"In 2011, Congressman Ron Paul will introduce a bill in the House of Representatives calling for an audit of the gold held by the Federal Reserve System on behalf of the United States government. If he can successfully promote this bill by the phrase, “Show us the gold!” he will inflict enormous damage on the American Establishment. This damage could conceivably spread to the entire international Establishment, which rests on the sovereignty of the central banks over their domestic governments.
Most of those few Americans who have ever heard of the Federal Reserve System operate under the illusion that the government is sovereign over the FED. On paper, this is true. Operationally, it isn’t. We know this, because no government agency audits the FED.
The Federal Reserve System has never been audited by an agency of the United States government. The FED hires private auditing firms, rotating them year by year, which undermines continuity, making it more difficult for them to follow the money. The FED limits those firms with respect to what they are allowed to audit. The FED then submits these internally audited facts to the United States Treasury.
Each year, the FED pays the Treasury any excess money beyond the FED’s operations expenses, if the money came from interest earned from its holdings of U.S. government debt. This has been the law since the early 1940s. In the good old days, the FED kept all of the money that it earned as interest payments from the Treasury. It paid nothing to the Treasury. That was a sweet deal.
When Congressman Paul persuaded the House of Representatives in 2009 to vote in favor of a general audit of the FED by the Federal government, the bill was blocked in committee. His original version of the audit bill never came to a final vote in the House as part of the banking reform legislation. The Senate never considered the amendment.
So, it is obvious who is in charge. Congress pretends that it is in charge, but in fact the Federal Reserve System is in charge. Congress accepts the word of the Federal Reserve System with respect to how much it cost the FED to keep its doors open, and it accepts whatever payment the FED makes to the Treasury.
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