By now we all know the story. Mel Watt introduced an amendment on the big financial regulatory reform bill that “gutted” Ron Paul’s HR.1207 Fed audit bill. Today, Ron Paul introduced a substitute amendment to that amendment that puts the “guts” back in to the audit. Effectively, Paul’s amendment is HR.1207 with a bit more detailed language regarding monetary policy oversight.
Paul’s amendment passed, first by voice vote, and then by roll call vote later in the day. The final tally was 43 for Paul’s bill and 26 against.
First up is Ron Paul arguing (yet again) why Fed transparency is not a call for injecting Congress into Fed policy decisions.
Next we have Barney Frank patting himself on the back again for bringing Ron Paul’s Fed audit legislation up in the committee. There’s a bit of humorous back and forth then Congressman Hensarling rips Frank for his comments a bit by calling them “irrelevant”.
Here are the leadup comments from Alan Grayson and co., then the voice vote on adopting Ron Paul’s substitute amendment.
And finally, the official roll call vote of Ron Paul’s substitute amendment. Ron Paul wins!
Ron Paul introduced a substitute amendment to replace Mel Watt’s amendment that would have “gutted” HR.1207’s intent. Dr. Paul’s substitute was later passed by the committee over the ‘nay’ votes of both Barney Frank and Mel Watt. It was passed by voice vote. The roll call vote is scheduled for this afternoon.
This was an important step in the process, but the amendment is going to be tacked on to the larger regulatory reform bill being deliberated now.
Watch Ron Paul introduce the bill earlier today in the committee in the video below.
The House Financial Services committee began debating Mel Watt’s amendment to Ron Paul’s HR.1207 bill to audit the Federal Reserve today. Watt’s bill is said to strip HR.1207 of it’s original purpose.
The clip below shows Alan Grayson arguing against Mel Watt’s amendment and then Watt’s rather angry response. Stay tuned for more clips…
As the unemployment rate crossed the double digit barrier for the first time since Michael Jackson learned to moonwalk, President Obama announced that he will convene a “jobs summit” to finally bring the problem under control. Using all the analytic skill that his administration can muster, the President is determined to figure out why so many people are losing their jobs and then formulate a solution. That’s a relief; for a while there, I thought we were in real trouble! In fact, the absolute last thing our economy needs is more federal government interference. If Obama really wants to know what’s behind entrenched joblessness, he should start by looking at the man in the mirror.
Obama is pursuing, with unprecedented vigor, the same policies that have for decades undermined our industrial base and yoked us to an unsustainable consumer/credit driven economy. This doubling down on Washington’s past failures is destroying jobs at an alarming rate. Today we learned that the September trade deficit surged by 18.2%, the largest gain in ten years. Much of the deficit resulted from Americans spending Cash-for-Clunkers stimulus money on imported cars – or “American” cars loaded to the sunroof with imported parts. In exchange for more domestic debt, we have succeeded only in creating foreign jobs.
An article in this week’s New York Times by veteran writer Louis Uchitelle confirmed a fact that I have been alleging for years. Uchitelle pointed out that foreign outsourcing of component manufacturing has led to consistent overstatement of U.S. GDP and productivity. The connection goes a long way to explain why we keep losing jobs even as GDP is apparently expanding.
As our economy becomes less competitive due to higher taxes, burdensome and uncertain regulations, and capital flight, more manufacturing and services will be outsourced to foreign firms. However, the flaw in GDP calculation allows the output of those foreign workers to be included in our domestic tally. Since we count the output but not the worker responsible for it, government statisticians attribute the gains to rising labor productivity. To them, it looks like companies are producing more goods with fewer workers.
The reality is that we are producing less with fewer workers. The added “productivity” comes from higher unemployment and larger trade deficits. This is a toxic formula that will have lethal economic consequences.
Ron Paul took his anti-Fed, anti-regulatory, pro-transparency message to the CNBC Squawk Box crew today. This is another winning appearance from Ron Paul. He outlines his views fairly well and makes extremely good arguments for his side of the Fed transparency debate.
His appearance was so positive that they end up telling him that he should come on the show as a special guest (as they have from time to time) for the full 2 hours of the show. Paul makes a joke in response. Check it out below.
by John Browne – Senior Market Strategist, Euro Pacific Capital
Last week, the Fed extended its emergency economic powers, which include lending to the money center banks at zero interest. A few days later, the Fed’s plan was reinforced by similar announcements from the rest of the G-20. The road map the authorities are providing for the near-term global economy can’t be much clearer. There will be no cessation of the seemingly endless supply of cheap dollars being pumped into the financial system. With the world apparently in complete accord on the need for ever more liquidity, stock markets are staging an easy-money rally. The main line media is almost euphoric. But what should investors make of this seemingly good news?
This time last year, the world faced a meltdown of its financial systems and a potential depression. Fed Chairman Ben Bernanke, a renowned expert on the Great Depression, coordinated an international rescue of the toxic financial system. Although the bill for these operations has yet to come due, almost all agree it will prove costly to present and future generations. For now at least, the most significant impact of these policies has been the creation of a liquidity bubble in stocks and a surge in commodities.
However, any efforts to reduce these stimuli will result in an immediate correction toward our previous depressionary trajectory. Acceptance of this uncomfortable truth is a political third rail. Therefore, it is highly unlikely that any major government will change course. Rather, the change will be thrust upon them.
It could have been argued that some of the actions taken last year were worth the cost if they had corrected the dangerous deficiencies in the financial system. But after a year, what has changed? The same behemoth banks remain, but even larger and yet more demanding of federal salvation. That particular risk has been increased rather than reduced.
Ron Paul’s bill to audit the Federal Reserve (HR.1207) has over 300 cosponsors, well above 2/3rds of the House, including every single House Republican. A few days ago an opinion piece appeared in the Wall Street Journal arguing that the Federal Reserve is already transparent enough and that a full audit would be overkill and dangerous. They write:
Economic theory and massive amounts of empirical evidence make a strong case for maintaining the Fed’s independence. When central banks are subjected to political pressure, authorities often pursue excessively expansionary monetary policy in order to lower unemployment in the short run. This produces higher inflation and higher interest rates without lowering unemployment in the long term. This has happened over and over again in the past, not only in the United States but in many other countries throughout the world.
The Fed’s independence is critical to its credibility. During the financial crisis, this credibility allowed the Fed to take extraordinary action to prevent a possible depression without triggering inflation. But eventually the Fed will have to scale back its unprecedented monetary accommodation. When it does move to tighten monetary conditions, it must be allowed to do so without political interference.
This is a tired argument at this point. The bottom line, once again, is that the Fed cannot “maintain its independence” when it is not independent to begin with. It is politicized already and it is plainly obvious to most observers without an axe to grind. The fact that this opinion piece appears in the WSJ at all is evidence in itself of this. It’s always important to consider the sources. The authors of the piece are both “in bed with the Fed”, so to speak.
Anil Kashyup was “an economist for the Board of Governors for the Federal Reserve System. He currently works as a consultant for the Federal Reserve Bank of Chicago, and serves as a member of the Economic Advisory Panel of the Federal Reserve Bank of New York, and as a Research Associate for the National Bureau of Economic Research (NBER).” His faculty bio page is here.
Frederic Mishkin is a former member of the board of governors of the Federal Reserve (2006-2008). Perhaps more telling is the following juicy bit:
In 2006, Mishkin co-authored a report called “Financial Stability in Iceland”. The report maintained that Iceland’s economic fundamentals were strong. The report was commissioned by the Icelandic Chamber of Commerce in response to critical coverage of the Icelandic economy and certain Icelandic companies in the international business media.
Iceland subsequently experienced a spectacular collapse within a year of Mishkin’s good report.
So, considering the sources, this WSJ opinion piece should be ignored and ostracized as the comments on the article are already showing.
Yesterday I gave a fast-paced lecture on constitutional money and the Federal Reserve to the Lehigh Valley Tea Party. The playlist can be found below, and the PDF of the presentation here. I am also available to present this material at a much slower rate, with plenty of time for Q&A to groups. Monetary economics is very crucial to understand as it underlies EVERYTHING that is going on with the economy.
Earlier today Judge Andrew Napolitano was the guest host on the Glenn Beck show. Four liberty-loving guests appeared on the show with the Judge. Peter Schiff, John Stossel, Ron Paul, and Rand Paul all appeared. When the Judge hosts Beck’s show it almost turns into an episode of Freedom Watch.
If you don’t know what Freedom Watch is then please check out http://freedomwatchonfox.com/. It’s an online only show hosted by the Judge catering to freedom-loving people everywhere.
Check out the excellent discussions from the show today below.
Liberty Maven
by Peter Schiff, president of Euro Pacific Capital and author of 
by John Browne – Senior Market Strategist, Euro Pacific Capital
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