Money Matters

Federal Reserve Needs Oversight

Federal Reserve Chief Janet Yellen is resisting a bill to audit the Federal Reserve saying it would harm the institutions independence and make them more inclined to be subject to political pressure.

As if no one thinks that is the case already but that is a story for another day.

There is no surprise on her putting up a fight against more oversight. Who in their right mind would want their job more scrutinized? And with more oversight and transparency, her actions on Fed policy could be questioned at every turn.

Historically one could make the argument that the Federal Reserve has done little to improve things since their inception.

For starters, didn’t they miss the dot com bust and housing blow up? What about the Great Depression of the 1930’s and stock market crash of 1929?

Have we forgotten about the near miss implosion of the world’s banking system a few short years ago?

Didn’t all this happen while the Fed was supposed to be regulating and watching over such things?

The failures of the Fed can also be compared to many decades past.

In the period prior to the Feds inception in 1913 (and before there was any federal income tax) the greatest economic boom in US history took place and the annual rate of inflation was half a percent.

Compare that to inflation rates averaging more than seven times that since the Federal Reserve came to be. So much for the Fed providing monetary stability.

Since their inception there has also been 18 recessions or depressions. Before the Fed the number of economic setbacks was under ten, much less severe and the average length of duration of those events was only 2.5 years.

The six largest banks have gotten even bigger and “too big to fail banking” institutions are now the norm, and grew that big under the Feds so called not so watchful eye. Keep in mind the Federal Reserve is the regulator of banks and similar financial institutions.

Under current Fed policy bubbles exist in a variety of asset bubbles and when they start to pop, the public will then realize the Fed is and has been shooting from the hip as to monetary policy.

I doubt anyone would argue the success of the Feds varying programs and attempts at stabilization are sketchy at best. Their track record of recognizing problems before they become bigger problems is indeed dismal.

Meanwhile their policies have enriched the very upper class to an even greater extent while the common man finds it harder to make ends meet.

Keeping all this in mind, do you think we should pull back the curtain at the Fed and find out what they’re doing or should Fed Chief Janet Yellen and her minions be allowed to continue to operate in the dark?

This article expresses the opinions of Marc Cuniberti. Mr. Cuniberti hosts “Money Matters” on KVMR FM 89.5 and 105.1 FM on Thursdays at noon and syndicated on over 35 radio stations throughout the US and Canada. He has been featured on NBC and ABC television and on a host of made for TV documentaries for his economic insights. His website is www.moneymanagementradio.com.