Fed Chair Janet Yellen is, as nobody in the world is surprised to hear, strongly opposed to the “Audit the Fed” bill that is gaining momentum in Congress. After all, the WSJ reports her saying, “Academic studies establish beyond a shadow of a doubt that independent central banks perform better.” Better than what? That’s the
million trillion dollar question. Certainly not better than the performance of free markets in money and banking.
But of course, that is not what she is trying to compare things to. No, in the realm of statism and “academic studies” the dichotomy is always between government-plan A and government-plan B. Everything else is simply not worthy of consideration; it is not to be taken “seriously.”
Government-plan A is to have an independent central bank; and by independent it is meant, policy according to the dictates of the Central Bank and its banking partners. Government-plan B is to have Congress make the centrally planned decisions on behalf of the whole economy. In short, if there are two types of socialism, Government plan A is fascistic and Government plan B is communistic. Who is to decide the policies for the centrally planned economy? This is the so-called great debate.
Now, the Audit the Fed bill actually gives no money and banking policy power to Congress, much to Yellen’s misleading comments. All it does, and it really is not enough at all toward ending the problematic central bank in the United States, is provide for an audit so that a Congressional committee can have some clue as to what in the world the Fed is doing, where it is sending its newly created money, and on what basis it is making its decisions.
Of course, all of this is a false-dichotomy that takes away from the real problem: central banking. There should be no central bank that needs to either be “politicized” by Congress or remain independent. Money and banking should exist on the market like every other good and service, subject to the will of the consumer and moved along by the interaction of supply and demand.