Rand Paul: Why I Plan to Grill Yellen

The Federal Reserve needs to be audited so that the public can better know what the institution is doing with the U.S. money supply, the Senator writes

  • Share
  • Read Later
Jewel Samad / AFP / Getty Images

From left: U.S. President Barack Obama listens to economist Janet Yellen after she was nominated as Federal Reserve chairman at the White House in Washington, D.C., on Oct. 9, 2013.

President Obama’s announcement of Janet Yellen as his choice as the new Federal Reserve chairman has prompted speculation about what this might mean for our central bank. Perhaps this can best be judged by reviewing its recent history and Yellen’s place in it.

It is also important to focus on the fact that the Federal Reserve is structurally flawed.  The institution needs to be reformed to prevent Yellen, or any other future nominee, from using the enormous power of the Fed to aid and abet the allies of big government.  I intend on using the Senate’s constitutional power of consent to nominations as a means to educate the American people on the structural flaws and policies of the Fed that are bankrupting our nation.

The Fed’s favored practice of “quantitative easing” has been questionable at best. One need not be an economist or mathematician to wonder whether printing money out of thin air is a sound way to help the economy. Still, as The Washington Post’s Neil Irwin notes, “Yellen has been not merely an engineer of the Fed’s policies of ‘quantitative easing’ and ‘forward guidance,’ but a consistent voice within the central bank to go further.”

(MOREForoohar: The Gridlock Economy Blues)

Will it now go further? Matt Nesto at Yahoo Finance added, “Yellen, who is the current vice chair of the Fed, is known for her staunch support of the controversial easy money policies that have dominated Bernanke’s two terms as Fed chief.”

“Controversial,” to say the least.

The Federal Reserve might be the most secretive institution in our history. For decades, Fed officials, politicians and various “experts” have insisted that such secrecy was integral to its independence, and therefore effectiveness. But during Bernanke’s two terms we have seen QE1 (quantitative easing), QE2 and QE3, and all were ineffective, if not destructive. An unprecedented amount of new dollars has been injected into the economy. In 2009, it was even reported that the Fed could not account for $9 trillion in off-sheet balance transactions. That amount is more than half our national debt.

When the economy doesn’t improve, what is the Fed’s eternal answer? Print even more money. In 2013, the Fed has been purchasing – and monetizing the government’s debt – at a rate of $85 billion a month.  Just this year, they have added over $800 billion in government debt to their balance sheets.

(MORE: Janet Yellen: Chairman of the Federal Reserve)

Apparently President Obama’s choice for Fed chairman is just as much an advocate of this policy as her predecessor. This is madness.

The American people have a right to know what this institution is doing with the nation’s money supply. The Federal Reserve does not need prolonged secrecy—it needs to be audited.

I have introduced the bipartisan Federal Reserve Transparency Act, more commonly known as “Audit the Fed.” My bill calls to eliminate restrictions on Government Accountability Office (GAO) audits of the Federal Reserve and mandating the Fed’s credit facilities, securities purchases, and quantitative easing activities would be subject to Congressional oversight.

This bill currently has 19 co-sponsors in the Senate, including members from both parties, and companion legislation introduced in the House of Representatives earlier this year currently has over 100 co-sponsors. It passed in the House with a vote of 327 to 98 on July 25, 2012.

(MORE: Market Watchers Are Cheering the Yellen Nomination (Mostly))

The complicity of the Federal Reserve in contributing to our economic woes is something many used to ignore, but perhaps one of my father’s greatest achievements as a Congressman was to bring this issue to the forefront. As we try to get through a partial government shutdown in which the President refuses to compromise or negotiate monetary policy remains at the heart of our economic crisis. A Federal Reserve completely dedicated to exorbitant printing and spending is a serious problem, and the fact that such policies don’t change from one chairman to the next indicates that it is a systemic one.

The system needs to change. The status quo is unsustainable and quite frankly, unforgivable. Whether it’s Congress, this President and especially the Fed—wanton fiscal recklessness seems to be the permanent economic policy of the United States.

I would like to hope that Yellen might be able to bring some sobriety to the Fed, but her performance to date mostly suggests that we will see more of the same policies. I look forward to an in-depth discussion in debating her nomination, but my ultimate decision will rest on her potential effectiveness in reforming that historically irresponsible institution.

More of the same simply will not do. It cannot do. I encourage every member of Congress to join me in supporting a thorough audit of the Federal Reserve. It is time for more transparency in virtually every part of our government—and the Fed is the most logical place to start.

MORE:  Rana Foroohar: Congress Is Bad for the Economy

137 comments
kclarkusa
kclarkusa

Hey Rand Paul, 

Since you clearly do not understand how it works or why it even exists you should spend some time reading the economic history of the American banking system and subsequent economies from the formation of the country until WW1.

That was period in which America suffered from constant boom and bust and regional conflict and chronic trade imbalance.

The Fed, that you hate because you're stupid & product of inbreeding, is the best fake paradigm of egalitarian existence ever created on this planet, and everyone should take a chill pill and be thankful for that.

kclarkusa
kclarkusa

Rand Paul, we all know why you plan to grill Yellen.  You plan to grill Yellen because you are an inbred dumbazs - like your dad.


Um... Rand ... didn't you ever wonder why your mommy is also your aunt? 

ChristinaJonsson
ChristinaJonsson

Senator Paul. Sit down and shut up for once. The country wants and needs Janet Yellen for Fed Chair. Everything that goes on in this country is not about you.

JeanetteBarrett
JeanetteBarrett

I'd like to know who the allies of big government are, according to Paul.  He doesn't say.  And I suggest he doesn't say because it's just one more vacant accusation.  "Allies of big government..."   Like saying the boogieman.

He's a nut case just like his father.  All Libertarians are anarchists.  There are plenty of online websites dedicated to the Libertarian thought processes, and to me all they promote is the "new racism" meaning, the rich v the poor.  The haves v the have nots.  Close the public schools (yes, let's keep them ignorant), open the markets to unfettered, unregulated trade (you go, Wall Street chieftans), and no taxes.  Good luck with that. 

I'm surprised how many crazy people post on Time's blog.  And I'm not one of them.

JeanetteBarrett
JeanetteBarrett

To:  almetcalf8193

The Sixteenth Amendment (Amendment XVI) to the United States Constitution allows the Congress to levy an income tax without apportioning it among the states or basing it on the United States Census. This amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interest were ruled to be direct taxes in the court case of Pollock v. Farmers' Loan & Trust Co. (1895). The amendment was adopted on February 3, 1913.

I get your angst over the Yellin appointment.  Of all those who follow politics, plenty are opposed to anything the president attempts.  But the Fed needs a chair, and Yellin is qualified.  You can dispute the effectiveness of QE1, 2 and 3, but we have managed not to slip into a debilitating recession, and I believe QE had much to do with it.  We also buoy other nations because we continue to buy, thereby preventing them from being swallowed into the abyss.

There is no need to make over the Fed as it complies with the requirements of the Constitution.  Ron and Rand Paul are classic libertarians, eager to break down government into its smallest components, and while I agree that the government spends too much, particularly on the military and security budgets, on the whole it does far more good than bad.  People like you and the Pauls, if given your way, would see a much different America - a much worsened America - than you seem to feel we have now.  I wish you would stop with your alarmist rantings and ask yourself the question: what exactly has this government done to you personally to destroy your way of life.  Because the answer, I'm sure, will be a simple:  Nothing.  So please stop this madness about destroying government.  The absence of such would open a Pandora's Box the likes of which neither you nor I ever want to see.

compago
compago

DougBlackman - recently I read an article that stated that only 3% of all "money" is printed currency, or paper dollars. The rest, 97%, is digital. The Fed creates money by entering a digital dollar amount in to an accounting program on a computer.. money is digital. Looking forward,  maybe 50 years tops, I'd wager that all world money will be digital less a fraction of a percent. We're certainly not going back to the old gold standard.

Not sure I follow your "..how can anyone in his right mind think making 11,000,000 illegals citizens.."  America IS a nation of immigrants.  Go back a few generations.. your family, mine, everyones - came from somewhere else.  Four generations ago my family was in Norway, Denmark, France and Germany. Yours?

One thing the US needs is tax revenue, and giving citizenship to those seeking it would create millions of taxpayers. I'm not an advocate of higher or more taxes, however, corporations should be taxed higher. Someone making $400k and up already pays many times the dollar amount in taxes than the average earner ($30-50k/ yr) does in several years. 

I agree w Rand on auditing the Fed. 



DougBlackman
DougBlackman

If you or I print money with nothing to back up it's value we would be tried and put in jail. However , our government can print money that's not worth the paper it's printed on , and not even get a slap on the hand. Come on people , 17 Trillion Dollars in debt !!!  No budget submitted since Obama has been in the Whitehouse. Our country is already bankrupt.

With this in mind how can anyone in his right mind think making 11,000,000. illegals citizens !!!  WITH BENEFITS that you and I have worked for all of our working lives. Close our borders with only a maximum of a 3 week visitors visa which includes a monitoring system. We have to secure our country and our rights Now.

APOBEACHAIN
APOBEACHAIN

THE madness must stop- printing money and having its Managers serve as foxes in the hen house

AnnaBennett
AnnaBennett

I hope that Rand Paul gets all the support that he needs from the Republicans behind him.

I hope to see rand Paul & Ted Cruz standing side by side with their wives & family's in 2016.

I know Ted Cruz was not born on American Soil,but neither was the 

Racist American Hating Bigot that the Liberal Democrats voted for in 2008 & 2012.

Sovereign120
Sovereign120

I can't wait to see Rand grill Yellen like his father did to Bernanke.

almetcalf8193
almetcalf8193

The real problem with the Federal Reserve System is that it is a Closed for profit Corporation and is not any part of our government, but like the IRS, which is also a Closed for profit Corporation, both are under Contract to the U.S. Treasury.  One to handle our money and the other, the IRS, to collect the taxes. Both of these entities were put in place by Senator Nelson Aldrich D, RI who was the boss of the Senate back in 1912/13 and W. Wilson was the President.  Who owns both of these Corporation? We do not have that information because they are both Closed Corps and ownership is not published. But reading the history of Nelson Aldrich can give us some clues.  Prior to the formation of the Federal Reserve Aldrich spent almost two years in England with the Rothschild people.  And if the name Nelson Aldrich sounds familiar it is because you have no doubt heard of Nelson Aldrich Rockefeller. The Senator was the maternal Grandfather of him....

Should we audit the Fed or should we Abolish the Fed and make it over according to our Constitution....?  That is the  question.  Should we abolish the IRS and put the Federal Government back where it was in the beginning, getting its funding by import, export and excise taxes....  This method of taxing was to protect the Citizen from the Federal Government and also to keep the Federal Government from growing into a monster like we have today.... Our founding Fathers were not fools, they knew that a Federal Government would grow and destroy our Nation that is exactly why they bound up that Government body and restricted it to only certain functions.  Well today the Federal Government is now running the entire show and is nothing but a pile of thieves and liars. 

When ObamaCare gets its feet in the water we will learn what the KGB of Russia was really like, for our IRS will be the American version of the KGB, count on it .....  The IRS will have every piece of information on every person alive in this Nation and they will use that information for whatever they want to do with the people. There will be no limit to the corruption we will be  faced with by bureaucrats.....  Obama knows exactly what he is doing and he will continue to push against our Constitution on a daily basis.   He does not care about our Laws, he will make his own laws to suit himself.

Our only defense is Article V of the Constitution, read it and understand what it says, for one day we must use this method to take back our Nation..... or we will have a revolution.....

petrabeaty85
petrabeaty85

If you are referring to Senator Rand Paul, and his father (Ron Paul), I can assure you that he is NOT a 'nut,' as you infer. He has been a steady rock in the Congress, to keep 'loons' at bay. Oddegg69, you are definitely one of the 'loons' who need to find out who is honest and true in their responsibilities to the American people. You cast false statements about the Paul family, based upon what you hear from the far -left, the consistently anti-American members of our society.

oddegg69
oddegg69

He is just as goofy as his old man. Nuts don't fall far from the tree.

PatrickJ.Kiger
PatrickJ.Kiger

Sen. Paul is being disingenuous here. What he really wants is to abolish the Fed completely, as his father advocated. It's the boogeyman in the far-right libertarian conspiracy theory alternative reality in which he resides.

tfdrumm
tfdrumm

All to say, because Ron Paul has a problem with the Federal Reserve, he's going to waste our time grand-standing on the nominee.

rsweeney
rsweeney

Let's throw another trillion in the fire and see what happens.


In Zimbabwe, the McDonald's Quarter Pounder meal is $2800.

RosaHines12
RosaHines12

<!--



my Aunty Maria got a 9 month old MINI Cooper Countryman Wagon her latest blog ……..Blue48.ℂℴm  -->

DannyEasterling
DannyEasterling

Its seems there is a profound ignorance among the iiberal/statists on the subject of monetary policy and quantitative easing.  It effectively steals from those in the middle and bottom while giving to the government and the rich.  Time to return to stable currency so the government can't steal by fiat. 

GoOregon
GoOregon

Yahoo, Rand supports the group of economists and business people who embrace Austrian Economic theory and is against Yellen becoming the Fed Chair, this should mean any rational person will support her nomination.  

These Austrian economist supporters have been proven wrong by a dismal economy for two decades in Japan where the government followed a conservative backed economic policy, the Austrian policies in Europe which lead to a deeper recession than necessary, and in the U.S. where fiscal stimulus has proven successful and non-inflationary.

All Rand wants to do is make the Fed part of the political spectrum with politicians like him getting to muck up our financial affairs more than they already have.

kclarkusa
kclarkusa

@DougBlackman - You're NOT a GD Government so if you print money you SHOULD BE arrested


WTF is wrong with you?  You think a GD government that is the People's (plural) should be treated as if it were you or me.  Dang you're dumb

kclarkusa
kclarkusa

@AnnaBennett - ok Anna


Now be a good inbred and go ask your sister why it is you call her "mommy"

JeanetteBarrett
JeanetteBarrett

@AnnaBennett   The only racist American hating bigot in your statement is you, AnnaBennet.  When a man or woman - of any color, but in this case, black - is elected by a majority of all American voters, yet people like you refuse to acknowledge the legitimacy of his or her presidency, it can only because you are a bigot and a racist.   The problem is that you're so undereducated that you either don't know the definition of those words, or that you're too blind to see that they apply to you. 

kclarkusa
kclarkusa

@Sovereign120 - Rand Paul will make a fool of himself, like he always does - and then we will watch as Yellen schools him

kclarkusa
kclarkusa

@almetcalf8193 - I'll answer

HELL NO we should not abolish the IRS or the Fed and HELL NO we should NOT move BACKWARD to where this Govt was in 1776 


For the record, taxation was NOT created to "protect citizens from Govt" and whoever told you that is a GD fool


WTF is wrong with you?!?!

JeanetteBarrett
JeanetteBarrett

@almetcalf8193   And, by the way, the president doesn't make laws.  Congress does.  So that just blows you out of the water on another of your conspiracy theories.

JeanetteBarrett
JeanetteBarrett

@almetcalf8193   I have news for you.  The government already has all the information on us that they could ever hope to have, thanks to the spying arm of the military.  Thank you NSA.  And while I am disappointed, ashamed and angry at our president for spying on American citizens, not to mention the leaders of 35 other countries, I realize that it's not a program he instituted; it began under George Bush.  It should have stopped immediately, but I'm sure there are people in the military - not appointees of Obama - who have pressured the President to keep up and even expand this program, all in the name of "National Security."  I believe they are violating the Constitutional rights of every American, at the very least.  And this spying should be stopped.  Now.

However, this has absolutely nothing to do with Obamacare, which is NOT a threat to our Constitutional freedoms.  The ability to access health care should be available to all.  When insurance companies can pick and choose whom to insure, millions are excluded from this valuable and necessary right.  Yes, we all have a right to affordable health care.  All of our allied civilized neighbors around the world provide this to their citizens, and if I have to hear one more time that we are the wealthiest country in the world, I will scream, because how can that be true, yet it isn't wealthy enough to keep its people healthy?

You, sir, are a nut case.  And you should make an appointment forthwith - assuming you even have health insurance - with a mental health professional.  I'm sure there are meds they can prescribe that will ease your paranoia.

kclarkusa
kclarkusa

@petrabeaty85 - you are wrong


Rand Paul is a nutjob who shows himself to be a fool in Congress.

lockeptrv
lockeptrv

@petrabeaty85 To bad an otherwise correct comment is spoiled by your use of the word "infer" where it should be "imply".

almetcalf8193
almetcalf8193

@PatrickJ.Kiger 

Read a bit of history of where the Fed came from and why it is named the Federal Reserve System. Griffin wrote a great book back in the 90s that actually incorporates some seven books into one and gathers all of the information on the history of the Fed and how it operates in our government. It is a real page turner and it stops in the late 80s.... It is at your local library, if you wish to do some reading, it is called the 'Creature form Jekyl Island'. It covers the League of Nations, the Roaring 20s, the Depression, WWII and the United Nations, the World Bank, the IMF and it follows our economic system right up through the advent of Credit Cards....  Great Book....  To bad Rand Paul has not read it....  He could learn a lot... 

cowboydroid
cowboydroid

@PatrickJ.Kiger Printing a Trillion dollars a year is not so much a theory anymore. Everyone knows it's happening, and everyone knows it's padding the assets of the wealthiest 1%.

Wellstone
Wellstone

@DannyEasterling Anytime someone uses the word " statist"  you know you are dealing with a Mark Levin/Glenn Beck ignoramus and sociopath.

cowboydroid
cowboydroid

@GoOregon Apparently you are completely ignorant as to the result of Keynesian economics. We are living the result right here in the USA, and it has brought nothing but massive public debt, massive money printing, and cyclical boom/bust bubbles and recessions.

It's no surprise that since the Fed was instituted a century ago, wealth has gradually concentrated to the top 1% over the same time span. It correlates almost perfectly with the increase in the money supply.

mr.m.m.abrams
mr.m.m.abrams

@GoOregon You are one delusional individual. Japan has created money out of thin air for 20 years keeping "zombie" banks and corporations alive. They have built useless bridges , roads and everything else they could think of. They are the only country in the world printing more and faster than the USA. They are crazed Keynesians to the core without a trace of common sense (Austrian economics)

DannyEasterling
DannyEasterling

@GoOregon Just like a liberal/statist to misrepresent the austrian school.  It means power back to the people by stable currency.  Only those who wish the government to steal from everyone wants the system now in place. 

SocratesWilde
SocratesWilde

@GoOregon False. Japan is not following, and has never followed, Austrian economic principles. What's your REAL agenda in creating this straw man?

pc3278
pc3278

@kclarkusa @DougBlackman No, but the purchasing power of the dollar is being destroyed.  Fiat currencies always eventually fail.  I will admit, the US dollar has been on a good ride.  However, it will fall.  The activity that has been going on with Bernanke and now to be Yellen will only accelerate the process...which happens towards the end of a fiat currency.  There is more on the line from the power people to keep it pieced together so I am sure they have more tricks up their sleeves.  Most of it depends on a world government to eliminate competition....We are getting dangerously close to that.  When that happens freedom is done.

akitadog01
akitadog01

@OtakuAnthony @DougBlackmanThe way that our money gets printed means that we CAN go bankrupt. Most people don't understand that our money is BORROWED into existence from the Fed, by the US Treasury. This means that the money in circulation IS DEBT. 

Like virtually every loan, debt needs to be paid back with interest. If our money supply only exists as a loan (the principal), then that means that the money to pay the interest DOESN'T EXIST. So we end up having to borrow more money from the Fed to pay off our old loans + interest, and now we've borrowed more (to cover the interest from the previous loan), so know we owe more in interest on a larger principal. The cycle continues and the debt grows until the amount of interest owed is too large for us to service AND pay for everything else. THAT is what we're in for, and it's how we as a country WILL go bankrupt.

Here's a broad overview of how the Fed works, courtesy of the Zeitgeist films:

Part 1: http://youtu.be/NYHOQWBiWn4

Part 2: http://youtu.be/KsNwY806qw8

cowboydroid
cowboydroid

@Wellstone @DannyEasterling Sociopaths are those who only know force in dealing with other human beings. Which perfectly describes those who work for the government.

Buz1
Buz1

@rsweeney @Wellstone that is more because of  Zimbabwe's economic decisions, than our (usa's) economic policies.. let's be real here... we badly need to clean up our own house,,,  & then the rest of the world will follow suite...