Nomination of Ted Cruz Likely Would Reassure Investors

Sen. Ted Cruz (R-TX) (photo credit: Gage Skidmore)

Barron’s compiled daily client memos from Greg Valliere, a Washington-based strategist with Horizon Investments, under the headline “Will Trump and Cruz’s Fed Feud Rattle Markets?” Subhed: “The two leading GOP candidates want to curb the Federal Reserve. Could that shake up stocks?”

Valliere notes that the three living retired Fed chairmen and the current Fed chair proclaimed that the U.S. economy is not in a bubble and not close to a recession, contrary to claims that Trump-on-the-Stump recently made. He also expresses mild consternation that Mr. Trump and Sen. Cruz would favor “an audit of the Fed’s policies,” that they are aligned with Tea Party Republicans who want to curb the New York Fed’s authority, and that they would mandate conditions under which the Fed could raise or lower interest rates.

He goes on to say, “Our bottom line is that a dispute between the Fed and Trump or Cruz could worry the financial markets if either candidate is perceived as having a chance in November. Anti-Fed legislation has been stalled in Congress, largely because it would face a certain veto from Barack Obama.”

Where to begin?

First let’s set one fact straight. Anti- (or, more specifically, Audit) the Fed legislation has twice passed the House, both by large bipartisan margins. It has been stopped by Sen. Bob Corker, a member of the Senate Banking Committee, whose vote would have been essential to committee passage. Senate Banking Chairman Shelby also made clear that he was for an audit of Fed policies rather than the wide-ranging audit Bill. Continue Reading

Trump Says Audit the Fed

It’s only a tweet, and it’s also an excuse to bash Ted Cruz, but for the first time, the GOP front runner Donald Trump has signaled he is jumping on the “audit the Fed” bandwagon:

If the economy is headed south, as some analysts think, the issue could reemerge in the general election, too.

Maggie Gallagher is a senior fellow at the American Principles Project. Continue Reading

Rand Paul Attacks Ted Cruz in Unusual New Video

The Rand Paul Campaign continued to hammer Sen. Ted Cruz for his absence on the Audit the Fed vote, this time in the form of a strange web video.

The video, titled “Audit the Ted” involves a dialogue between two cartoon characters about Paul’s commitment to auditing the Federal Reserve in an attempt to distinguish himself from Cruz:

“Did you hear about audit the Fed?” the male character says in a robotic voice.

“Yes, Rand Paul is trying to stop the out of control Fed,” the female character replied in an equally robotic voice.

“Do others support audit the Fed too?” the first character asks.

“The Ted Cruz said so but did not show up to vote,” replied the female character.

The characters in the cartoon went on to say that Cruz missed the vote because he was too busy campaigning. The Paul Campaign followed up the video with an email appeal to voters, touting his record and directly bashing Cruz.

Stephen Brown works for the American Principles Project. Continue Reading

Cruz Stands by Commitment to Audit the Fed

Sen. Ted Cruz (R-TX) (photo credit: Gage Skidmore)

Sen. Ted Cruz reaffirmed his commitment to auditing the Federal Reserve in an email statement to radio host Glenn Beck late Tuesday night, despite not showing up for the vote earlier that day. Facing backlash from fellow Republicans about his absence, he had this to say:

I strongly support auditing the Fed. Indeed, I was an original co-sponsor of Ron Paul’s Audit the Fed bill. Unfortunately, it was clear early on that yesterday’s vote wasn’t going to succeed (it fell 7 votes short). And, at the same time that the vote was scheduled, I had longstanding commitments to be in New Hampshire — for a Second Amendment rally, and a 1500- person State of the Union town hall. If my vote would have made a difference in it passing, I would have cancelled my campaign events to be there. Because the vote was not going to succeed, I honored my commitments to be with the men and women of New Hampshire. As President, I look forward to signing Audit the Fed legislation into law.

Stephen Brown works for the American Principles Project. Continue Reading

Ron Paul Questions Cruz’s Absence on Audit the Fed Vote

Former Rep. Ron Paul (R-TX) (photo credit: Gage Skidmore)

The Senate failed to pass a measure Tuesday that would have provided for the consideration of legislation to audit the Federal Reserve. Falling seven votes short of the necessary 60, Sen. Rand Paul’s (R-KY) legislation would have mandated an audit and greater transparency in monetary policy-making from the Federal Reserve.

The measure had near-unanimous Republican support, with Sen. Bob Corker (R-TN) casting the only GOP ‘nay’ vote. Prior to the vote, Sen. Paul called on Sen. Elizabeth Warren (D-MA) and Democratic presidential candidate Bernie Sanders (I-VT) to vote in favor of the legislation in an attempt to put their money where their mouths are regarding their alleged commitment to the middle class. Perhaps the most notable dynamic of the vote, however, was the absence of Republican presidential candidate Ted Cruz (R-TX).

Cruz, who just last month went on the offensive against Florida Senator and presidential candidate Marco Rubio’s absentee voting record, was not present for Tuesday’s vote, despite being vocal about auditing the Federal Reserve. His absence has drawn the ire of prominent libertarian voters and even former Congressman and presidential candidate Ron Paul.

In the first time he has gone on the offensive for his son’s presidential campaign, Ron Paul explained the historical significance of Rand’s “Audit the Fed” Bill and wasted no time in noting Cruz’s absence:

My son Rand Paul forced the issue and brought it to the floor. Unfortunately, it failed by just a few votes and Senator Ted Cruz skipped the vote to campaign.

Continue Reading

Newsweek Calls the Fed a “Marquee Issue” in the Presidential Race

Photo credit: Kurtis Garbutt via Flickr (CC BY 2.0)

Newsweek offers this startling headline: “Paul, Sanders Join Forces Against Federal Reserve.

Given Sanders’s surge in the polls as a serious rival to Hillary Clinton, it is very notable that the presidential campaigns’ criticism of the Fed now has turned bipartisan. Newsweek:

Senators Bernie Sanders and Rand Paul are on opposing sides in the presidential race, but the two candidates lined up together Tuesday on a bill to open the Federal Reserve to more scrutiny.

The controversial proposal to “audit the Fed,” as the Paul bill was called, didn’t get the votes to move forward in the Senate. But it showcased a marquee issue that both candidates are emphasizing as they pitch themselves to primary voters.

Newsweek‘s Emily Cadai really nails this issue more perceptively than have any other reporters on the presidential campaign beat:

Sanders’s beef with the Fed has more to do with how its “loose money” policies have benefitted the wealthy, part of a larger critique of rising inequality in the country. The Vermont Independent made a name for himself in the House in the 1990s with his aggressive critique of longtime Fed Chairman Alan Greenspan. Their verbal sparring matches at hearings over the years is something the Sanders campaign now points to with pride as evidence of his commitment to the issue.


Senator Paul claimed the mantle for auditing the Fed when his dad retired from the House in 2012. And he’s garnered support from a growing number of Republicans, including fellow 2016 candidates Senators Marco Rubio and Ted Cruz, who both co-sponsored the bill.

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Sanders Joins Rand Paul in Voting Yes on Audit the Fed

Sen. Bernie Sanders (I-VT) (photo credit: Michael Vadon via Flickr, CC BY-SA 2.0)

In a sign of how potentially potent the issue of the Federal Reserve and monetary policy still is, the insurgent leader of the Democrats in Iowa and New Hampshire, Bernie Sanders, joined with Rand Paul and most Republicans to vote yes on Paul’s Audit the Fed bill, which was nevertheless scuttled by a majority of Democrats:

Senate Democrats blocked a vote Tuesday on legislation from Sen. Rand Paul, R-Ky., that would have required an audit and greater transparency on monetary policy-making from the Federal Reserve, the powerful central banking system that sets interest rates and manages the money supply.

The bill won near-unanimous Republican support and votes from Sen. Tammy Baldwin, D-Wis., and Vermont independent Sen. Bernie Sanders, who is seeking the Democratic presidential nomination, but fell short of the 60 votes needed for consideration.

In a statement, Sanders explained why he parted ways with most Democrats in voting for the bill:

Too much of the Fed’s business is conducted in secret, known only to the bankers on its various boards and committees. In 2010, I inserted an amendment in Dodd-Frank to audit the emergency lending by the Federal Reserve during the financial crisis. As a result of this audit, we learned that an institution that was created to serve all Americans had been hijacked by the very bankers it regulates.

We must expand on that first review of the Fed’s activities. Requiring the Government Accountability Office to conduct a full and independent audit of the Fed each and every year, would be an important step towards making the Federal Reserve a more democratic institution that is responsive to the needs of ordinary Americans rather than the billionaires on Wall Street.

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Sen. Paul’s Audit the Fed Bill Will Be Voted on Today. Paul’s Indictment of the Fed in Time Is Strong

Sen. Rand Paul (R-KY) (photo credit: Gage Skidmore)

Now in Time Magazine, U.S. Sen. Rand Paul yesterday boldly states, in an op-ed, that “The Fed Is Crippling America.” Sen. Paul writes:

On Jan. 12, Congress is scheduled to vote on the “Audit the Fed” legislation (H.R. 24/S. 264), which, if passed, would bring to an end to the Federal Reserve’s unchecked—and even arguably unconstitutional—power in the financial markets and the economy.

According to Ron Paul’s Citizens For Liberty, which is putting a full court press on for Senate passage of Audit the Fed, prospects for passage are uncertain. Sen. Paul’s indictment of the Fed is very certain. Sen. Paul:

The Fed was intended to be an apolitical body, a concession to placate the naysayers. But today, the Fed isn’t even shy about entering the political fray: witness Federal Reserve Chair Janet Yellen’s income inequality speech riddled with Democratic talking points during the 2014 elections.

The Fed is, indeed, a political, oligarchic force, and a key part of what looks and functions like a banking cartel. During the 2007-08 financial crisis, the Fed’s true nature was clear to anyone paying attention. As the Treasury began bailing out the investment banks from the consequences of their profligate risk-taking (and in some cases fraudulent schemes), the Fed moved in tandem, further purchasing the underwater assets of these institutions, as well as actually paying interest to the commercial banks (hemorrhaging from risky loans) for reserves they kept parked at the Fed.

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Cruz Joins Rand in Support of ‘Audit the Fed’ Bill

Sen. Ted Cruz (R-TX) (photo credit: Gage Skidmore)

A bill subjecting the Federal Reserve to a more thorough audit process has finally hit the Senate floor—and Rand Paul and Ted Cruz have jumped all over it.

The Federal Reserve Transparency Act of 2015, reintroduced to the Senate a week ago, would allow the Government Accountability Office (GAO) to audit the agency, therefore creating oversight over the Federal Reserve.

“The Federal Reserve needs to fully open its books so Congress and the American people can see what has been going on.  This is a crucial first step to getting back to a more stable dollar and a healthy economy for the long term,” Cruz said in a written statement.

“Right now, the Fed is adjusting monetary policy according to whims, getting it wrong over and over again, and causing booms and busts.  If you look at the crash of 2008,” he added, “the Fed’s policy destabilizing our money contributed powerfully both to the bubble and the collapse.

Opposition comes from those such as the Federal Reserve Chairwoman Janet Yellen, who believes that “Audit the Fed is a bill that would politicize monetary policy and it would bring short-term political pressures to bear on the Fed.”

Cruz, Rand, and the 20 other senators who have co-sponsored the act, however, are of the mind that “by auditing the Fed, the American people can fully understand the scope and consequences of the agency’s extraordinary monetary policy since 2008—and then know what reforms are needed to improve the Fed’s operations and accountability.”

Anna Pfaff works for the American Principles Project. Continue Reading

Federal Reserve Doesn’t Like Paul’s “Audit the Fed” Bill

In a shocking twist Wednesday night, Federal Reserve Vice-Chair Stanley Fischer decided that the Fed really shouldn’t be audited by Congress. Strangely, Fischer made his impassioned plea for the political immunity of America’s central bank…to Canada.

Speaking at the Canadian embassy in Washington, Fischer criticized the audit the Fed legislation backed most prominently by presidential candidate Sen. Rand Paul, R-Ky.

Paul’s Fed audit, and separate legislation backed by Republicans on the House Financial Services Committee, would “reflect an effort by the Congress to influence the Fed’s policy decisions,” Fischer warned. He did not mention Paul or any other lawmakers by name.

In text prepared for the speech, Fischer said the bills would subject the Fed “to the very sort of political pressure from which experience suggests central banks should be independent.”

Leaving aside the strange choice of venue, Fischer’s assertion that the Federal Reserve should not be accountable to elected representatives of the people displays a level of hubris not seen since his 1999 prediction that the Fed could manage the economy better without even the modest restraint of a monetary rule like gold:

In 1999 Dr. Fischer was interviewed by Arthur J. Rolnick, then Senior Vice President and Director of Research of the Federal Reserve Bank of Minnesota.  The Fed, at that moment, was riding high.  When asked about the gold standard, Dr. Fischer’s answer concluded that “It may be hubris to believe that human beings can do better than depend on the supply of gold, but we certainly should be able to do so, and are doing so now.”

I hoped that after the housing and tech bubbles popped and the disasters of QE one through infinity, Fischer would reconsider his opinion that the Fed needed no accountability. Continue Reading