<blockquote>"The main argument seems to be that Congressional oversight over the Fed is government interference in the free market. This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time. The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money – the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate, Constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.
Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks who, instead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930’s. It has also inflated away the value of our currency by over 96 percent since its inception. It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problems it was meant to solve.
Detractors have also argued that the Fed must remain immune from the political process, and that that more congressional oversight would distort their very important decisions. On the contrary, the Federal Reserve is already heavily entrenched in the political process, as the Fed chairman is a political appointee. High level officials routinely make the rounds between positions at the Fed, member banks, Treasury and back again, taking care of friends and each other along the way.
As far as the foolishness of placing complex monetary policy decisions in the hands of politicians – I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again."
- Ron Paul, <a href="[
www.house.gov] the Fed, Then End It!</a> May 18, 2009</blockquote>
<blockquote>"Mr. Volcker let the market dictate the interest rate, allowing the prime rate to go as high as 21.5 percent..."
- Allan H. Meltzer,
Inflation Nation, May 3, 2009</blockquote>
<blockquote>"In
The New Yorker again the next year, he reminisced about hearing of Ludwig von Mises at Harvard in the 1930s. But of course his professors and fellow students scoffed at Mises's claim that socialism could not work. It seemed at the time, he wrote, that it was capitalism that was failing. Then, a mere 50 years later, he acknowledged: "It turns out, of course, that Mises was right" about the impossibility of socialism. I particularly like the "of course." Fifty years it took him to grasp the truth of what Mises wrote in 1920, and he blithely tossed off his newfound wisdom as "of course."
...
May the socialists in Cambridge and Cambridge, and the people struggling to create decent societies around the world, especially in Africa, the Arab world, and the ex-Communist countries take the frank (albeit delayed) honesty of Robert Heilbroner to heart."
- David Boaz,
The Man Who Told the Truth _
Robert Heilbroner fessed up to the failure of socialism, January 21, 2005</blockquote>