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"ACCOUNTABILITY IS AUTONOMY"
On February 17, the President of the Federal Reserve Bank of Philadelphia gave a speech to the Philadelphia chapter of the World Affairs Council. Whenever an official gives a speech to a WAC chapter, we can be sure that the official regards this as an important speech. The media do not talk about the World Affairs Council.
There may be an occasional report about a speech at a WAC chapter, but there will be nothing said about the WAC: what it is, who belongs, and what influence it possesses. The WAC has an important social function.
Establishment to communicate the latest perspective to the nation's elite. According to the brief entry on Wikipedia, the WAC has 535,000 members in 89 separate councils in 39 states. There are 175 million adults in the United States.
It is the single most important membership organization for the nation's senior elite
This means the WAC's membership is a little over three-tenths of one percent of the adult population. I call this an elite.
The WAC was founded in 1918, three years before the Council on Foreign Relations was founded. Like the CFR, the WAC officially is concerned with international affairs. Also like the CFR, the WAC deals with domestic issues as well. The President of the Philadelphia FED, Charles Plosser, titled his speech, "The Federal Reserve System: Balancing Independence and Accountability." This sounds boring.
For those who understand the function of the Federal Reserve and its influence, the speech is not boring to read. The target of the first half of the speech was Ron Paul. It was a warning against Ron Paul's bill in the House of Representatives that would authorize the Government Accountability Office to audit the FED.
The House's leadership has kept the bill from coming to the floor for a vote, despite the fact that a majority of the membership has officially supported it, and despite the fact that a majority of the House Financial Services Committee voted for it, 43 to 26, in November 2009.
The FED has consistently opposed this bill. The official explanation is that this would in some way constitute interference with the FED's policy-making. This argument has never been clear. The fact that the General Accountability Office will verify the numbers in no way constitutes interference with FED policy, unless FED policy has been carried on under false numbers.
Nobody at the FED will say what is really at stake: an independent audit of the government's gold holdings, which are officially held for the government by the FED for safekeeping. If the gold is gone, or if there are legal claims against it by foreign central banks as a result of FED swaps, this would constitute fraud on a massive scale. The real power in the FED has always been the Federal Reserve Bank of New York. In all textbook accounts of the years leading up to the Great Depression, the focus is on Benjamin Strong, the President of the New York FED. He set policy, not the Board of Governors.
The bulk of the world's gold holdings are stored in the vault of the New York FED. This includes most of the deliverable gold (99.9% fine) owned by the FED as trustee of the U.S. government's gold. The gold at Ft. Knox (probably coin melt, 90% fine) constitutes a second holding area, said to be 20% of the nation's gold.
No one knows. It has not been audited since the early 1950's, not even by the private accounting firms that audit the FED on an annual rotation basis. The FED demands secrecy. It proclaims that it pursues transparency, but it does not on any issue of substance. Bloomberg News in November 2008 sued the Board of Governors under the Freedom of Information Act to find out which institutions received how much money in the October 2008 bailouts. The Board of Governors refused to comply on this legal basis: this would expose trade secrets of the recipient banks. Even though a district Federal judge in August 2009 ruled that the New York FED must turn over these records, the FED refused to comply. She gave the FED five days to comply. It did nothing for six months.
Anyone who thinks that the Federal courts have operational authority over the Federal Reserve System is ignorant of the last century of American history. The Board of Governors appealed the ruling on January 11, 2010. A ruling will not come down for months. A recent summary of this bizarre story appeared in the New York Times. In a rare form of candor, the writer added this observation, deep down in the bowels of his article:
The Federal Reserve has wrapped itself in secrecy since the turn of the 20th century, when a select group of financiers met at the private Jekyll Island Club off the eastern coast of Georgia and, forgoing last names to preserve their anonymity among the staff, drafted legislation to create a central bank. Its secrecy, of course, persists today, with Ben S. Bernanke, the Federal Reserve chairman, refusing to tell even Congress which banks received government money under the bailout.