Ron Paul is Scott Bessent's spirit animal
The Federal Reserve deserves everything that happens next...
In a recent interview on CNBC’s “Squawk Box,” Treasury Secretary Scott Bessent ignited a long-simmering debate by calling for a “thorough examination” of the Federal Reserve’s mission and effectiveness.
“What we need to do is examine the entire Federal Reserve institution and whether they have been successful,” Bessent said, questioning whether the central bank has fulfilled its mandate.
His remarks, made amid tensions between the White House and the Fed, echo a decades-long critique championed by former Congressman Ron Paul, who has relentlessly advocated for greater transparency through audits of the Fed since the mid-2000s.
Bessent’s call is not just timely—it’s overdue. The Fed’s policies, particularly quantitative easing (QE) since 2008, have reshaped the American economy, often to the detriment of the middle class, while its opaque operations demand scrutiny.
Ron Paul’s crusade against the Federal Reserve began in earnest during his 2008 presidential campaign, when he made auditing the Fed a cornerstone of his platform. In his 2009 book, End the Fed, Paul argued that the central bank’s unchecked power undermines economic stability and erodes public trust. Channeling the Austrian School of Economics to critique the Fed’s independence as a “self-perpetuating oligarchy.”
Paul wrote:
“The Federal Reserve System is accountable to no one; it has no budget; it is subject to no audit.”
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By 2011, as Chairman of the Monetary Policy Subcommittee, Paul introduced H.R. 459, the Federal Reserve Transparency Act, which called for a comprehensive audit of the Fed’s operations, including its securities valuation.
The bill gained traction, passing the House in 2012 with a bipartisan 327-98 vote, supported by 270 co-sponsors and even Mitt Romney, who tweeted, “Ron Paul’s ‘Audit The Fed’ bill is a reminder of his tireless efforts to promote sound money and a more transparent Federal Reserve.”
Despite this momentum, Senate Majority Leader Harry Reid blocked the bill, leaving the Fed’s operations largely unexamined.
Paul’s warnings about the Fed’s unchecked power resonate today, particularly when we consider the seismic impact of quantitative easing since 2008.
QE, the Fed’s policy of purchasing massive quantities of Treasury and mortgage-backed securities to inject liquidity into the economy, was a response to the financial crisis but came at a steep cost. By creating money to buy these assets, the Fed ballooned its balance sheet from $870 billion in 2007 to over $4.5 trillion by 2014, a figure that has since hovered around $8 trillion.
This flood of liquidity devalued the U.S. dollar, as Paul predicted in his 2008 book, Revolution: A Manifesto:
“When the money supply is increased, prices rise—with each dollar worth less than before, it can purchase fewer goods than it could in the past.”
While inflation remained low in consumer goods, the policy fueled rampant asset inflation, disproportionately benefiting the wealthy.
The numbers tell a stark story. According to Spectrem Group, QE contributed to the creation of 2.3 million new millionaires between 2008 and 2012, with the millionaire population surpassing its 2007 peak by 2013.
The top 5% of Americans, who own 60% of financial assets, and the top 10%, who hold 80% of stocks, reaped the lion’s share of gains as stock markets soared.
Meanwhile, the broader economy languished, with 95% of income growth from 2009 to 2012 captured by the top 1%, largely through stock-tied compensation, as noted by Berkeley economist Emmanuel Saez. Billionaire Stanley Druckenmiller called QE:
“The biggest redistribution of wealth from the middle class and the poor to the rich ever.”
The wealthy splurged on luxury assets—Ferraris, $142 million art pieces, and record-breaking real estate—while ordinary Americans faced stagnant wages and rising costs for essentials like housing and healthcare. The dollar’s purchasing power, measured by the Consumer Price Index, has declined hugely since 2008, eroding savings and real income for the middle class.
Bessent’s critique, while less radical than Paul’s, taps into this unease. He questioned the Fed’s “fear-mongering” over tariffs and its failure to cut interest rates despite moderating inflation, sarcastically noting:
“All these Ph.D.s over there, I don’t know what they do.”
His call for a review aligns with Paul’s push for transparency, raising questions about whether the Fed’s dual mandate—stable prices and maximum employment—has been met. The Fed’s reluctance to lower rates, even as inflation cools, and its $2.5 billion headquarters renovation, criticized for cost overruns, further fuel skepticism about its priorities.
Critics of auditing the Fed, argue that it risks politicizing monetary policy, a nightmare scenario that could undermine the Fed’s independence. Yet this independence, as Paul noted, often shields the Fed from accountability while enabling policies that exacerbate inequality.
A thorough review, as Bessent proposes, could clarify whether the Fed’s actions align with its mission or serve narrower interests. Resistance to even the concept of a review raises even more questions such as “Why?” and “What are you doing in there?”
While questions such as these might have seemed impertinent in 2008, after what has come to light about the FBI, the DOJ and USAID in recent years were agencies appeared to pursue their own agendas, it is no longer a stretch to demand proof of accountability.
It could also address longstanding concerns about the Fed’s role in economic cycles and asset bubbles, issues Paul raised decades ago.
The blunt economic reality is that Fed’s outsized influence demands scrutiny. Bessent’s call, echoing Paul’s, is a chance to reassess an institution that shapes the economic lives of billions around the world. Without transparency, the Fed risks remaining what Paul called a “self-perpetuating oligarchy,” accountable to no one but itself. Americans are right to demand answers.
It’s time to open the books.
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