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Tuesday, July 30, 2013

My Day Among the Tax-Eaters



September 28, 2009 by · Leave a Comment 

By Thomas E. Woods, GoldSeek

Last week I testified before the House Financial Services Committee in support of HR 1207, the Federal Reserve Transparency Act of 2009. Speaking on behalf of HR 1207 is particularly tricky because (1) what the Fed might be up to is entirely speculative, and thus can hardly be admitted into testimony; and (2) the bill is not opposed to the Fed per se, so arguments about the Fed’s performance as an economic stabilizer are also out of bounds (unless a congressman happens to raise them). Thus when the opposition argues that the Fed needs to maintain its secrecy in order to be able to keep up the super job it’s been doing, it would be considered “political” to argue that the Fed’s record has in fact been terrible. I eventually had to do so anyway, since there was no other way to answer some of the congressmen’s questions. But you see how delicate it is.

The most contentious moment for me came right at the beginning, when Congressman Mel Watt (D-NC) demanded to know if I supported a “policy audit” or a “numbers audit.” I was caught off guard because I couldn’t tell if he was asking for my personal opinion of what would be better or if he was seeking clarification of the meaning of HR 1207, which was presumably the point of the hearing. If the latter, I didn’t understand why he couldn’t simply have asked Dr. Paul this question sometime over the past seven months, the bill having been introduced on February 26. What I was trying to say, and I think at least the first part came through before being cut off multiple times, was this: because the Fed, unlike other entities subject to audit, is a creation of Congress exercising a government-granted monopoly privilege, an audit of such an institution will need to disclose more information than we would need (or have a right to) from a normal firm. But although we would like to see documentation of Fed meetings made available more promptly, and it would be nice to know the rationales for some of the Fed’s more inscrutable decisions, the purpose of the audit would not be to substitute the judgment of Congress for that of the Fed in the execution of monetary policy.

I don’t see how that could be summed up in a two-word answer. And any two-word answer I did give, I could tell from Congressman Watt’s demeanor, would be followed by a harangue that would use up the rest of his time. (The witness does not have a separate allotment of time in which to answer; the congressman has five minutes, and any answer the witness is permitted to give is included in that five minutes.) Congressman Watt chose to take my preface as an evasion, and then dismissed me for giving too “philosophical” an answer.

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