Efforts to shine daylight on the Federal Reserve have failed so far in the Senate. But with Ron Paul's Fed audit bill already well over the number of cosponsors it needs to pass the House, the Fed's defenders seem to be getting worried.
"Amidst the debate over systemic regulation, the independence of U.S. monetary policy is at risk," the letter reads. "We urge Congress and the Executive Branch to reaffirm their support for and defend the independence of the Federal Reserve System as a foundation of U.S. economic stability."
The letter, written by a core group of eight economists that includes former Fed Governor Frederic Mishkin, warns that central bank independence is necessary to control inflation, and worries that the Fed's actions would be overly politicized were it held accountable to Congress or the Executive Branch.
"The democratic legitimacy of the Federal Reserve System is well established by its legal mandate and by the existing appointments process. Frequent communication with the public and testimony before Congress ensure Fed accountability," the economists wrote. "If the Federal Reserve is given new responsibilities every effort must be made to avoid compromising its ability to manage monetary policy as it sees fit."
The letter did little to move Rep. Paul (R-Texas), who's been pushing for broader oversight of the Fed for decades.
"They're doing a bang-up job stabilizing the economy, aren't they? What they call 'independence' we call 'secrecy,'" Paul said. "Throughout its history, the Fed has been a secretive organization that saps the many to benefit the few. 'The many' are now fed up, and expect this kind of protest from the few."