On Wednesday afternoon, members of the financial press from around the world focused their attention on the Federal Reserve in advance of the Federal Open Market Committee’s statement on monetary policy. At issue was how the Fed will wind down a series of programs that, while controversial, are widely believed to have prevented the U.S. economy from tumbling into a second Great Depression following the financial crisis and the Great Recession.
Meanwhile, at the other end of Pennsylvania Avenue, the House of Representatives approved a bill that, its sponsor hopes, is the first step toward doing away with the Federal Reserve and handing Congress the power to control the U.S. money supply.
Yes, Congress. The Congress that has barely been able to pass anything for the past several years. In charge of the nation’s money supply. Sure. What could possibly go wrong?
The measure, sponsored by Rep. Paul Broun (R-GA), doesn’t seem that radical. It simply calls for an “audit” of the Federal Reserve and the 12 Federal Reserve Banks around the country.
But Broun belongs to a school of thought that views the central bank as an entity with vast, unconstitutional powers that has been usurping the prerogatives of the Congress for a century.
Yesterday, Broun told U.S. News and World Report that he has high hopes for the future once the audit is complete. “Hopefully once the American people see what the Fed has been doing over the last 100 years then they will support getting rid of the Fed and going to sound money policy.”
“Sound money policy,” to a casual listener, might seem to suggest a merely “prudent,” or “sensible” approach to managing the nation’s money supply. In fact, what Broun and ardent opponents of the Fed advocate is the “sound money policy” put forward by Austrian economist Ludwig von Mises, which essentially calls for a return to the gold standard.
The bill passed 333-92, with majorities of both parties in support. The opposition was made up of 91 Democrats and a single Republican.
The measure is, most likely, going nowhere. While Sen. Rand Paul (R-KY) has introduced a similar measure in the Senate, Majority Leader Harry Reid (D-NV) has shown no interest in bringing it up for a vote.
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