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| Joined: | Mon Nov 21st, 2005 |
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The target of the first half of the speech was Ron Paul. It was a warning against Ron Paul's bill in the House of Representatives that would authorize the Government Accountability Office to audit the FED. The House's leadership has kept the bill from coming to the floor for a vote, despite the fact that a majority of the membership has officially supported it, and despite the fact that a majority of the House Financial Services Committee voted for it, 43 to 26, in November 2009.
The FED has consistently opposed this bill. The official explanation is that this would in some way constitute interference with the FED's policy-making. This argument has never been clear. The fact that the General Accountability Office will verify the numbers in no way constitutes interference with FED policy, unless FED policy has been carried on under false numbers.
Nobody at the FED will say what is really at stake: an independent audit of the government's gold holdings, which are officially held for the government by the FED for safekeeping. If the gold is gone, or if there are legal claims against it by foreign central banks as a result of FED swaps, this would constitute fraud on a massive scale.
The real power in the FED has always been the Federal Reserve Bank of New York. In all textbook accounts of the years leading up to the Great Depression, the focus is on Benjamin Strong, the President of the New York FED. He set policy, not the Board of Governors.
The bulk of the world's gold holdings are stored in the vault of the New York FED. This includes most of the deliverable gold (99.9% fine) owned by the FED as trustee of the U.S. government's gold. The gold at Ft. Knox (probably coin melt, 90% fine) constitutes a second holding area, said to be 20% of the nation's gold. No one knows. It has not been audited since the early 1950's, not even by the private accounting firms that audit the FED on an annual rotation basis.
The FED demands secrecy. It proclaims that it pursues transparency, but it does not on any issue of substance.
Bloomberg News in November 2008 sued the Board of Governors under the Freedom of Information Act to find out which institutions received how much money in the October 2008 bailouts. The Board of Governors refused to comply on this legal basis: this would expose trade secrets of the recipient banks.
Even though a district Federal judge in August 2009 ruled that the New York FED must turn over these records, the FED refused to comply. She gave the FED five days to comply. It did nothing for six months.
Anyone who thinks that the Federal courts have operational authority over the Federal Reserve System is ignorant of the last century of American history.