Rep. Thomas Massie (R-Ky.) recently reintroduced his “Federal Reserve Transparency Act,” which he says was inspired by Ron Paul’s famous “Audit the Fed” measure from 1983. Paul, a former congressman and presidential candidate, created a movement decades ago that pushed for increased oversight of the Fed’s monetary policy decisions.
Massie’s bill is a revised iteration of Paul’s 1983 draft and aims to bring more transparency to one of the country’s largest financial regulators, which employs nearly 23,000 people.
“The bill does a complete audit of the Fed, not the perfunctory audit they do now,” the congressman said in an interview with The Epoch Times. “I don’t feel like we’ve provided adequate oversight over the Federal Reserve.”
Requiring a “full audit” of the Fed is the crux of Massie’s relatively short 600-word bill. Much of the language in the bill is pulled directly from Paul’s original text.
Massie considers Paul a hero and is proud to pick up the torch of his failed bills.
Paul and his son, Sen. Rand Paul (R-Ky.), “inspired me to run for office in my county, and I ended up running for Congress after that,” Massie said. “A lot of the bills I introduced initially are, indeed, bills I ripped off and duplicated [from Rand Paul].”
Auditing the Fed may prove difficult with Sen. Chuck Schumer (D-N.Y.) at the helm of a Democrat-controlled Senate.
Ron Paul came close in 2012 when his bill passed the House 337–98 with overwhelming bipartisan support but was blocked by then-Senate Majority Leader Harry Reid (D-Nev.), who refused to hold a senatorial vote. Massie called out once-supportive House members who changed their tune after being elected to the Senate.
“What’s interesting is that people who’ve gone from the House to the Senate, some of them don’t support the bill anymore,” he said. “Even though it’s just a few hundred yards from our chamber, the water must be different over there.”
The congressman remains optimistic, however, offering several strategies to force a vote, like employing senatorial allies to negotiate on behalf of the bill. Massie suggested that Paul’s son would be on board with assisting.
Rand Paul has introduced his own “Audit the Fed” bill to the Senate several times.
Opposition to the Bill
Critics of a Fed audit claim that the Federal Reserve reveals a great deal about its objectives and decision-making processes. These critics, including acting Fed Chair Jerome Powell, argue that monetary policy should be insulated from political influence. In a speech in January, Powell stressed that the “absence of direct political control” over Fed decisions allows for a commitment to unpopular but “necessary measures.”
Massie rejected the premise that the Federal Reserve has any meaningful degree of independence.
“It’s already a political tool of the White House and Congress,” the congressman said. “It’s ridiculous to say that the Federal Reserve is independent of the Treasury or the banking industry. They have to work with them every day.”
“How do you transfer $5 trillion if you’re not talking to each other every day?” he asked, referring to the pandemic-induced surge in the Fed’s balance sheet in 2020.
Further tarnishing central bank independence is what Massie called the “revolving door” between the Fed, the Treasury, and Wall Street. Retired central bankers often find employment in the federal government or in large corporate banking entities.
Treasury Secretary Janet Yellen served as Federal Reserve chair from 2014 to 2018. Prior to joining the Fed, Powell was a partner at the Carlyle Group, a global private equity firm with over $350 billion in assets under management.
“They don’t go to different people for dinner at night just because their business card changed,” Massie said.
Abolish the Fed?
When asked whether abolition would be preferable to an audit, Massie said, “Ideologically, yes, and I believe the country would be better off.” However, he does not believe Americans are prepared for such a drastic move.
The congressman lamented the fact that the central bank was ever created.
“1913 was the worst year America ever had,” he said. “I’m even comparing it to 2020 with COVID.”
Massie took issue with three major changes made that year: the creation of the Federal Reserve, the imposition of the income tax, and the 17th Amendment—by which senators were no longer chosen by state legislators and instead were voted in by the populace.
“All three of those things converged to create a really bad situation that we’re in right now.”
With regard to the 17th Amendment, the congressman argued that a Senate chosen by legislators would be more financially prudent. Opening the congressional body to the whims of the masses has forced senators to spend recklessly to appease their constituencies, in Massie’s view.
“I would repeal 1913.”