You will end up politicizing the Federal Reserve Board if you choose to begin auditing.  So says the chairwoman of the Federal Reserve, who wishes to remain operating behind the screen.

The convenient leap made by Janet Yellen is that if audited, then politicized.  Not true.

Audits do not have to be an over-the-shoulder monitoring; they could be a semiannual peek at where all the money is going and why.  When the Fed buys tens of billions of dollars of securities each month, as they did during the Quantitative Easings, is it not fair to ask certain questions?

The audit could be conducted at a time interval that would not influence what was done, but would discover with whom it was done, when, why, at what price, and in what quantities.  The auditing could be done in confidence and secrecy – just the way the Federal Reserve operates now, Janet.

Tens of billions of dollars shuffled about through the securities and banking industries in a fashion known only to a few begs for sunlight. 

And Janet, if you embrace the idea that the Fed should never be audited because it never has been, take a long look at what the Federal Reserve has become.  No longer just a entity that cures short-term liquidity issues in the banking system, it has morphed into something much grander.  So grand that a word used or not used in a official release will catalyze billions of dollars to change hands in seconds.  And that is just a small part of the new Fed.  Promoting inflation, locking interest rates at all-time lows for years...that’s all new as well.  Your balance sheet just leaped from $800 million to $4 trillion-plus – or at least that’s what you say.  No one is certain.

This isn’t the old Fed anymore.  The Fed unilaterally expanded its power and has rewritten its mandates and mission statement – all under the initial cover of “emergency action.”  The appropriate response is an expansion of oversight – you know, just to see where the tens of billions...no, trillions of dollars has gone.  Call us overly fastidious if you must.