Reuters article "Senator Rand Paul re-introduces 'Audit the Fed' bill" (January 28th, 2015) discusses a new bill introduced by Rand Paul, Ted Cruz, and 28 other Senators to "audit the Fed." This would expand the yearly audits taken by 1) Government Accountability Office, 2) the Office of the Inspector General, and 3) Private firms, to include monetary policy discussions, minutes of which are currently released with a three week lag. Detailed accounts of their holdings are released each week.
The real intent of the bill seems to be to monitor Federal Reserve policy discussion in real time. This will have two effects: first, to generate more comments for politicians like Rand to jawbone Fed officials about. Second, it will chill discussion in times of crisis.
In the end, chipping away at the Fed's independence is a good way to get higher inflation. From Alesina and Summers (1993), the relationship between Federal Reserve bank independence and inflation (click to enlarge).
Another aspect of the conservative echo chamber that has lead to insanity. Sadly, Corrections sees little way to end it.
Edit: Even a broken clock is right twice a day. Senator Warren:
[...] but I oppose the current version of this bill because it promotes congressional meddling in the Fed's monetary policy decisions, which risks politicizing those decisions and may have dangerous implications for financial stability and the health of the global economy.
The worst thing for a party about giving up its sanity for poorly-thought-out crusades,is it cedes sanity to the opposition.
US average inflation is 4%?
ReplyDeleteNo: current inflation is less than 4%. That said, I wouldn't expect a paper from 1993 to show the current inflation rate.
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