Rand Paul defends his war on the Fed (Video and article)

[NACBA]

UPDATE: Senator Rand Paul has responded to his critics. After his latest push to audit the Fed, everyone from Fed governors to journalists like Pedro da Costa in the video above have critized his strategy. The Fed is already audited, they said; its balance sheet is open.

Sen. Paul specifically addressed criticism from Former Fed Chairman Donald Kohn, who said: "There is essentially no credit risk on the Fed balance sheet right now."

In a recent interview with Glenn Beck, Sen. Paul responded:

"When they say there’s no credit risk, they created four-and-a-half trillion dollars to buy these bad mortgages. So is there no risk in creating it?...They didn't borrow money from someone. They didn't go out and work and earn it. They just created a computer entry to pay the banks for these assets. And the point I've been making is, who did they buy these things from, and what did they pay for them? .... The Fed has 4.5 trillion dollars' worth of so-called assets. We don't know what they are."

http://finance.yahoo.com/news/rand-paul-vs--the-fed--like-father--like-son-151506540.html

[The Gold Standard]

That distinction is key, per da Costa, because it means the risk ultimately lies with the Treasury Department. Treasury is the body that would be on the hook if those loans get into trouble.

And where does the Treasury get the money to pay off these loans when they get into trouble? Oh, that's right, the Fed. Idiots.

[limequat]

Article was so-so, but the comments are good.

[ClydeCoulter]

The article sucks. At least the one that the link took me to.

[ClydeCoulter]

Does anyone have an account there?

If the Fed is already audited fully, then why are they fighting "Audit the Fed"? Just let it go through, it's nothing that they claim is already being done.

[limequat]

Does anyone have an account there?

If the Fed is already audited fully, then why are they fighting "Audit the Fed"? Just let it go through, it's nothing that they claim is already being done.

Because the audit will politicize the fed, leading to politicians making decisions about monetary policy. At least what they say.

Until we can articulate a clear response to that without shouting, we are losing the PR war.

[acptulsa]

Because the audit will politicize the fed, leading to politicians making decisions about monetary policy. At least what they say.

Until we can articulate a clear response to that without shouting, we are losing the PR war.

The Fed wasn't irredeemably politicized when it's output was declared by federal law to have a monopoly role in the commerce of the nation? If they don't want to be politicized, why aren't they lobbying to have the law that made their product the Official Currency of the Land repealed?

[surf]

"he threw all these kinds of asset-backed securities into the mix, which isn't the case. what the fed owns is mortgage backed bonds issued by or backed by fannie and Freddie mac which means that the risk lies with the treasury..."

not sure he understands agency debt (not guaranteed by treasury), asset backed securities (which mortgage-backs are), or much else.