Economists opposing Fed audit bill have undisclosed Fed ties
Submitted by cpowell on 06:49PM ET Wednesday, November 18, 2009.
Section: Daily Dispatches By Ryan Grim
Huffington Post, New York
Wednesday, November 18, 2009

http://www.huffingtonpost.com/2009/11/18/economists-opposing-fed-a_n_362...

As the debate over an audit of the Federal Reserve intensifies in the House, one camp is trotting out eight academics it calls a "political cross-section of prominent economists."A review of their backgrounds shows they are anything but.In a letter to the House Financial Services Committee earlier this month, all eight wrote that they support the type of amendment now being introduced by Rep. Mel Watt, D-N.C. Watt's approach purports to increase Fed transparency while it actually would tighten restrictions on any audits.The letter was sent around Wednesday by Watt's staff to members of the committee in advance of a vote scheduled for Thursday.Watt's measure is in competition with an amendment cosponsored by Reps. Ron Paul, R-Texas, and Alan Grayson, D-Fla., that would repeal the restrictions that Watt leaves in place.But far from a broad cross-section, the "prominent economists" lobbying on behalf of the Watt bill are in fact deeply involved with the Federal Reserve. Seven of the eight are either currently on the Fed's payroll or have been in the past.The Fed connections are not outlined in the letter sent around to committee members on Wednesday, but are publicly discernible through a review of their resumes, which are all posted online.In September, Huffington Post reported that the Federal Reserve has accomplished a soft form of effective control over the field of monetary economics simply by employing -- and being the means for career advance -- for an overwhelming proportion of the discipline.Now that the Fed is locked in a legislative battle on the Hill, it can call on those economists to give their "unvarnished" opinions to lawmakers.The connections that the seven economists lobbying Congress have to the Fed are not incidental and four of them maintain current positions.Let's run the traps:Frederic Mishkin is a former board member, having served from 2006-2008. His career at the Fed stretches back to 1977 and he currently holds two positions: one as a member of the Center for Latin American Economics at the Federal Reserve Bank of Dallas, where he's been since 1996; and another as an academic consultant to the Federal Reserve Bank of New York, where he's been since 1997.Anil K. Kashyap is currently a consultant with the Federal Reserve Bank of Chicago, a position he's held since 1991. He's also on the economic advisory panel of the New York branch and was a consultant there in 2003. He was a visiting scholar at the division of monetary affairs at the Board of Governors of in1994, 2001 and 2005 and at the division of international finance in 1997.Pete Klenow was a visiting scholar at the Federal Reserve Bank of Minneapolis from 1994-1999, 2003-2004, 2006 and again this year. From 2000-2003 he was also a senior economist at that branch. He's currently a visiting scholar at the Federal Reserve Bank of San Francisco, a position he's held since 2005. He was a visiting scholar at the Federal Reserve Bank of Kansas City from 2004-2006.Ricardo J. Caballero was a visiting scholar at Federal Reserve Bank of Boston from 2004-2005 and a visiting scholar at the Federal Reserve Board on multiple occasions.Robert Hall was a research assistant at the Board of Governors of the Federal Reserve System from 1982-1984 and an economist there from 1988-1991.Thomas Sargent was an adviser to the Federal Reserve Bank of Minneapolis from 1981 to 1987 and continues to write frequently for Fed-sponsored journals.Micheal Woodford is on the Monetary Policy Advisory Committee of Federal Reserve Bank of New York, a position he's held since 2004. He's also listed as a consultant to the research department there dating back to 2005. In the past, he's been a visiting scholar at the Board of Governors and various regional branches in 1987, 1993-1998 and 2000-present, often at multiple banks in the same year.Economists with Fed connections strongly reject the notion that being paid by the bank influences their thinking. But Robert Auerbach, who spent years investigating the institution and is the author of "Deception and Abuse at the Fed," says that those economists are simply in denial. "If you're on the Fed payroll, there's a conflict of interest," says Auerbach.The tie between the economists backing Watt's amendment and the Fed doesn't by itself mean that it's bad policy, but it does make clear which amendment is favored by the Federal Reserve. If there's still any doubt, the e-mail from Watt staff notes that former Fed chairs Alan Greenspan and Paul Volcker also support a version of it.Meanwhile, a broad coalition of liberal organizations is lining up behind the Paul-Grayson amendment, which also has the backing of most Republicans on the committee.The AFL-CIO and other labor groups, as well as Americans for Financial Reform signed on to a letter posted Wednesday calling for committee members to back the Paul-Grayson approach."In creating the Federal Reserve nearly 100 years ago, the Congress envisioned a central bank free from political pressure. But the structure that may have once ensured independence now appears to put the Fed much closer to the financial industry than the American people, who deserve to know who the beneficiaries are," reads the letter.The Fed, in other words, is not independent of political pressure, but that pressure comes from Wall Street banks rather than from the American people through their elected representatives.It's a distinction that the note from Watt's staff on Wednesday subtly acknowledges, by focusing on legislative and executive branch pressure, rather than financial industry influence. The Paul-Grayson amendment, it warns, "would place the United States well outside of the mainstream of industrialized nations that shield their central banks from political interference by the Legislative and Executive branches of government, with potentially disastrous results to the U.S. economy."

-----Ryan Grim is senior congressional correspondent for the Huffington Post.

Congressman Steve Lynch

Boston Office

88 Black Falcon Avenue, Suite 340

Boston, MA 02210

617-428-2000

November 17, 2009

Mr. Lynch,

Please schedule a meeting with me in your Boston office as soon as possible so you can to explain to me who you represent.

I have asked you now four times to co-sponsored the Federal Reserve Transparency Act HR-1207 during the past six months. This law would give the Federal Reserve Corporation the opportunity to show American taxpayers how they are spending the trillions of taxpayer dollars stolen from the public for the criminal banker bailouts.

Over 300 Congresswomen and men from both parties have co-sponsored the bill. These are honorable people, who actually represent and serve their constituents, ……70% of America .

Yet you have the arrogance to refuse co-sponsoring this bill.

What kind of person are you to be against accountability? All good citizens must be accountable in their lives, so why don’t you want Federal Reserve Corp. accountability? The vast majority of Americans want to know how our hard-earned taxes are being spent and yet you refuse to tell them.

You are not doing your job and you do not represent the citizens of Milton or the citizens of the 9th Congressional District.

Who do you represent? The criminal bankers and Wall St. financiers who created the junk securities that have crashed our economy?

The fact that you will not co-sponsored HR-1207 indicates that you are in favor of secrecy when it comes to spending trillions taxpayer’s hard-earned dollars. That is exactly what is occurring with the banker bail-out money.

Do your job or you will be run out of office.

Rich M

Economic Cause & Effect - Time to Audit the Fed!

By Jim Summers

The effects of our financial house-of-cards collapsing are everywhere: home foreclosures, unemployment, stock values cut in half, retirement savings lost. The cause, however, is a bit harder to discern as we are distracted by false leads (Fannie Mae and mortgage brokers) and side shows (Bernie Madoff and AIG bonuses).

To solve this case, we must remember to always ask the next question: What enables all of these sideshows? What economic force allowed for the housing bubble, too-big-to-fail financial firms, the trillions of bailout dollars and endless government deficit spending? If the boom-bust cycle is ever to be stopped, we must walk past the sideshows, go inside the big-top and observe the main event. That event is a magic show called money creation, where, like pulling a rabbit out of a hat, the Federal Reserve creates money out of thin air.

Contrary to what some of our congressmen still believe, our money is not backed by gold or any other commodity. The U.S. dollar is a pure fiat currency. It is ink on paper redeemable for ink on paper. This is why, in Washington, fiscal discipline is just a quaint notion of the Founding Fathers that doesn’t apply to our sophisticated financial markets. The Fed doesn’t have any “reserves” to speak of, they have something far better: a printing press………….and they’re not afraid to use it! Ever since President Nixon severed the last connection between the dollar and gold, the Fed has had no restrictions on the amount of money it can create. Inflation has skyrocketed since this action in 1971. By inflation, I mean the expansion of our money supply. This, of course, always leads to price inflation: the hidden tax that allows unfettered deficit spending without the messy business of raising our income tax. All politicians know that raising taxes is a career ender, but more handouts for their constituents is a career extender. As legislators become addicted to spending, they know the money well will never run dry. Can’t balance the budget? Need a monetary fix? No problem, the Fed is a licensed counterfeiter always ready to deliver the goods. This is why congress allows the Fed to carry on in secret with its unfettered expansion of the money supply. Congress is a money addict and the Fed is its enabler.

Injecting liquidity into the market would be one thing if this credit were backed by capital, but just the opposite is true. With no gold reserves, all of our money is created out of debt. This is why every bill in your wallet says “Federal Reserve Note”, not “silver certificate” or “gold certificate”, because modern dollar bills are instruments of debt, not of capital. Ben Bernanke is unquestionably a learned individual, but he must have been absent the day his professor discussed the definition of capital. Capital is the result of hard work and savings. Capital is money readily available to purchase the goods and services that are created from the borrowing and investing of entrepreneurs. This was the real problem with our latest economic bubble. After the Fed was done inflating it with liquidity (1 – 2% interest rates), it finally burst because no real capital (savings) was available to buy all those artificially created goods and services. Now, the government is trying to re-inflate those values using more credit (debt). How does it do this with a bankrupt Treasury? The Fed simply creates more debt, either by selling bonds, or simply printing more money. Without the Federal Reserve and its ability print money at will, there would be no $800 billion Wall Street bailout. Of course, one could argue that without the Fed / Wall Street / Treasury Department revolving door, our house-of-cards would have been made of some stronger materials. Perhaps even on a foundation of sound money like gold and silver, as was the intention of our founders.

Beyond the questions of Fed policy there is the issue of who controls this private entity we call the “Federal” Reserve. The Fed’s specific ownership is confidential but we know that member banks are always shareholders in their respective Fed districts. This makes our largest banks, the Wall Street banks, shareholders in the most powerful Fed branch. When the New York Fed decides to give, say, $30 billion to Citicorp, it is simply the executives of Citicorp and the rest of the boys club (Goldman Sachs, J.P. Morgan, etc.) bailing themselves out with our money.

One might expect that a private company with the power to print the reserve currency of the free world might be subjected to close congressional scrutiny. But in the bizarro world of finance, the Fed is above the law. Congress has had no authority to audit the Federal Reserve since the 1950’s. When Chairman Bernanke testifies before Congress, he answers only those questions that he so chooses. When asked recently which banks the Fed loaned $2 trillion to, Bernanke simply refused to answer. The Federal Reserve has become our fourth, and most powerful, branch of government yet is accountable to no one.

On Sunday November 22nd, thousands of concerned citizens with gather at Federal Reserve offices nationwide to support H.R. 1207, a congressional bill that would require a comprehensive audit of the Federal Reserve by the G.A.O. The bill currently has 310 co-sponsors but is being held back by the House Financial Services Committee as the Wall Street banks and the Fed have unleashed their lobbyists on key committee members.

The time has come for accountability. We the People have a right to know what our servants in Washington have allowed to become of our wealth. Congress has unconstitutionally delegated its power to coin money to a cartel of private bankers. This has created a government of the bankers, by the bankers and for the bankers. The Fed has created a no-lose casino where bankers can gamble with impunity, their winnings to keep and their losses to be absorbed by the taxpayer. We must demand that congress pull back the curtain and show us who is really pulling the strings. It is time for congress to pass H.R. 1207 and finally audit the Fed.

Visit www.endthefed.us for more information about H.R. 1207 and END THE FED! rallies happening nationwide on Nov 22nd.

Jim Summers is organizer for END THE FED! (www.endthefed.us), a grassroots effort to raise public awareness about the Federal Reserve System.