Krugman: Question Fed Policy? Sure. Audit It? No. (Rand Paul's very bad idea.)

[pampango]

Mike Konczal has a very good piece on why Rand Paul’s proposal that the Fed be “audited” is a bad idea. You should read it; I’d just like to offer a complementary take.

Here’s the thing: we know what it means to audit a private bank; it means checking to be sure that it isn’t wasting or taking undue risks with depositors’ money. But the Fed isn’t in the business of investing, except for tactical purposes; it’s there to manage money, not make it.

So what, exactly, is being audited? Suppose the Fed is buying somewhat risky assets, like mortgage-backed securities. Is that a good thing or a bad thing? The answer has almost nothing to do with the question of whether there’s a chance that some of those securities will go bad. It’s all about the effects on the economy.

And you know who the likes of Rand Paul would be turning to to make that assessment — if not outright gold bugs, it would be these people. As Konczal says, the whole audit-the-Fed thing is just an excuse to impose hard-money policies, based in turn on fantasies about currency debasement.

http://krugman.blogs.nytimes.com/2013/11/18/question-fed-policy-sure-audit-it-no/

I missed this Krugman article yesterday. Apologies if it was posted already.

[BlueStreak]

1. In this case, I think "audit" should really mean

Explain in plain English to the American citizens exactly what these banksters do and how they are able to put literally trillions of dollars into their own pockets and the pockets of their friends. It is outrageous the even suggest that Americans should not have this level of transparency. Is that some kind of "You can't handle the truth" argument?