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Audit the Fed?

BERKELEY – The party platform adopted at the Republican National Convention includes a number of remarkable planks. To a monetary economist, for example, the party’s proposal to restore some kind of metallic monetary standard is so outlandish as to be an almost irresistible target.

More serious is the Republicans’ proposal for an annual audit of the United States Federal Reserve. This, like the gold-standard plank, is partly designed to appeal to the libertarian followers of Ron Paul, the Texas congressman and perennial presidential candidate who is hugely popular with the Republicans’ “Tea Party” wing. While Paul would go further, and abolish the Fed altogether, several bills in the US Congress have mandated an annual audit; earlier this year, one such bill was passed by the House of Representatives (but not the Senate).