Ron Paul
Campaign For Liberty
Tuesday , January 12th, 2010
Last week it was revealed that when Treasury Secretary
Tim Geithner was Chairman of the New York Federal Reserve, he urged AIG
officials not to disclose to the Securities Exchange Commission
relevant details of agreements with banks to bail out Goldman Sachs.
Apparently he felt at the time that regulators and the public would be
angry that taxpayer money was used to fully compensate bankers who made
some horrifically bad investment decisions. These banks should have
suffered the consequences of the huge risks they were taking. After
all, they kept plenty of rewards when times were good. Instead, the Fed
found a way to socialize these major losses so these banks could
survive and continue making more bad decisions, at the expense of the
American people and the value of the dollar.
Geithner claims that they had to take politically unpopular actions
to save the economy from collapse. Half of that is right — it was
politically unpopular, but it is extremely premature at best, to claim
the economy has been saved. It was just reported that 85,000 more jobs
in December. Unemployment stands at 10 percent officially, and 22
percent according to more traditional calculations. It is hard to argue
that this sort of government waste has done anything but harm to our
economy. Raiding Main Street to bail out Wall Street is a foolish idea.
Main Street productivity and the strength of the dollar is the bedrock
of the economy. You cannot gut this foundation without eventually
toppling everything else. This is what too many policy makers either
don’t understand or refuse to face. Or even worse, perhaps they
do understand, but don’t care!
In any case, this revelation makes precisely my point about the need
for Fed transparency. This claim that the Fed should have
“independence” is a canard. They very much enjoy their
comfortable pattern of bailing out friends and devaluing the currency
with no oversight and no accountability. Geithner specifically asked
officials at AIG not to disclose to the SEC or to the public
particulars about this special deal for his friends. We only know these
details now because AIG was eventually forthcoming when Congress
demanded some answers.
We should be getting this information, and information on all such
dealings, straight from the Fed. The Fed should be accountable to
Congress because it is a creature of Congress. The Constitution gives
Congress the authority to oversee the integrity of the monetary unit.
We have unwisely and unconstitutionally delegated this authority to the
Federal Reserve, which has in turn devalued our dollar by 95 percent
and counting. When the Federal Reserve engages in harmful policies,
Congress is still ultimately responsible. If the Fed is not made
accountable through a GAO audit at least, it will continue to be
accountable to no one, and that is unacceptable.
Geithner expects to be praised and thanked for his actions instead
of rebuked and fired. He expects to be given more power to engage in
“experimental” monetary policy in the future. But he has
just given us a very good idea of what the Fed and Treasury would do
with more power, what they consider good monetary policy, and why they
like their so-called independence.
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