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| Joined: | Mon Nov 21st, 2005 |
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FAITHFULNESS OR BETRAYAL?
Ron Paul will wait until 2011 to introduce his gold audit bill. He seems to be assuming that Republicans will be in control of the House of Representatives in 2011. He also seems to be assuming that the House of Representatives will be more aggressive passing legislation that will embarrass the Obama administration, assuming that a House bill gets through the Senate.
Obama will veto any bills that he does not like, which will be a lot of them if Republicans control both branches of Congress. If Republicans do take control, and if they are successful in getting such legislation onto the desk of the President, this will undoubtedly embarrass the President. Short of that, bills from the House can embarrass Democrats in the Senate.
As part of positioning for the Presidential election of 2012, a bill to audit America's gold could play havoc with the Federal Reserve. The bill will not be seen as an audit of the FED's operations in general – only an audit of America's gold, which has been justified by the FED in its supposed capacity as a trustee. It is the issue of the FED as trustee, not the FED as a lender, that will be the heart of the audit.
Will the House pass a bill to audit the gold that is supposedly held in Fort Knox and also in the vault of the Federal Reserve Bank of New York? Will Congressman Paul be able to gain support from the rest of the Republicans in Congress? If he can't, then it will be clear who is really in charge. But if he is able to get the bill passed, and if it somehow gets through the Senate, then Obama will veto it. Whether that will be a big deal politically remains to be seen.
The problem that such a bill poses to the Federal Reserve is obvious. On paper, Congress has the right to audit the Federal Reserve. On paper, Congress also has the right to make certain that the gold reserves of the United States government are still available to be used by the United States government, should the United States government ever decide to do something with the gold.
Any attempt by the Federal Reserve to argue that it must not allow the United States Congress to see if there is really any gold in its vaults is going to be a very difficult public relations exercise.
It is one thing for the FED to say that a full audit will interfere with the privacy necessary for the conduct of central bank operations. Some voters might actually believe this. But it is something completely different to say that the Federal Reserve should not be required to prove that it still has possession over the gold that it purchased with the money created by the FED in 1933 and 1934. Its reports have always said that it does. If it doesn't, then there will be a huge scandal. "Who got America's gold?" That would force Congress to conduct a full-scale audit.