a problem in the 2000s as well.

Recently we noted the rise of stagflation in Canada.

According to non-government sources like ShadowStats, Inflation is running between four and eight percent in the US while formal unemployment continues to affect an astonishing 90 million workers.

Continue Reading At: TheDailyBell.com

Audit the Fed Legislation Sinks: Plan Accordingly

DailyBell.com
January 13, 2016

Senate rejects Rand Paul’s ‘Audit the Fed’ legislation … The Senate on Tuesday blocked legislation calling for tougher audits of the Federal Reserve, rebuffing an attempt by Republican presidential candidate Rand Paul to give lawmakers greater oversight of the central bank’s moves on interest rates. The 53-44 vote fell short of the threshold to overcome a Democratic filibuster. – AP

Dominant Social Theme: Dangerous legislation deserves to be blocked.

Free-Market Analysis: Audit the Fed, in which so many had invested so much hope, is no more, at least for now.

Rand Paul and Ron Paul, the dynamic duo of anti-Fed forces, invested a lot of time and money trying to get that legislation passed. But even if it reached Barack Obama’s desk, it would have been vetoed.

And thus it was not destined to be. But the high-profile bill probably informed or reminded millions that the system was not a very good one and that there were better alternatives.

Here’s more:

The measure call[ed] for the Government Accountability Office, a watchdog agency for Congress, to scrutinize the Fed’s monetary policy and offer recommendations to lawmakers on ways to address any perceived problems.

Congress, the White House and Treasury officials have traditionally been careful to steer clear of questioning the Fed’s independence to set policy, and current law blocks the GAO from reviewing the way the agency conducts monetary policy or reviewing internal deliberations.

Rand Paul doesn’t see it that way. “Nowhere else but in Washington, D.C., would you find an institution with so much unchecked power,” Paul was quoted as saying.

Of course, the Fed pushed back against the legislation. Fed Chairman Janet Yellen penned a letter to senators before the vote claiming that the legislation would deprive the Fed of necessary independence.

She also noted that passing the legislation might generate an inflation scare and cause interest rates to rise.

One wonders if this was a subdued threat. Additional rate increases, especially happening rapidly, could tip a delicate economy back into the red, assuming it is in “recovery” to begin with.

Continue Reading At: DailyBell.com