Wikinvest Wire

"Audit us, and we'll raise your interest rates"

Thursday, July 16, 2009

Judge Napolitano talks to Ron Paul about Fed Vice Chairman Donal Kohn's recent comment that auditing the Fed, as required in HR 1207: Federal Reserve Transparency Act of 2009, will result in much higher interest rates (spotted over at The Daily Bail).

Paul: "I think one thing an audit might reveal would be all the communication between the Fed and Goldman Sachs. Just think of what kind of communications we might find there ... what kind of promises were made and how Goldman Sachs came out so 'golden'."


michael.dufel said...

Clearly this guy doesn't understand how the Federal Reserve works, or perhaps he doesn't care.

Interest rates on U.S. debt is not determined by the federal reserve, but rather by foreign and domestic demand. I fail to see how central bank independence is a major factor to debt purchasers.

In my opinion, this video wasn't worth posting as it's just more disinformation.

Tim said...

You're certainly entitled to your opinion. I think these sort of things are interesting because they represent a growing portion of the population that doesn't really understand what's going on, but know that there's something terribly wrong.

Anonymous said...

What do you mean "interest rates are not determined by the Federal Reserve"?

You really must be kidding. Wanna guess why short term interest rates are near 0%? Yep, the reason is the Federal Reserve. Don't think so? Then imagine the Federal Reserve is gone tomorrow. Where do you think short term interest rates would be then?

Now look at long term rates. Ever heard of monetization? The Fed's been TRYING to manipulate long term rates by printing money to buy long term treasury bonds. They also provide dollars to foreign central banks that then step in to buy bonds at auctions.

michael.dufel said...
This comment has been removed by the author.
michael.dufel said...

anonymous, why would you misquote me when my original quote is just a few lines further up and plain to see? My statement was factually correct as written.

You're claim that the Federal Reserve is directly providing money for foreign central banks for the purpose of purchasing our bonds is interesting. Considering that such information would not be public knowledge, is that just speculation or do you have some sort of proof? Yes, I've heard of monetization, and the only way monetization could equal control over the rates would be if the only purchaser was ... the Fed. This is not the case, so this means they have only a limited degree of influence, hardly what I would call control. If you look at the charts of U.S. Treasury prices, you can see where the U.S. Treasury stepped in. The dip in rates didn't last for long so it's really hard to make the claim that the Feds intervention was all that successful. It was interesting when the dip happened, as the refinance applications jumped. The problem was that people didn't act quick enough and by the time the mortgage lenders got their advertisements out and people started to respond, the rates had jumped again. Ooops.

Anonymous said...

Dufel is a troll. Only long-term rates are beyond the reach of the fed (except as the unintended consequences of short-term policies). Minutes of the FOMC are available for the doubtaz:

michael.dufel said...


you confuse correlation with causation, resort to ad hominem attacks, and cowardly remain anonymous. And I'm the troll? When I was in high school, the going phrase was "He who smelt it dealt it." Some things never change.

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