Thursday, March 09, 2006

Let’s “democratize Federal Reserve transparency.”

Bringing Democracy to the Federal Reserve

I came across this article by Ralph Nader -- hopefully this will spark some discussion!

"So far Chairman Bernanke has limited specifics about his push for “greater transparency” to the idea of the Fed stating explicitly the numerical inflation rate it considers to be consistent with the goal of long-term price stability...Let’s hope that Ben Bernanke really is talking about ‘transparency” and “open government”—the kind of transparency that gets the message to all citizens, not just bond traders and the Wall Street insiders. What the Fed does or doesn’t do affects the jobs and economic well being of all Americans—the very future of the nation."

Nader outlines seven ways Bernanke might "bring the Federal Reserve up to speed for 21st century democracy":

1. Regular open press conferences by the Chairman. Alan Greenspan and his predecessors never held press conferences.

2. Adhere to the Budget Act which requires the submission of a formal annual budget subject to review by OMB and the Congress. (Currently the Federal Reserve prepares a limited in house budget and gives it self approval).

3. Require congressional appropriations for all Federal Reserve activities. Currently the Federal Reserve finances whatever it pleases with public funds derived from the buying and selling of government bonds in the market as part of its control of the money supply. Surplus funds are returned to the U. S. Treasury annually.

4. Allow the early release of Minutes of Federal Open Market Committee meetings with exceptions for national security issues.

5. Hold open meetings on all issues not involving monetary policy.

6. Require full audits by the Government Accountability Office (GAO). Currently the Fed refuses to allow GAO to audit anything involving monetary policy as defined by the Fed itself.

7. Support legislation to prohibit commercial bank officials from serving on the boards of the 12 Federal Reserve District Banks.

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