UPDATE: Senator Rand Paul has responded to his critics. After his latest push to audit the Fed, everyone from Fed governors to journalists like Pedro da Costa in the video above have critized his strategy. The Fed is already audited, they said; its balance sheet is open.



Sen. Paul specifically addressed criticism from Former Fed Chairman Donald Kohn, who said: "There is essentially no credit risk on the Fed balance sheet right now."





In a recent interview with Glenn Beck, Sen. Paul responded:

"When they say there’s no credit risk, they created four-and-a-half trillion dollars to buy these bad mortgages. So is there no risk in creating it?...They didn't borrow money from someone. They didn't go out and work and earn it. They just created a computer entry to pay the banks for these assets. And the point I've been making is, who did they buy these things from, and what did they pay for them? .... The Fed has 4.5 trillion dollars' worth of so-called assets. We don't know what they are."

Many critics siezed on that last statement to note that the Fed's specific holdings are known and available for inspection. "You can search by individual bond number," quips Politico's Ben White. "Go knock yourself out.

Most observers beleive the anti-Fed comments from Paul are meant to target libertarian voters. Paul was quick to dismiss that assertion before launching into another train of thought very popular on Main Street - a criticism of the backroom dealings on Wall Street.

"There's a question of favoritism... I mean, Bear Stearns is bailed out. Does that have anything to do with who runs the bank?" Sen. Paul said. "For decades, there’s been a revolving door between the Fed, the Treasury, and Wall Street again... I’m tired of bailing out these big banks when they make bad decisions.”

EARLIER: It’s a rivalry almost as old as the Yankees and Red Sox: A politician with the last name Paul versus the Fed. The latest iteration comes from Senator Rand Paul (R-KY) who wants to audit the central bank. He’s raised some $88,000 for the campaign via his “Audit the Fed Money Bomb” web site and hopes to hit $150,000 by next week.

We should note that the Fed is already audited by both the Government Accountability Office and an independent auditor, so Paul’s push is about more than just auditing. Some speculate that Paul’s hoping to find out where the Fed buys its debt from, but more than that, the push is likely meant to give Congress more influence over monetary policy.

Paul is also pushing legislation that would allow Congress to be more openly critical of the Fed. Chairwoman Janet Yellen has vowed to fight the push, and several Fed governors have vocally fired back. “Who in their right mind would ask the Congress of the United States — who can’t cobble together a fiscal policy — to assume control of monetary policy?” asked Dallas Fed President Richard Fisher in an interview with The Hill.

Rand Paul with his father, then-Congressman Ron Paul, during his 2010 Senate campaign. More

It’s important to remember that this fight isn’t new and that in many ways Rand Paul is continuing the legacy set up by none other than his father, former Congressman Ron Paul. “There have been several Republican efforts, going back, of course, to his father Ron Paul, that wanted to overtly end the Fed. But that line about ending the Fed has been moderated into, ‘Let’s audit the Fed,’” said Pedro da Costa, an economics reporter at the Wall Street Journal who focuses on the Federal Reserve. “While that sounds very good, the Fed is already audited. The Fed has fairly open books.”

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