Freddy, fears about what Congress might do to the money supply if the Fed is audited are understandable but misplaced. Contra Bartlett, you’re more likely to get Zimbabwe-style hyperinflation under the Fed than with Congress dictating the money supply — politicians, for all they are in bed with Wall Street, are still more vulnerable to public discontent than the Federal Reserve is. I don’t see the public clamoring for Congress to inflate the currency. Indeed, there would be a backlash if inflation occurred under congressional oversight, the kind of backlash that throws a Jerry Ford or Jimmy Carter out of office. The difference is, Congress rather than the executive would feel the brunt of the backlash, and would have a more direct means than the president for taming inflation if Congress chose to do so. Congressmen can’t be trusted to do the right thing, but they can usually be trusted to do what’s in their own interests. Political survival being their paramount interest.
Debate over monetary policy, like debate over foreign policy and abortion, properly belongs in the legislature. That’s the design of the Republic, and it’s in the legislature where you do have a panoply of voices, some of whom are anti-war, some of whom are anti-inflation. The foreign-policy elite, by contrast, includes no one who is antiwar, while the banking elite, which includes the Fed, includes hardly any voices skeptical of inflation and the expansion of monetary base. The bankers have shown pretty well conclusively over the past few years just how irresponsible — how literally bankrupt — they are. There needs to be at least some awareness raised about what’s going on in our financial institutions, even if the opponents of money-pumping don’t win. Taking the whole fight out of the shadows of the Fed and into the (relative) daylight of Congress is the first step. Then we’ll see if there’s any elected constituency for sound money, and if not whether there’s any popular demand for sound money that’s willing to shake up the legislature.
I put a great deal more confidence in the political system devised by the Framers, however debauched it may now be, than in the banking system devised by Rockefeller, Morgan, and Woodrow Wilson.