For voters who have become increasingly disillusioned with their government in an era of record debt levels, never-ending bailouts and government takeovers, high unemployment, and a weak economy, the election of November 2nd, 2010 is seen by many as the last recourse to changing the nation’s unsustainable trajectory. In a representative government, a big shift of power should translate into a big change in the policies being pursued by that government.
Here is some cold water on that antiquated notion: The election will have no impact on the decisions made at the Federal Reserve’s meeting on November 3rd, or at any meeting of central bankers thereafter. There, the independent Fed is expected to announce that it is once again firing up the printing presses to buy anywhere from $250 billion to $1.25 trillion of U.S. treasuries. It already holds $834 billion of U.S. debt.
This comes amid widespread public opposition to both the rapidly escalating $13.6 trillion national debt and the paper-happy Fed. Some 75 percent of Americans think the Fed should be audited, and 61 percent believe the government has too much money and does not spend it wisely, according to Rasmussen Reports. Another 83 percent believe it is likely the U.S. will be forced to make spending cuts in the next ten years.
Nonetheless, the Obama Administration proposes adding an average of $1.06 trillion to the national debt every year for the next ten years, bringing it to $25.777 trillion by 2020. And, apparently, the Fed has every intention of financing this spending binge with a fresh stock of ink and paper.
This latest expansion of the debt follows without pause annual increases of the national debt every year for the past 52 years, dating back to 1958. Regardless of the party in power, the debt has gone up like clockwork.
So, why is there so little correlation between the governed, who demand fiscal responsibility, and the government, which couldn’t balance a piece of paper on a flat table?
“One of the results of the Federal Reserve Act of 1913 was to immediately insulate politicians from the consequences of their own actions,” says Americans for Limited Government President Bill Wilson, referring to the legislation that created the nation’s central bank.
Wilson called for “a transparent audit of the Federal Reserve, and comprehensive hearings into its various bailout programs.” Wilson said “hundreds of billions of dollars right now are just up for grabs by financial institutions and other entities.”
Currently, the Fed lends money at a near-zero percent interest rate. During the financial crisis, it lent out over $2 trillion, but refuses to disclose who the recipients were. On top of that, it recently wrapped up its purchases of $1.25 trillion of mortgage-backed securities and another $150 billion of Fannie and Freddie debt. Wilson called it “picking winners and losers with printed money.”
“All of these purchases and asset expansions, which resulted in the nation’s money supply more than doubling since the financial crisis began in 2007, occurred without any vote in Congress,” Wilson noted. “Meanwhile, the American people’s purchasing power has been eroded as families have experienced price shock after price shock, in housing, education, energy, you name it. Price stability is a thing of the past.”
Wilson continued, “By ceding the role of monetary policy to unelected, faceless bureaucrats, it was, from the very beginning, an abdication of Congress’ constitutional responsibility over the U.S. dollar.” According to Article I, Section 8 of the Constitution, Congress is supposed to have the power “To coin Money, regulate the Value thereof, and of foreign Coin.”
“The only thing the Fed’s independence has brought about is the destruction of the dollar,” Wilson added.
Wilson explained, “What was once Congress’ responsibility, monetary policy, which gave the people a voice in the decisions made, has been outsourced to banks.” He noted that monetary policy once was a critical issue in national elections. The nation started out with a gold and silver standard before switching to simply gold in 1873. In 1896, the election between William McKinley and William Jennings Bryan saw the debate over the singular gold standard versus a gold and silver standard front and center.
“In those days, the public was actively engaged in the policy debate over money. The entire composition of Congress could shift based on that debate. But no longer. Congress, despite being the constitutional wielder of monetary policy, has absolutely no say in it now,” Wilson said.
Wilson noted congressional abdications extended into other areas of policy as well. “The EPA has taken it upon itself to regulate carbon without any congressional authorization. The FDIC has been delegated the authority of bailing out financial institutions under the Dodd-Frank bill. The Treasury can give Fannie Mae and Freddie Mac as much funding as it wants through the end of 2012. It will be up to the Department of Health and Human Services to ration Medicaid and Medicare under ObamaCare. It goes on and on.”
Which, Wilson said, is exactly what voters are rejecting in 2010. “If this election has a theme, it’s that this sort of abdication of responsibility by Congress to all-powerful bureaucrats ends now.”
Or else, Wilson warned, the next Congress will be held accountable for whatever mistakes the Fed, and the rest of the bureaucracy, makes now. “The insulation has pretty much worn off on voters, who now are desperate to rein in the unaccountable entities of Big Government. Now, the American people’s only hope is that a cadre of new members will come into power through the election who will return to the Constitution and save the dollar.”
“Congress, under the constitutional limits of power, is supposed to be the primary policy maker in our representative system,” Wilson explained, adding, “That includes monetary policy.”
Wilson explained, “Right now, if the Fed messes up the dollar — which is what they’re doing now — the American people can’t get rid of them.”
Which may very well be what is bringing down the economy now, and sweeping one party out of power. Politicians would do well to take note: If they cannot rein in the unaccountable forces of government, voters will throw them out on their tails and find somebody who will.
Robert Romano is the Senior Editor of Americans for Limited Government (ALG) News Bureau.
