Tag: ron paul

Remembering the Reporter Who Sued the Fed

With the Washington Post and other mainstream media outlets publishing endless defenses of “Federal Reserve independence” and proclaiming the Fed as savior of our financial system, it is all to easy to dismiss much of the media as simply defenders of the status quo.  There were many, however, willing to challenge this orthodoxy.  Standing out among them was Mark Pittman, reporter for Bloomberg.  It was Mr. Pittman who sued the Federal Reserve, winning a victory on August 24, as the Manhattan Federal Court allowed the suit to proceed.  Sadly, Mark Pittman passed away on November 25th. 

Mark Pittman and his employer, Bloomberg News, sought details on the Federal Reserve’s numerous special lending facilities.  Which firms were getting loans, and for how much and at what terms?  These were all details the American public were entitled to, yet were denied by the Federal Reserve.  We all remember the Fed’s warnings that if AIG counter-parties were named, there would be market disruptions.  Yet, after much public and Congressional pressure, those firms were named, with no adverse market consequences. 

While Mark Pittman’s efforts will be greatly missed, his suit continues, as does the efforts by Rep. Ron Paul and others in Congress, to bring transparency to the activities of the Federal Reserve.

Is an Independent Fed Better?

Rep. Ron Paul now has a majority of the House of Representatives supporting his bill for an independent audit of the Federal Reserve System. He presented his case at a Cato Policy Forum recently, with vigorous responses from Bert Ely and Gilbert Schwartz.

Now more than 200 economists have signed a petition calling on Congress to “defend the independence of the Federal Reserve System as a foundation of U.S. economic stability.” The petition seems implicitly a rebuttal to Paul’s bill.

Allan Meltzer, a leading monetary scholar and frequent participant in Cato’s annual monetary conferences, declined to sign the petition and explained why: “I wrote them back and said, ‘the Fed has rarely been independent and it strikes me that being independent is very unlikely’” in the current environment.

Cato senior fellow Gerald O’Driscoll adds:

it is not the critics of the Fed who threaten its independence, but the Fed’s own actions.  Its intervention in the economy is unprecedented in size and scope. It is inevitable that those actions would lead to calls for further Congressional oversight and control. 

One of the lessons here is that once you create powerful government agencies, from tax-funded schools to central banks, there are no perfect libertarian rules for how they should be run. The way to protect freedom is to let people make their own decisions in civil society.  Schools have to decide what to teach, offending the values of some parents and taxpayers. The Fed can be independent and unaccountable and undemocratic, or it can be subject to the political whims of elected officials; neither is a very attractive prospect.

Support for Federal Reserve Audit Increasing

Last week Cato hosted a policy forum on “Bringing Transparency to the Federal Reserve,” featuring Congressman Ron Paul. As mentioned in CQ Politics, Rep. Paul’s bill, HR 1207, has been gaining considerable momentum in the House, with currently 244 co-sponsors, ranging from John Boehner to John Conyers Jr. In fact, the Senate companion bill was introduced by Senator Bernie Sanders.

Fed Chairman Ben Bernanke discussed the very topic of Federal Reserve Transparency at Cato’s annual monetary conference in the Fall of 2007.

After praising moves toward greater transparency at the Fed, Bernanke argued that “monetary policy makers are public servants whose decisions affect the life of every citizen; consequently, in a democratic society, they have a responsibility to give the people and their elected representatives a full and compelling rationale for the decisions they make.”

Chairman Bernanke also goes on to argue that “improving the public’s understanding of the central bank’s objectives and policy strategies reduces economic and financial uncertainty and thereby allows businesses and households to make more-informed decisions.” Bernanke’s full remarks can be found in the Spring 2008 issue of the Cato Journal.

Over the last two years, we have seen an almost tripling of the Federal Reserve’s balance sheet to $2.3 trillion, resulting from the bailouts of AIG and Bear Stearns and the creation of 14 new lending programs.

Our recent forum, and Rep. Paul’s bill, bring much needed debate and focus to the issue of Fed’s inner-workings.

Ron Paul at Cato: ‘Audit the Fed’

When Texas Congressman and former Republican presidential candidate Ron Paul speaks about transparency in the Federal Reserve, he sums up his argument with one simple question. Why not?

“Why in the world should this much power be given to a Federal Reserve that has the authority to create $1 trillion secretly?” Ron Paul asked a standing room-only crowd today at the Cato Institute.

Paul was on a panel of speakers, including Gilbert Schwartz, former associate general counsel to the Federal Reserve, to discuss a new bill that will audit the Fed for the first time in its history. This comes at a time when the Fed’s balance sheet has almost tripled, from just over $800 billion before the financial crisis to almost $2.3 trillion now.

“We will only win when the people wake up and realize that transparency is what we need,” said Paul. “When we know exactly what’s happening, there will be monetary reform.”

Watch the rest of Paul’s comments below:

Bierfeldt v. Napolitano Roundup

Back on March 29th, Campaign for Liberty employee Steven Bierfeldt was leaving the Campaign’s regional conference in St. Louis, Missouri. He was carrying $4700 in cash donations and Campaign for Liberty and Ron Paul literature. TSA personnel at the St. Louis airport felt that carrying this amount of cash was “suspicious” and detained him for interrogation. The TSA personnel intended to take Bierfeldt to the local police station for further questioning after he refused to answer the questions associated with their fishing expedition. Luckily, a plainclothes officer arrived and spoke briefly with one of the TSA officers, who told Bierfeldt that he was free to go.

Bierfeldt is now filing suit against Secretary of the Department of Homeland Security Janet Napolitano. The ACLU Blog of Rights has more on the suit, including a digital copy of the complaint. Filing suit to prove that “[c]arrying $4700 in cash poses no conceivable threat to flight safety” is a sign that airport screening is going too far.

Bierfeldt was right to be wary of airport screening while carrying Ron Paul and Campaign for Liberty literature. The Missouri Information Analysis Center, one of 70+ “fusion centers” in the nation, had just released its report on domestic terrorism and the militia movement. Libertarians are expressly targeted as potential domestic terrorists:

Political Paraphernalia: Militia members most commonly associate with 3rd party political groups. It is not uncommon for militia members to display Constitutional Party, Campaign for Liberty, or Libertarian material. These members are usually supporters of former Presidential Candidate: Ron Paul, Chuck Baldwin, and Bob Barr.

Cato recently held a forum on this phenomenon, Fusion Centers: Domestic Spying or Sensible Surveillance? My colleague Tim Lynch hosted, and panelists included Bruce Fein, Constitutional Attorney, The Lichfield Group; Harvey Eisenberg, Chief, National Security Section, Office of United States Attorney, District of Maryland; and Michael German, Policy Counsel, American Civil Liberties Union. Audio and video are available at the link.

Mike German has written extensively on this topic. Read his November 2007 report, What’s Wrong with Fusion Centers and July 2008 update. Mike is a former FBI agent and author of the excellent book, Thinking Like a Terrorist.

You can watch Mr. Bierfeldt giving his side of the story to Judge Andrew Napolitano (no relation to Homeland Secretary Janet Napolitano) on Fox’s Freedom Watch.

Judge Napolitano recently spoke at the Cato book forum, Dred Scott’s Revenge: A Legal History of Race and Freedom in America. Co-panelists included my colleague Jason Kuznicki and Reason’s Damon Root.

Stop the War, Stop the Spending

One of the great things about Ron Paul’s presidential campaign was its cross-ideological appeal. Libertarians, free-market conservatives, and antiwar young people all found his candidacy appealing. As someone who has despaired for years about the split between free-marketers and civil libertarians, who ought to be part of the same broad freedom movement, I looked forward to seeing that combination continue. So here’s a suggestion.

President Obama’s frightening tax-spend-and-take-over-private-businesses policies are re-energizing a free-enterprise constituency that had been depressed and dispirited by the reality of a Republican government giving us bigger, more expensive government for eight years. Cato’s full-page newspaper ads against the “stimulus” bill generated much enthusiasm and media discussion. CNBC’s Rick Santelli and South Carolina governor Mark Sanford have become folk heroes for speaking out against Obama’s economic policies. Now there are anti-tax “tea parties” planned in more than 300 cities. The growing resistance to Obama’s spending agenda is encouraging.

But meanwhile, where’s the antiwar movement? President Obama rose to power on the basis of his early opposition to the Iraq war and his promise to end it. Now he has doubled down on the war in Afghanistan and has promised to keep the war in Iraq going for another 19 months, after which we will have 50,000 American troops in Iraq for as far as the eye can see. If McCain had proposed this sort of minor tweaking of the Bush policy, I think we’d see antiwar rallies in 300 cities. Calling the antiwar movement!

So here’s my suggestion. Some libertarian group – which may or may exist already; the Internet makes it amazingly easy to organize a new group at a moment’s notice – should start a campaign to unite the antitax and antiwar constituencies with a simple message:

Stop the War, Stop the Spending

Or maybe it should be “Stop the Wars, Stop the Spending.” But it would pick up on Ron Paul’s appeal with his TV ads in which he said, “I’m the only presidential candidate who’ll bring our troops home from Iraq immediately and stop wasteful government spending.” Millions of Americans are tired of the war and worried about soaring federal spending. Somebody should give them a rallying point.

New at Cato Unbound

This month’s Cato Unbound continues our tradition of stirring up controversy. The lead essay is by Patri Friedman, who challenges the advocates of liberty as follows:

I deeply yearn to live in an actual free society, not just to imagine a theoretical future utopia or achieve small incremental gains in freedom. For many years, I enthusiastically advocated for liberty under the vague assumption that advocacy would help our cause. However, I recently began trying to create free societies as my full-time job, and this has given me a dramatic perspective shift from my days of armchair philosophizing. My new perspective is that the advocacy approach which many libertarian individuals, groups, and think tanks follow (including me sometimes, sadly) is an utter waste of time.

Argument has refined our principles, and academic research has enlarged our understanding, but they have gotten us no closer to an actual libertarian state. Our debating springs not from calculated strategy, but from an intuitive “folk activism”: an instinct to seek political change through personal interaction, born in our hunter-gatherer days when all politics was personal. In the modern world, however, bad policies are the result of human action, not human design. To change them we must understand how they emerge from human interaction, and then alter the web of incentives that drives behavior. Attempts to directly influence people or ideas without changing incentives, such as the U.S. Libertarian Party, the Ron Paul campaign, and academic research, are thus useless for achieving real-world liberty.

Cato isn’t called out by name, but it easily could have been. Like I said, Cato Unbound tries to be controversial.

What’s needed, Friedman claims, is not more study or advocacy, but a change in the deeper institutional structures that give rise to government policies. Competition among states (and non-state agents!), new technologies, and new intentional communities may just induce old-fashioned governments to behave a whole lot better. By contrast, just recommending somewhat better policies won’t do very much, not if all we do is write about them. (Friedman seems particularly skeptical about blogs. Ahem.)

Is this just a young person’s impatience? Or has Friedman found a serious weakness in libertarian activism? One reply I might make is that Cato scholars have researched quite a few topics that Friedman would probably find worthwhile. It’s important to document these things, and much of this work directly furthers the kind of structural reform that Friedman favors.

Consider the many Cato scholars who have heralded the rise of tax competition – in which states feel increasing pressure to deliver a low-cost product when their taxpayers can move elsewhere. Or consider Bryan Caplan’s The Myth of the Rational Voter, a book whose conclusions inform Friedman’s own project. This book began with a series of discussions among public policy scholars (on a blog no less!). Cato actively promoted Caplan’s work, and we would hope that Friedman would find this an effort well-spent. An upcoming event with author James Tooley shows how the world’s poor are founding their own schools to educate themselves, admirably free from any state interference – a new, private social practice bests an incompetent government! These things matter, I’d say, and they matter even if we accept Friedman’s premises. (We’re also giving a platform to Friedman, both here and at an event on April 7.)

In any case, this a big and very important discussion for the libertarian movement, of which the Cato Institute is only a part. Cato Unbound will have a remarkable series of panelists commenting throughout this week and next, including Jason Sorens, founder of the Free State Project; Peter Thiel, co-founder of PayPal and noted philanthropist; and Brian Doherty, who has researched and written about more forms of libertarian activism than most of us can even recall. Whatever side of the debate you end up taking, be sure to stop by to catch this month’s edition of Cato Unbound.