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Kurt Wallace: This is Kurt Wallace and our guests today on Rare are Norm Singleton, VP of Policy for Campaign for Liberty and Matt Hawes, VP of Programming for Campaign for Liberty. We’re here to talk about the effort to audit the fed and gentlemen, thanks for being with us today. Let’s go ahead and start off, Norm you have this HR24. There is a bit of history now on auditing the fed. It’s been introduced originally by Dr. Ron Paul. It got traction and developed. Tell us a little bit of the history of the effort to audit the fed.
Norm Singleton: Well, this is one thing that Congressman Paul championed going back to the 80’s when he was first in congress and back then it never really got any traction. It was sort of considered almost a strange idea because outside of a handful of libertarians and Austrian economists and gold bugs nobody questioned the fed despite its clear history of failure. Then after Congressman Paul’s presidential run in 2008 followed by the financial meltdown and bailouts of the fall of 2008 there were a lot more people listening to his message and starting to understand that this secretive institution that has this great power over our economy needs to be more transparent so that congress and the people can do a better job of evaluating its performance, and even whether or not its ultimately harmful and should be abolished and we should return to a free market monetary system.
So, in 2009 Congressman Paul introduced the bill. It was supported by almost every Republican and a fair number of Democrats. There was a watered down version of it put in the Dodd Frank so-called financial reform bill. Which was passed through congress. Then he reintroduced it again in 2001. There was a vote in July of 2012 on Audit the Fed. It passed the house. Then Congressman Paul obviously left. He continues to be involved with Campaign for Liberty as well as a lot of other projects. And Rep Paul Broun of Georgia, who’s a good friend and ally of Congressman Paul’s in the house introduced it this year as HR24. This Spring it got a majority of cosponsors of the house so Campaign for Liberty activist then put some pressure on house leadership and house leadership agreed to schedule a roll call vote on it before the end of the year. Which they did in September. And for people that thought issues like Audit the Fed or even the movement on questioning the fed’s actions in general would dissipate or weaken after Congressman Paul retired from the house, I think that was disproven by the fact that we actually passed it by a stronger margin this year than it did last year. Unfortunately, we continue to have a problem in the Senate because Harry Reid despite the fact that he’s on record numerous times in the past – most recently during his difficult reelection campaign in 2010 in support of Audit the Fed refuses to schedule a vote on it.
So, right now Campaign for Liberty is turning it’s attention to the Senate. Through October we are going to be having our members put a little bit of pressure on senators and through our candidate survey program to try to get them to pledge to when they either go to the Senate or go back to the Senate starting in the lame duck and if not in the lame duck then next year to get Harry Reid to finally put the bill on the Senate floor and vote on it. OUr lead cosponsor in the Senate is Senator Rand Paul. And he has been working very hard and we have been working with him to get a vote. He has tried to put holds and filibuster several appointees to the Federal Reserve. This is one of the reasons why Harry Reid changed the filibuster rules for nominees. So, that he could put Janet Yellen and other Kaynesians on the Federal Reserve board without first having to a vote on legislation supported by nearly 75% of the American people to Audit the Fed.
Kurt Wallace: Matt, why is this so important to the American people? What is the purpose of this? Doesn’t the Federal Reserve, they handle monetary policy and keep things from getting in bad shape. What’s the problem here?
Matt Hawes: Well, I think we’ve seen first hand, especially in the financial crisis of 08, that they’re running full speed ahead into a brick wall, that’s what they’re doing. So, the Fed through its manipulation of money and credit and interest rates, we believe from the Austrian economics we believe that reality proves what we’ve seen in front of us, fueled this massive boom and bust cycle. So, without the Fed, which just sits there creating money putting money on the books even if it doesn’t physically exist here. We believe that the Fed is just fueling the cycle. It builds things up and then gets people to invest with false confidence for instance by manipulating interest rates fuels this debt so congress can spend whatever it wants cause it knows the Fed is there to bail it out. Builds everything up in this massive cycle and then when it all inevitably crashes, cause again all this is built on just opinion and theory, when it inevitably crashes it just impacts and crushes so many lives. And it’s because of things like the Fed for instance that all these years that people have spent saving up and trying to plan for their retirement they’re losing the value of the dollar at a crazy rate.
There’s an interesting statistic from actually the Minneapolis Fed one of the Fed’s own branches. They have a little tool you can go on their website and plug-in and see how much would something cost me in one year as compared to another on the value of the dollar. And if you go back in and punch in 1913, the year that the Fed was created and punch in a dollar for what the goods and services I could purchase, and then you punch in this year you see that what it costs for a dollar to buy in 1913 now nearly costs $24. So the value of the dollar has just fallen at a crazy rate since the Fed was created in 1913. And again with something like the 08 crisis and since we’ve seen just how much damage it can do and just how much it can cripple our economy and really affect the entire nation affect what we can do.
Kurt Wallace: Norm, what is the push back and who are the people that are pushing back? What are their reasons for not allowing an Audit of the Fed?
Norm Singleton: Well, you hear a lot of canards from the Federal Reserve for various reasons a lot of opponents of transparency repeat. The biggest one is that it will somehow interfere with Federal Reserve independence. There’s several responses to that. The main one is as Michele Bachman asked Janet Yellen last year in Fed testimony is this is a one paragraph bill one page bill it’s two or three paragraphs. It simply calls for an Audit of the Fed. It gives congress no authority to direct monetary policy. It does not in any way infringe on their ability. It just says to conduct monetary policy as they are currently authorized to do by federal law. It just says that there has to be an audit. Secondly, if you look at the history of the Fed we know that Fed independence is kind of a myth because we know first of all congress confirms the Fed nominee which are nominated by the president. So, that obviously impacts their autonomy and secondly there’s is such a thing as the political business cycle where Federal Reserve chairman in the past have blatantly tried to maneuver monetary policy to help or hinder current administration depending on how much they favor the existing president’s policies.
I think there is a Fed chairman, Arthur Miller during the Nixon administration, who was quoted as saying that the Federal Reserve had to be sensitive to the political needs of the current administration in order to maintain their operational independence. Basically meaning we don’t want to get the president and congress upset with us because they could take away our independence. Well, obviously their not totally independent of politics they’re just independent of letting the people as Matt pointed out are most directly impacted by their decisions know how they come to these decisions and know about their deals with foreign central banks and with wall street and how they’re monetizing the debt. Which might be another reason why big spenders don’t want a Fed audit because they know one of the functions of the Federal Reserve is to help make possible the government to run these huge deficits without America becoming Greece or Argentina.
Kurt Wallace: Matt, in terms of the activities that the Fed does that are concerns outside of interest rates and lending fiat money to the US Government, Norm touched on that. Are there very specific things that should be alarming to the American people?
Matt Hawes: Well, Norm mentioned earlier that limited audit that was passed in 2010 that was part of the Dodd-Frank act and the GOA Government Accountability Office, the same ones that would conduct this audit also conducted the audit that resulted from that. And what they found when they did that was that in addition to the massive debt we’ve accumulated, I think at the time it was 16 trillion. In addition to that the Fed had put us on the hook with commitments to foreign central banks to foreign governments to businesses that had triple A ratings at the time. They put us on the hook for another 16 trillion and how many commitments they were making and the loans that they were making. And they just had the ability to loan out just astronomical sums of money and eventually that’s going to come back to really effect the American people and greatly crush the American people. And one of the things that actually got us most upset at the beginning of this was when Bernanke appeared before congress and they were asking for more information on who were these loans made to? Who did they go out to? How much were they for? And Bernanke just flat-out told them no we’re not going to tell you that.
So we have this powerful central bank that’s created by congress the creature of congress come before congress and tell them ‘no you’re not having that information’ is just unbelievable almost. Especially when they have so much control and so much power. And so that’s one reason that we launched the Audit the Fed effort and Congressman Paul’s bill. And originally when we introduced it the funny thing about it is the first time we brought it up as an organization was at CPAC in 2009 and it had just been reintroduced. It only had a handful of cosponsors. And we passed out flyers and talked about it at one of the events we had there. And we were met with the same response which was nothing will ever happen with this. This is just one of an extremist ideas. Ron Paul is on this and no one is going to care. And we were met with this response and we kept telling people this could really catch on. This is something important. This is something we need to do. And we kept stressing that the more grassroots pressure we put on congress the more they’ll respond on this even if it doesn’t seem like it at the time. Which is why now looking back on two congresses having passed it through the US house as a stand alone bill is just absolutely incredible. Like Norm said the statistic there of like 74% of AMericans support the federal audit of the Fed now.
When you go back several years ago few people probably knew what the Fed was and what the Fed did for instance. So we’ve just seen this massive success. I think it really speaks well of what our movement can accomplish and what we can do if we just keep at it, if we don’t give up. If we refuse to accept the system as it is and appearing now the same response much as we heard before with the house. Well it’s Harry Reid’s senate and nothing can happen in the Senate. Well we’re up to 31 cosponsors in the Senate which itself is pretty incredible. And we feel if we keep pushing we can have the same kind of success we had in the House. And no matter what Reid does and what happens in the Senate we can use the Fed as a platform to reach out to more Americans about transparency, about sound money, about why the Fed is up to some bad stuff and what they’re doing and why we need to change the status quo. So, it’s really both a powerful education platform and it’s a powerful platform for getting a real policy change made in taking on the Fed.
Kurt Wallace: Now Norm, we talk a lot about arguments against the Federal Reserve actions of inflation and, well, the typical monetary policy arguments of printing money and interest rates. But there isn’t as much discussion over ‘fractional reserve banking’. Is this something that doesn’t get enough play and has a relevant importance to the American people?
Norm Singleton: It does and I think that it’s an issue that needs to be more int he public eye and more discussed. Certainly Dr. Ron Paul has done a lot to highlight this and other aspects of monetary policy. And I think that a full audit, one of the things that it will reveal is the extent to which the Fed’s dealings with the banking system is really propping up what is an inherently unstable system because any system that needs government intervention to survive is inherently unstable. Although with fractional reserve banking you do get more into areas of government that are actually outside the Federal Reserves purview. Because that gets into questions of the safety of the Federal Deposit Insurance Corporation which is what makes fractional reserve banking possible.Because that gives the government guarantee to people’s savings accounts. And that’s what makes it possible for a bank to take $00 deposit from you in savings and loan out $90 of it and say don’t worry because if the business we loaned the $90 collapses and all of our business loans and other loans collapse you are still guaranteed your $100 back courtesy of the US taxpayer.
And that I think is a system that Congressman Paul spoke out against when he was on the Financial Services Committee. And it is something that at some point we need to seriously look at because a crisis in the banking system it is I think more than possible that a serious crisis in the banking system you’ll see the FDIC end up in a situation where it’s unable to fulfill it’s legally obligations to bailout all these banks. And this could lead to a bank bailout that will make the 2008 bailout look like we were just throwing some pocket change at the banks and at wall street.
Kurt Wallace: Now in terms of putting pressure on the US Senate, Matt, what are some of the things that people who support Campaign for Liberty and support auditing the Fed in general, what do you recommend?
Matt Hawes: One of the best things they can do is to get the calls going into their Senator and just to keep those calls going all throughout the month. On both through the national office and because they’re all back for either the elections or just district time Calling their local offices as well and just putting the pressure on both sides. If they visit CampaignforLiberty.org we’ll have materials up soon as well to pass out wherever they may be going to inform more people about what the bill is what it does and to give them information as well to put on pressure. Through Campaign for Liberty’s email list we send out fax petitions for instance that people can sign up and we’ll fax those into the senate. And that’s just another outlet for putting on pressure. So really people can help us hit from all sides.
Kurt Wallace: Well I want to congratulate Campaign for Liberty. The hard work you guys have been doing. This tedious ongoing moving forward hard work and this issue is not going to go away. You;ve proven that it has its own legs and it’s gone viral. And the American people overwhelmingly support transparency with the Fed. Any last words from either one of you today?
Norm Singleton: I just want to say first of all thank you to Campaign for Liberty’s members because they’re the ones that actually make this happen when they call and put pressure on their senators and representative. And we need t continue through these efforts in order to get audit the fed. And that we’re not going to give up and we know that our members won’t give up until we are successful in auditing the fed. And that once it’s audited we will see what kind of support we can get for future changes in monetary policy.
Matt Hawes: Just to echo Norms, thanks to everyone whose taking action and everyone whose been interested in this. I think it’s just a great issue to look at to encourage people. We see so many discouraging things in the news and so much that there seems to be going wrong at the time. We need to remember there’s a lot of good stuff going on. And Audit the Fed is a great example of what can happen through keeping pressure on. Constantly applying that pressure and consistently applying that pressure and turning up that pressure over time that we look how we see all sorts of things that we would like to change. All sorts of things we would like to do. Well we can actually accomplish them. And we just need to stick at it and I think that’s a very encouraging sign for the liberty movement.
Kurt Wallace: Norm Singleton VP of Policy and Matt Hawes VP of Programs at Campaign for Liberty thanks for being with us today on Rare.
Matt Hawes: Thank you.
Norm Singleton: Thank you and keep up the great work at Rare it’s a real asset to the liberty movement.
