The Federal Reserve is one of the most powerful, secretive, and unaccountable institutions in U.S. history. Its insulation from oversight, combined with its massive coffers and strong statutory authorities, makes it a uniquely troubling institution. 

To give you an idea of just how powerful the Fed is, in 2018, Forbes ranked Jerome Powell, the Chairman of the Federal Reserve Board of Governors, as the 11th most powerful person in the world, ahead of the prime ministers of France and the United Kingdom.

Earnest oversight is long overdue. Current law prohibits the Government Accountability Office from auditing the Fed’s vast monetary policy functions, and the Fed’s Inspector General serves at the pleasure of the Fed Board of Governors, the very institution it’s supposed to hold accountable. 

This summer, I began investigating the Fed. After months of stonewalling, the Fed finally produced information on one of the most significant tools of monetary policy – Interest on Reserve Balances, or IORB. 

The Interest on Reserve Balances system began after the 2008 Financial Crisis, when the Fed aggressively purchased assets to flood the market with liquidity. This marked the beginning of a transition from the scarce reserves regime to the abundant reserves regime. 

The Fed vastly underestimated how this transition would play out. Initial estimates put the cost of transitioning at $35 billion. As of May 2022, those estimates increased to $2.3 trillion. 

Under this new regime of abundant reserves,........

© Townhall