Libertarian economist disagrees with Ron Paul’s plan to audit Fed

August 3, 2009

I just got this email from an economist with strong libertarian leanings who also thinks that Ron Paul’s plan to audit the Fed is a bad, bad idea:

Congress delegating its monetary authority to the Fed is the only feasible approach. Opening the door to giving 535 politicians the authority to influence policy is a recipe for disaster. Sure a price rule would be great, and so would peace everlasting. It ain’t gonna happen. The most you can realistically ask for is to have policy conducted by people who get it right more than wrong. It’s an imperfect resolution, but we live in an imperfect world.

Me: Again, if don’t like monetary policy under Bernanke, would you like it any better under Pelosi and Reid? If you want monetary policy linked to market indicators, fine. But make that case directly. The Fed audit would only spook the markets, and with good reason.  Unless, of course, you expect a Fed audit to reveal a worldwide conspiracy like this one from the film I Married an Axe Murderer:

Stuart Mackenzie: Well, it’s a well known fact, Sonny Jim, that there’s a secret society of the five wealthiest people in the world, known as The Pentavirate, who run everything in the world, including the newspapers, and meet tri-annually at a secret country mansion in Colorado, known as The Meadows.
Tony Giardino: So who’s in this Pentavirate?
Stuart Mackenzie: The Queen, The Vatican, The Gettys, The Rothschilds, *and* Colonel Sanders before he went t-ts up. Oh, I hated the Colonel with is wee *beady* eyes, and that smug look on his face. “Oh, you’re gonna buy my chicken! Ohhhhh!”
Charlie Mackenzie: Dad, how can you hate “The Colonel”?
Stuart Mackenzie: Because he puts an addictive chemical in his chicken that makes ya crave it fortnightly, smart-ss!


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You suggest that an GAO audit of the Fed is akin to the Congress taking control of monetary policy, which is not the case.

You also suggest that the options are to have monetary policy set by government enforced monopoly, embodied either by the Fed (Bernanke) or by the elected representatives themselves (Pelosi and Reid).

Given those two choices, I would prefer monetary policy set by elected representatives, but there is another option: Get government out of monetary policy completely. Let the free market determine interest rates and provide competing currencies.

Finally, you state that the Fed audit would spook the market with good reason unless a worldwide conspiracy is revealed. Actually, I think that a worldwide conspiracy would be the most spooky thing that could be revealed.

I am glad to see the tables being turned on secretive government. As we the people were reminded repeatedly by the government passing the Patriot Act to listen to our phone calls, “You have nothing to fear unless you have something to hide.”

Posted by yoikes | Report as abusive

I was interested in reading this article, hoping that it would be a full in depth argument against Ron Pauls Bill. Alas, it seems to be nothing. Not even a ligitimate counter arguement. Just some vauge statements. I can only conclude that this is blantant media bias. Reuters Interweb FAIL

Posted by bob barker | Report as abusive

You and this “libertarian” economist you fail to name both miss the point. The goal is not to have congress issue fiat money instead of the Fed. It is to have no institution with the power to disrupt the economy by issuing fiat money. Let the market decide monetary policy. Let the supply of savings and the demand for loans determine the interest rate. And let us stop making investors who have accumulated savings the honest way compete with an institution that has the power to print free money.

Posted by Jonathan | Report as abusive

You don’t name this “libertarian” economist.
You don’t actually explain WHY this “libertarian economist” thinks auditing the Fed is a bad idea.
I find it incredible that any “libertarian” economist would say, “Congress delegating its monetary authority to the Fed is the only feasible approach.”
Then you quote some meaningless giberish about the “Pentavirate.”
In other words, you have zero credibility, and seemingly use the term “libertarian” carelessly.

Posted by Geno Canto del Halcon | Report as abusive

This is the second article from James Pethokoukis today with no substance other than disinformation. It’s nice to know that we finally have enough clout to bring the shills out of the woodwork.

Posted by Thom D. | Report as abusive

Reuters owned by Rothchilds. Fed owned by Rothchilds. You connect the dots…

Btw – Who is this mystery “Libertarian” economist? Lolz

Posted by Brian | Report as abusive

So this “one” libertarian economist, it seems abundantly clear he is not of the Austrian school of economics as is Ron Paul, or Peter Schiff, you know the guys who predicted the mess we are now in 3-4 years ago?

So who the hell is he?

Posted by Alfred Montestruc | Report as abusive

Brian, I agree with you completely, or should I say I completely agree with myself. I’ll take the fact that you took my line from an earlier post as a compliment.

August 3rd, 2009
1:30 pm GMT
[permalink] Reuters owned by Rothchilds, Fed owned by Rothchilds, enough said.

– Posted by Brad

Posted by Brad | Report as abusive

Gene Epstein with Barron’s also agree strongly with Paul’s bill. You can be sure that Larry Kudlow of CNBC would also support it. Apart from the overall majority (if not all) of libertarian economists, there is also a bipartisan group of politicians AND economists who support this bill.
James, you may as well give it up, the arguments against the Fed AND its political involvement is overwhelming.
The Fed initiated the TARP bailouts, which was orgininally rejected by most GOP congressmen and then by the half of them. You already have Fed political interference there and it is unconstitutional! And is Andrea Mitchell, political journalist with MSNBS and wife of ex-Fed chairman Greenspan not a political journalist as well? One can say conflict of interest…
or are you going to blame the crisis for the “savings glut” of the Asian investors a la Greenspan and Bernanke”? Have we not already seen massive dislocations and upset in the financial market, due to uncertainty. An audit will clear things up and if the Fed has nothing to hide, it will bring order and stability to the market. Only if the Fed has something to hide, may it affect the market, but the markets are in any case so manipulated by the Fed and its cronies.

Posted by Stefan | Report as abusive

Give me control of a nation’s money and I care not who makes the laws – Mayer Amschel Rothschild

Posted by Rockefeller | Report as abusive

Brad – Please do take that as a compliment, and my apologies for the lack of prior acknowledgement of the source. Imitation is flattery. :)

Posted by Brian | Report as abusive

I am going with Ron Paul on this one especially in light of recent economic events most of which have been caused by Fed policies. I think Paul has won me over to the idea of market set interest rates as well as the idea of money backed by something. I think Paul’s ideas represent a path towards fiscal solvency, i.e. slow, steady growth without the boom bust cycles that cause so much resource dislocation. Think of all the rotting houses and pools that have turned to swamps. Cash for clunkers is another dumb stimulus ideas. Right now the nation is totally bankrupt from stimulus and low interest rates. We the people want our country to be on firm economic footing, at least those people associated with Paul’s ideas.

Posted by Dave | Report as abusive

It’s way past time – AUDIT THE FED

Posted by louella | Report as abusive

Jesus christ what the fu*k is up with this guy!!! James you little FED cronie scumbag, eat shit

Posted by Max Power | Report as abusive

I must say this article confuses me a bit. The only name mentioned in the article that could be described as a Libertarian Economist was the name of Ron Paul.

Strange. I guess everyone gets to say they are a Libertarian without realizing what such a word means.

From John Locke and Adam Smith to Murry Rothbard and Ludwig Von Mises, there are a lot of people rolling in their graves these days.

Posted by Brock | Report as abusive

As a long-time libertarian I find the abuse heeped by the Rondroids here very embarrassing. An audit of the Fed won’t turn up much of anything since it doesn’t operate the way Ron Paul and his Bircher friends think it does. The goal here is not end fiat money, as one writer claimed. While that would be good, the goal is to show how private owners are making millions from the Fed. That just isn’t happening. Ron Paul is not an “Austrian economist”. He is not an economist at all. Even 99% of his “articles” and books are written by others. An economist friend of mine who worked for Paul (and wrote material for Paul) says Paul has read a lot of economics but doesn’t really understand much beyond the basic principles, which is why he does so badly the moment a question becomes probing about economics.

The reality is that most Austrian economists in the US are not associated with Paul and his good buddy Lew Rockwell (who runs the misnamed Mises Institute). And most have not signed on to the this bill. Rockwell, the real author of the racist newsletters that got Paul into so much hot water, is another Bircher type, who buys into conspiracy theories that ARE NOT part of libertarianism. Paul’s social conservativism is not part of it either. Neither is Hoppe’s racism or the rest of the rot that comes out of Auburn.

Posted by HLM | Report as abusive


besides abortion what else would you consider social conservatism, because that’s about the only thin I see that could even be labeled that way.

Posted by Brock | Report as abusive

We don’t want unelected, economically illiterate fools like Ben Bernanke controlling our currency. The Constitution of the United States of America gives Congress the power to coin currency backed by gold and silver.

The Federal Reserve was responsible for this economic crisis and the idiots who caused the problem should not be involved in the coinage of our currency.

Posted by ThomasJefferson | Report as abusive

James, could you specifically point out the section in Bill HR1207 that would support the claims you make about polticians being able to take over monetary policy decisions?

Posted by Jeff | Report as abusive

James must be getting some of that nice Fed, printed money, this lackeys on a smear campaign with his blog.

Posted by WALLACE | Report as abusive


I guess you are correct! Austrian Economists love the FED. Libertarians don’t think that government has any tendency to collect more power, and it would be inappropriate to label any government plans and actions evidence of a conspiracy to restrict our liberties or steal our money. This is all just Bircher stuff.

We don’t need libertarianism, since all the R’s, D’s, and bureaucrats are doing a great job managing our freedom for us!

I guess I’d rather have a Doctor running the economy, Mr. Economist. Sorry if you’re embarrassed by the horrible, uneducated Ron Paul. Do you live/work inside the D.C. Beltway?

Posted by David Sullivan | Report as abusive

FACT- Reuters was purchased by the Rothschilds in the 1890’s.

FACT- Those that control the Federal Reserve, also control the MSM. If you do a news alert search of the New York Times for HR-1207, You will discover that it has never been mentioned, not even once.

FACT- If you search the NYT for Ron Paul, you will discover that they have not mentioned his name in print for any reason, in more than 200 days.

This is just an example of the tip of the iceberg.

The MSM has been corrupted.

The MSM is complicit in the implementation of the NWO agenda.

Info Wars, I know & I am telling everyone !

Posted by Terry Conspiracy | Report as abusive

Since when are Libertarians Statists? This article is a joke. This isn’t about a gold standard. This is just a call for a full government audit. We are talking about trillions of dollars here. Imagine if you had the power to print money without oversite. We are asking for even more trouble if we don’t exert oversite and accoutability to an entity of such power as the Fed. Call your Congressman/Senator right now if you’ve enjoyed this stupid article! (202) 225-3121

Posted by Aaron | Report as abusive

For the record, your “libertarian leaning” economist friend is no libertarian. Any one truly in favor of liberty does not believe in central economic planning. It is, in fact, the antithesis of what libertarians believe. I’d very much like to hear his positions on other things, but if he belives the FED is the best way to “manage” the economy and then turns around and stands by other libertarian principles, I would say he is a politician, not an economist.

Posted by AJ | Report as abusive

What’s his name? How credible is it in your world to say “a libertarian economist”? Are your bosses in on this as well?

Posted by BD | Report as abusive

Come on James, I know you want to join our side! Or are you enjoying all the attention you are getting from this. Albeit negative, but it’s attention right?

Posted by Jeremy | Report as abusive

“The Congress shall have the Power…to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.”

I don’t see where Congress gets the power to set interest rates here. Nor where it can delegate that power to anyone else. Ron Paul is absolutely right: the market sets interest rates. Banking starts with the depositor; it is unfair to print money to compete with that depositor. And the economy is not about the borrower and what his rights are. It is the risk on the part of the lender that stimulates an economy.

Posted by BobP | Report as abusive

YOU AGAIN. Your writing is a joke. And you are in direct opposition to smart people. Your comment section is more in line with America than you. Not to mention more intelligent, by a long shot.

Posted by GabeNTX | Report as abusive

Dude, a libertarian leaning is not a Libertarian, you putz. Either his is a Libertarian or not a libertarian.If it aint Walter Williams,i dont believe them.

Posted by LarryT | Report as abusive

[…] Pethokoukis, a Reuters columnist who wrote a hit piece on Ron Paul’s bill to audit the Fed, has taken so much heat on that column that he’s […]

Posted by Seeking Economists in Favor of Auditing the Fed « Blog | Report as abusive

James Pethokoukis, you g*ddamned shill…who are you trying to protect???


Posted by Nunya Bizness | Report as abusive

Here is yet another pitiful example of A Voice of The State, an apologist who neither provides adequate or accurate information on the subject. When considering the fact that since the inception of the Federal Reserve, created to bring stability to the Dollar and the economy, the Dollar has been effectively and intentionally debased by 95%, the economy has gone through numerous boom/bust cycles and the people of this country are seeing the value of their labor diminished by the FED’s monetary policies.

Imagine, for a moment, if someone took 95 cents from you for each dollar in wages you earned…that’s what has happened in this country. Today it takes over$22,000.00 to purchase what $1,000.00 purchased in 1913. That’s officially sanctioned robbery folks and that’s just the beginning of the crimes of this illegitimate government.

People are not naturally inclined toward revolution, but given enough abuses by government revolution will come and it will come to this country if this government is not completely reformed and the politicians, who work for the People, continue to ignore the Will of The People.

Posted by Republicae | Report as abusive

So, James, you graduated from Northwestern with a double major in Soviet politics and American history, then got a degree in journalism. Sounds to me like you don’t know diddly squat about economics yourself.

Ron Paul has studied economics for 30 to 40 years. I would think he understands enough to be able to make wise policy prescriptions. Or do you think Barney Frank and Chris Dodd are better qualified?

Posted by John Windsor | Report as abusive

“Opening the door to giving 535 politicians the authority to influence policy is a recipe for disaster.”

This statement is true for every “policy” that the State imposes onto an otherwise free-society. So are you making a principled stand for anarchy? Or rather for a monarchy/dictatorship where all “policy” is made by powerful elite? Of course the answer is too obvious for an unprincipled suck-up.

Posted by M ark Davis | Report as abusive

This has got to be the worst retort ever. I’m not sure what kind of an economist wrote you, but they certainly aren’t avid readers.

An Audit simply gives authority to review decisions by the Federal Reserve. The American people are on the hook for 23 Trillion Dollars and counting. Apparently you and this economist don’t think they should know what their hard earned tax dollars are paying for. I can think of a lot words to describe that kind of mentality, none of them being commonsensical.

Secondly this disdain for the Congressional Authority delegated by The Constitution is risible. Somehow people who think less of this power to Congress presuppose they are better informed than the architects of The Constitution. I can say with absolute certitude people will not remember either of you gentlemen centuries for now. Your intellect will never span the sands of time.

Posted by Lee Cruz | Report as abusive

The best solution would be a completely gold covered currency, without the possibility to create money out of thin air and new bubbles continously.
The second best solution is a state owned central bank lke EZB which is not owned by JP Morgan etc.
And the worst solution is the FED; completely run by GS & JPM it’s only function is to raise M3 more than 10% pa, take billons of junk assets from the investment banks and lead the way into hyperinflation. It’s the work of Greenspan and Bernanke that the gold reserves of the US have been sold completely (“loan” to JPM which sold it into the market; have a look into official export statistics – your gold is now in private hands). I’m from Europe so normally I shouldn’t care about your FED – but unfortunately the manipulation of the currencies, commodities and share markets through GS & JPM with the friendly support of the FED and with the pressure from US on EU Central banks to collaborate with them affects us also.
If FED proceeds uncontrolled, the next big bailout the world has to stem will be the bailout of the USA.

Posted by Andreas | Report as abusive 2E

I strongly believe we need a federal reserve audit. The recent stock market action suggests to me the federal reserve is intervening in a free and open market. I believe the biggest beneficiary of this TRILLION DOLLAR stock market move in a couple of weeks was Goldman Sachs. Goldman Sachs sells derivatives in our equity markets its apparent that Goldman Sachs Has Total Control Over our stock market using the unlimited capital available from the federal reserve. I believe Goldman Sachs doesn’t have the best interest of our markets. They are misusing the federal reserve to manipulate the stock market and making huge 100 BILLION DOLLAR profits THIS IS ILLEGAL people expect our government to obey the laws just like citizen. Also this manipulation without regards for cost continues to put our government and the people more and more in debt



Imagine controlling the Federal Reserve portfolio of commodities and equities. TO DO WITH AS YOU PLEASE!!!!!!!

Posted by mike | Report as abusive

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