The Washington Post editorial board once again missed the boat in trying to argue the case against an audit of the Fed, getting both the facts and the logic wrong. Starting with the facts, the Post confidently told readers that: "it's uncontroversial to keep Fed decisions about setting interest rates and other traditional functions confidential." Umm, actually no. It's uncontroversial that they should be made available to the public. Since the early 90s the Fed has made the transcripts of its open market committee meetings available to the public with a 5-year lag. They may be some dispute about whether the time lag should be longer or shorter, but there is no big push to reverse the policy of making the transcripts available. In terms of the logic, a major concern of many proponents of the Paul-Grayson bill to audit the Fed is to try to insert democratic control as a check on the financial sector's influence on the Fed. The banks actually appoint most of the members of the open market committee that decides monetary policy. This should be unacceptable in a democracy. While in the Post's pretend land the Fed is an independent actor, making decisions that are best for everyone, in the real world, the Fed is overly responsive to the interests of the financial sector. This is a main motivation behind the support for the Paul-Grayson bill -- a motivation that went completely unmentioned in the Post editorial.
--Dean Baker
