Tags: Lipsky | Yellen | audit | Fed

Lipsky: Yellen Errs in Arguing Against Audit of Federal Reserve

By    |   Friday, 27 February 2015 11:58 AM

Federal Reserve Chair Janet Yellen expressed intense opposition this week to Sen. Rand Paul's, R-Ky., proposal to audit the Fed.

But she's wrong, says New York Post columnist Seth Lipsky.

Yellen noted in Senate testimony that the Fed's finances already are made public. Its balance sheet now totals $4.6 trillion. But "what Paul is talking about (and she knows it) isn’t a financial audit of the Fed’s books," Lipsky writes.

"He’s eying a much broader look at how the Fed makes monetary policy and what it is doing with foreign banks. Such matters, which would be routine at any other bank, are off-limits to the Fed’s auditors as a matter of law passed in the 1970s."

Yellen also told the Senate that an audit would "politicize monetary policy,” Lipsky reports.

"She should take that up with George Washington, James Madison, Alexander Hamilton and the boys. After all, the Constitution they wrote specifically granted the monetary powers to Congress, the most political branch of the government."

As you might expect, liberal economist Paul Krugman, a Nobel laureate, sees things a bit differently. "The emerging GOP consensus on money is crazy — full-on conspiracy-theory crazy," he writes in The New York Times.

As for the Kentucky senator, "Mr. Paul likes to warn that the Fed's efforts to bolster the economy may lead to hyperinflation," Krugman says.

"He loves talking about the wheelbarrows of cash that people carted around in Weimar Germany. But he's been saying that since 2009, and it keeps not happening." So now Paul focuses on the Fed being an overleveraged bank that could collapse, Krugman says.

"This story is wrong on so many levels that reporters are having a hard time keeping up. But let's simply note that the Fed's 'liabilities' consist of cash, and those who hold that cash have the option of converting it into, well, cash. No, the Fed can't fall victim to a bank run."

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Federal Reserve Chair Janet Yellen expressed intense opposition this week to Sen. Rand Paul's, R-Ky., proposal to audit the Fed. But she's wrong, says New York Post columnist Seth Lipsky.
Lipsky, Yellen, audit, Fed
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2015-58-27
Friday, 27 February 2015 11:58 AM
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