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[Congressional Record Volume 158, Number 128 (Thursday, September 20, 2012)]
[House]
[Pages H6219-H6224]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                            FEDERAL RESERVE

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 5, 2011, the gentleman from Georgia (Mr. Woodall) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. WOODALL. Mr. Speaker, I appreciate you coming in tonight and 
allowing me to have the time.
  I'm going to get a little outside of my comfort zone tonight, Mr. 
Speaker. You talk about the 20 months you and I have been on the job 
here in this body. We've talked a lot about tax policy. And I feel like 
we're going to have a conversation. I think, as we stand in this 
Chamber a year from today, we will have signed fundamental tax reform 
into law. I'm excited about seeing this body do that.
  I think about health care reform. As we stand here today, I feel like 
this time next year, we will have much more freedom in our health care 
system. I feel like we'll have skin in the game in our health care 
system. That's a conversation that America has had and will continue to 
have.
  But a conversation America has not been having, Mr. Speaker, is one 
about the Federal Reserve and what the Federal Reserve is doing to help 
with jobs and the economy. We talk about that here on the floor of the 
House on a regular basis: What are we doing to help jobs and the 
economy?
  As you know, Mr. Speaker, we have about 30 bills sitting over in the 
Senate that we've passed here in the House that would stimulate the 
economy, that would help American workers get back to work, but the 
Senate has failed to act. And in the absence of action by the Senate 
and in the absence of being able to move legislation to the President's 
desk, the economy continues to flounder.

                              {time}  1930

  The President has orchestrated about $800 billion worth of stimulus 
programs, but that has not gotten the economy back on track. Not only 
did we not get unemployment down, it continued to rise under that 
stimulus program. And so what we have, and so if you folks in America 
talk about it, we have an independent Federal Reserve that engages in 
monetary policy, and these days, in economic stimulation.
  I want to point, Mr. Speaker, to an article by--well, I'll call him 
Dr. Phil Gramm. I mean, in fact, he's Senator Phil Gramm, from the 
great State of Texas, but he was born in the great State of Georgia and 
got his Ph.D. from the University of Georgia, his Ph.D. in economics. 
And he had an article in The Wall Street Journal just this past week, 
and I want to tell you what it said.
  Phil Gramm writes this, Senator Gramm writes this, Dr. Gramm writes 
this:

       Since mid-September of 2008, the Federal Reserve balance 
     sheet has grown to $2.8 trillion, from $924 billion, as it 
     purchased massive amounts of U.S. Treasury's and mortgage-
     backed securities. To finance these purchases, the Fed 
     increased currency and bank reserves, base money. That kind 
     of monetary expansion would normally be a harbinger of 
     inflation. However, the bank's holding the excess reserves, 
     rather than lending them out, and with velocity, the rate 
     with which money turns over, generating national income at a 
     50-year low and falling, the inflation rate has stayed close 
     to the Fed's 2 percent target.

  Now, Mr. Speaker, I work hard. I study hard. I get through paragraph 
one of Dr. Gramm's editorial, I'm already getting confused because we 
don't spend enough time talking about velocity of the money supply. We 
don't spend enough time talking about what the Federal Reserve's doing 
in terms of purchasing the bonds. And we don't spend enough time 
talking about monetary expansion.
  But let me get into some terms that we do talk about more, Mr. 
Speaker. The second paragraph of the editorial. While the Fed 
considered its previous rounds of easing, QE1, QE2 and Operation Twist, 
the argument was consistently made that the cost of such actions was 
low because inflation was nowhere on the horizon.
  That same argument is now being made as the central bank contemplates 
QE3 during the Federal open market committee meetings on Wednesday and 
Thursday. Inflation is not, however, the only cost of these 
unconventional monetary interventions. As investors try to predict the 
timing and effect of Fed policy on financial markets and on the 
economy, monetary policy adds to the climate of economic uncertainty 
and status already caused by current fiscal policy. There will be even 
greater costs when the economy begins to grow, and the Fed, to prevent 
inflation, has to reverse course and sell bonds and securities to the 
public.
  Now, I'm not going to say that's still perfectly clear, Mr. Speaker. 
But I am going to say, we're starting to talk about QE1, QE2, now QE3 
because that open market committee met and decided to proceed with QE3, 
and Operation Twist. Now what are these terms, and why don't we talk 
about them more often?
  Let me just go briefly, Mr. Speaker, to the Federal Reserve Act. Just 
to be clear, section 2(a), monetary policy objectives, this is what, 
we, the Congress, Mr. Speaker, have charged the Federal Reserve with. 
And I'll quote from the statute:

       The Board of Governors of the Federal Reserve System and 
     the Federal Open Market Committee, shall maintain long-run 
     growth of the monetary and credit aggregates commensurate 
     with the economy's long-run potential to increase production, 
     so as to promote effectively the goals of maximum employment, 
     stable prices, and moderate long-term interest rates.

  Now, when folks want to know what it is the Federal Reserve does, 
this is the congressional mandate: increase production so as to promote 
efficiently--effectively, pardon me--the goals of maximum employment, 
stable prices, and moderate long-term interest rates.
  Now, Mr. Speaker, I'm not a Ph.D. economist, but I've taken a few 
economics classes over the years. And what I would tell you is I have 
always imagined that full employment and stable prices and moderate 
long-term interest rates are often in conflict with one another.
  You know, when you want to stimulate the economy, you try to lower 
interest rates so folks borrow more

[[Page H6220]]

money, so folks create more jobs. You want to put more money in the 
hands of our small business owners, our job creators, want to create 
jobs with other people's money when interest rates are low so that we 
can bring unemployment low.
  When interest rates go higher, folks borrow less money. When they 
borrow less money, perhaps unemployment goes up.
  These are conflicting goals, but we've tasked the Federal Reserve 
with both of those. And I want you to see, Mr. Speaker, what that 
brings us to today.

  I've got a chart here, and you're not going to be able to see it from 
where you stand, but it's the last 5 years of the Federal Reserve 
balance sheet. And I'd be interested to take a poll here, Mr. Speaker, 
folks back in their office watching on TV: how many folks have taken a 
look at the Federal Reserve's balance sheet? I don't mean take a look 
in the last 10 days, I mean who's taken a look in the last quarter?
  Maybe in calendar year 2012, Mr. Speaker. How many folks have taken a 
look at the balance sheet in 2012? Maybe not even 2012. What about this 
session of Congress? What about this new decade? How many folks have 
taken a look at the Federal Reserve balance sheet? Because what you see 
at the Federal Reserve balance sheet, Mr. Speaker, is a dramatic 
change.
  You're not going to be able to see these numbers here, but they run 
from zero on the balance sheet up to $1 trillion, up to $2 trillion, up 
to $3 trillion. You know, we throw trillions around in this town, Mr. 
Speaker, like they're nothing. A trillion's a big number. It's a 
million millions.
  And historically, if you go back, and you see it here on the chart, 
2007, 2008, going back into 2006, in general, the Federal Reserve, in 
order to keep liquidity in the economic system, in order to make sure 
that our financial system doesn't have fits and starts, kind of 
lubricates that system, makes sure everything's moving at the proper 
pace, keeps just under about $1 trillion on its balance sheet, the debt 
that it buys, money that it's lending.
  It will buy Treasurys to keep that market fluid. It has a window that 
it will lend to banks to keep that market fluid.
  And what we see here, represented by this beige line here, is that 
going back into 2007 and 2008, most of that balance sheet was comprised 
of this traditional activity, with a little bit of lending to financial 
institutions.
  Now, you remember, Mr. Speaker, when folks got so scared back in 2008 
and we started to talk about TARP and the bank bailouts, we were going 
into the fall of that year and wondering if fiscal calamity was on the 
horizon. And this Congress passed, before you and I got here, measures 
to expand our aid to financial institutions, to increase that 
lubrication to make sure that dollars continued to flow.
  And so you see it represented here on this gray line, Mr. Speaker, as 
the Federal Reserve's balance sheet expanded with loans to banking 
institutions.
  Now, I don't mean expanded a little. Traditionally we're here, just 
about $800 billion. Within the period of one quarter, we more than 
doubled that to $2.2 trillion, almost tripled it.
  Now, hear that again. This is an institution that exists to keep 
markets fluid, to prevent hiccups in our financial process, to make 
sure, again, full employment, long-term interest rates are stable, 
price stability. Tripled its balance sheet almost overnight in the name 
of protecting us from an economic collapse.
  And the balance sheet has not just stayed there since the fall of 
2008, it's grown even larger. But the components have begun to change, 
and that's why it's important to begin this conversation, Mr. Speaker. 
Again, I'm not a Ph.D. economist. I don't claim to have all the 
answers. But what I do claim to know is, we're not spending enough 
time, as a Nation, talking about the role of the Federal Reserve.
  You know, the Federal Reserve's an independent agency. It's supposed 
to make decisions on its own. Whenever someone complains to me, Mr. 
Speaker, about what's going on with the Federal Reserve, I say, I 
understand that you have some concerns with the Federal Reserve, but 
the only thing worse than an independent Fed Chairman making these 
decisions would be a Republican Party chairman and a Democratic Party 
chairman making these decisions. I mean, we've made it outside of 
Congress to keep partisanship out of it, to try to do the best economic 
thing instead of the best political thing.
  But this is what's happened on our watch. The Fed has tripled the 
size of its balance sheet. First it was loans to bank, represented here 
by gray. Then it turned to liquidity in other credit markets, 
demonstrated by this blue, and then it turned to mortgage-backed 
securities and long-term American debt.
  Now what does that mean?

                              {time}  1940

  That means that the Fed decided that no one wanted to buy mortgage-
backed securities in this country and that, in the collapse of Fannie 
Mae and Freddie Mac, uncertainty took over in the marketplace, and it 
began to slow and, in fact, began to bind up as those mortgage-backed 
securities either began to fail or ceased to move, and so they began to 
buy them in record numbers represented here. It started out as just a 
little. Now it's over $1 trillion in mortgage-backed securities going 
through 2010. Couple that then with long-term bond purchases--American 
debt.
  Here we have an American banking institution, the Federal Reserve, 
buying American debt. Now, don't think too hard about that. Don't think 
too hard about what it means when the folks who control your money 
supply begin to buy your debt so that you begin to pay your interest to 
the Federal Reserve, which then returns all of its profits back to the 
government. You begin to see you're taking it out of your left pocket 
and you're putting it into your right pocket--taxing the one hand and 
paying the other hand. It gets circular in a hurry, and it puts us, as 
a Nation, on the hook for these actions.
  Again, in 5 years--2007 to 2012--and really, the fall of 2008 to 
2012--4 years, 48 months--we tripled the size of the Federal Reserve's 
balance sheet and changed its composition from what has historically 
been traditional security holdings and loans to banking institutions to 
making those the two smallest parts of the chart and making long-term 
debt and mortgage-backed securities the largest part of the chart. 
That's what we've heard from the Federal Open Market Committee, Mr. 
Speaker, is that we're going to continue that program to the tune of 
about $40 billion a month.
  These aren't actions that have no consequences. I'm looking here at 
yesterday's Wall Street Journal, and the headline is this: 
``Governments Brace for Currency Onslaught Ahead of QE3.'' Again, 
``QE'' stands for ``quantitative easing.'' It's talking about pumping 
more liquidity into the marketplace--trying to keep the lubrication 
going in the American economy--and it's the expansion of the balance 
sheet. We have some charts that show what happened after QE1 and what 
happened after QE2 and Operation Twist. This was in yesterday's Wall 
Street Journal. It was not an editorial, but it was from their 
reporting pages.
  The Wall Street Journal says this:

       In the previous round of Fed quantitative easing, which was 
     dubbed QE2, the dollar weakened significantly. In the 13 
     months from June 2010--when expectations of more Fed stimulus 
     first began to rise--until the $600 billion bond-buying 
     program wound up the following summer, the Wall Street 
     Journal Dollar Index--a measure of the dollar's value against 
     a basket of major currencies--lost 18 percent of its value.

  I just want you to think about that for a moment. We're here arguing 
about what's going to happen with the fiscal cliff, and, of course, the 
House has acted to prevent taxes from rising on all American families 
come January. The Senate has not yet acted. We're trying to push that 
bill through the Senate, and we're trying to get the President on 
board. We're trying to prevent tax increases--a major part of what we 
do in this body and a major focus of the American taxpayer.
  All you have to do is to go back to December 2010, which was when 
Speaker Nancy Pelosi was running this U.S. House, when Majority Leader 
Harry Reid was running the United States Senate, when President Obama 
was sitting in the White House, and when a big election had just been 
held in November of 2010. That election brought 99 new freshmen to this 
body. It turned over a tremendous number of Members, which was the 
largest number we'd seen in decades, and America said, I

[[Page H6221]]

don't have any more money to give Washington. I'm voting ``no'' on new 
taxes.
  So what happened?
  In the lame duck session--November and December of 2010--Speaker 
Nancy Pelosi, Majority Leader Harry Reid, and President Barack Obama 
came together and extended the Bush tax rates for an additional 2 
years. They refused to raise taxes on the American people because the 
American people had just had a giant referendum in the November 
election, and Washington responded. Folks who hated the Bush tax 
rates--who demonized the Bush tax rates, from whom I've never heard a 
nice thing said about the Bush tax rates--came together to extend those 
tax rates for 2 additional years. Why? Because the American people 
demanded it.
  In reading from yesterday's Wall Street Journal--call it causative, 
call it correlated, call it coincidental--in 13 months of QE2, $600 
billion of bond-buying, the value of the American dollar against world 
currencies fell by 18 percent, which is, in effect, an 18 percent 
instant tax on every single dollar in every single American pocket in 
this country.
  If you're not thinking through that, I mean, here is the story. 
You're going to Walmart to buy those Chinese tennis shoes for your 
kids. Now, when the American dollar--the value of what a dollar buys on 
the world marketplace--falls 18 percent, that means the cost of those 
Chinese sneakers rises by that same amount because the dollar is worth 
less and foreign currencies are worth more. It helps U.S. exports, 
because what we've produced here becomes worth less and it makes it 
easier for foreign companies and corporations and nations to buy it, 
but it makes all of our savings, all of the dollars in our pockets, 
worth less, too. This is 18 percent, Mr. Speaker, in 13 months.
  You and I were not in Congress at that time, but I wonder: How many 
letters do you think folks got, Mr. Speaker? How many phone calls do 
you think came in to say, ``I'm watching the activities of the Federal 
Reserve. I've been studying their balance sheet. I'm deeply engaged in 
the actions of the $600 billion bond-buying program and QE2, and I see 
that the value of the dollar against a market basket of world 
currencies is falling by 18 percent, and I want Congress to fix it''?
  Now, Mr. Speaker, you and I were not here, but if this House of 
Representatives had raised taxes by 18 percent on every American 
family, there would have been a riot. Phones would have lit up. 
Mailboxes would have been jammed packed. Email accounts would have been 
pumped full as American consumers would have said this is not the right 
direction for America. But who is talking about it when the Federal 
Reserve creates exactly that same impact through monetary policy? 
Again, I'm not saying it's right or wrong. We have to make these 
decisions as a Nation. What I'm saying is there hasn't been enough 
debate on that topic.

  Let me go on. Again, this is from yesterday's Wall Street Journal:

       The dollar followed a similar but slower path leading to 
     the QE3 announcement last week. The Wall Street Journal 
     Dollar Index hit a 22-month high in July.

  That means that our dollar was valued high against a market basket of 
world currencies, which meant spending a dollar bought more goods than 
it historically buys. It's a 22-month high. It bought more goods in 
July than it bought in any other month over 22 months.
  The Wall Street Journal goes on:

       It then started to slide gradually before dropping sharply 
     once Fed Chairman Ben Bernanke signaled the Central Bank's 
     plan at his speech in Jackson Hole, Wyoming, on August 31. 
     The index is now 6 percent off its July high.

  From July to September, every dollar in every American pocket and in 
every community across this land is worth 6 percent less than it was 
just 3 months ago.
  How many letters have you gotten, Mr. Speaker? How many letters have 
you received from your constituents to say that every single dollar 
they're earning in their paychecks, that every single penny in their 
children's piggybanks, that every single bank account, that every 
single stock purchase--that every single dollar of wealth we have in 
this country--now buys 6 percent less?
  Again, Ben Bernanke is a bright guy. Alan Greenspan before him was a 
bright guy. We have this independent Federal Reserve so that we can 
have really smart people who are studied, schooled--decade upon 
decade--in the economics of our land and of our world make these 
decisions. But they impact us, and we're not having that national 
discussion about what that impact is. This is 6 percent in just the 
past 3 months.

                              {time}  1950

  We talk a lot about Social Security and Medicare, and certainly 
there's an impact on our seniors, Mr. Speaker, with both of those major 
programs that we've all paid into out of our paychecks all of our 
lives. But what about folks on a fixed income? Because, again, part of 
this Federal Reserve policy, there is the expansion of the balance 
sheet side, and there's also the controlling of the interest rate side. 
Of course, we've pushed interest rates low.
  What I have here, Mr. Speaker, is a chart of interest rates in this 
country that is kind of a 10-year bond yield. It is a number that is 
looked at around the globe. This chart goes from January of 2009 up to 
September 2012. What you see in green is the beginning of quantitative 
easing, QE1 in green. You see the end of QE1 in red. As we begin to put 
more and more and more money into the marketplace, lubricate that 
marketplace more and more and more, the cost of borrowing money went 
higher and higher and higher until QE1 ends and interest rates 
collapse. Then we announce QE2. Here in green you see where QE2 begins. 
You see in red where QE2 ends. As soon as QE2 ends, interest rates 
collapse. Operation Twist begins.
  Here we are with average 10-year yields, Mr. Speaker, going back over 
the last 3 years. This is what we're usually paying for money. This is 
what we're paying for money right now. These are the lowest interest 
rates we've seen--well, not just in a generation, Mr. Speaker--in 
decades. Let me go on.
  This is that dollar index that I talked about, that market basket of 
world currencies. How much is a dollar worth? Again, let's look. QE1 
begins, the value of a dollar spikes briefly. Throughout QE1, the value 
of a dollar collapses and rises towards the end of QE1. As soon as QE1 
ends, the value of a dollar spikes again--QE2. Again QE2 begins. By the 
time QE2 ends, we see the dollar valued substantially less.
  What's the discussion around the family dinner table, Mr. Speaker? 
You can't find a household in this Nation that hasn't had a discussion 
about their tax bill. I daresay you wouldn't find many households in 
this Nation that haven't had a discussion about the regulatory burden 
that is being placed on them by the Federal Government today, the 
challenges of going out and creating a business or building a new job 
because of the regulatory burden.
  But how many folks are sitting around the dinner table talking about 
this small group of men and women, the Federal Open Market Committee, 
the chairman of the Federal Reserve, and what they're doing that both 
obligates Americans and impacts our fiscal and economic future, and 
what they're doing to try to create those jobs and keep interest rates 
low for America today?
  This is the chart that concerns me the most, Mr. Speaker, because 
we're borrowing at record low interest rates. The Federal Reserve is 
doing a lot of buying of American debt too. Again, I talked about the 
left hand and the right hand, and we're paying ourselves because we're 
borrowing from ourselves and lending to ourselves. These are all just 
clicks of the mouse these days. It's not dollars that are changing 
hands. We're just clicking the mouse.
  What happens borrowing a trillion dollars a year, Mr. Speaker? You 
and I are working hard to curtail that. Of course, discretionary 
spending in the 20 months you and I have been here, we reduced 2010. 
When we went into 2011, we came lower than 2011. When we went into 
2012, we now sent a continuing resolution to the Senate that brings us 
even lower in 2013. We're in 2012. We're absolutely saving those 
dollars one dollar at a time, but we're still borrowing a trillion tax 
dollars a year. Whose buying that debt, Mr. Speaker?
  In the early 1970s, it would have been us. That's been the history of 
this

[[Page H6222]]

country. We, the American people, buy our debt. Thrift was valued, and 
we take our hard-earned dollars, we take those dollars we've 
accumulated as families through our thrift, and we buy American bonds 
with them. We reinvest in America. And when America pays interest on 
those bonds, that interest comes back to us as American families.
  But over the past four decades, that's begun to change dramatically. 
The mix of who's buying those bonds has moved from American families 
and American institutional investors and is drifting aggressively 
towards foreign purchasers.
  That's just the way it is. We don't have any thrift in this country 
anymore. No one is saving money in this country anymore. American has 
debt it has to sell. It can't sell it to American families because 
American families don't have jobs and don't have money, so they've got 
to sell it to foreigners: China, Germany, Japan. That's the way the 
economy is today, Mr. Speaker.
  I've represented those lines here. This is a percent of GDP. That's 
what this chart is. This is a baseline here, zero percent of GDP. It 
goes back to the year 2000. We're just looking at the last decade. It 
comes out to 2012. The question is: Year over year, who's buying 
Treasury securities? Is it the private sector, individuals, and 
institutional investors? That's the green line. Is it foreign 
investors? That's the blue line. Or is it the Federal Reserve?

  Again, I don't know who is following those things day to day, Mr. 
Speaker. It's not coming up at town hall meetings. It's not coming up 
around family dinner tables. But the Federal Reserve, if you follow 
this black line here, the net change in what they were buying in terms 
of Federal Treasurys, it's pretty close to zero here. This black line 
representing the Federal Reserve is zero in 2001, 2002, and 2003. The 
foreign nations begin to buy more here, American consumers begin to buy 
a little more here, they sold more here, the foreigners bought more 
there. But here's that black line, the baseline, the Federal Reserve 
going right on out.
  Look at what happens in 2009, 2010, and 2011. That black line spikes. 
As we go into 2011, I want you to see, Mr. Speaker, that black line 
crosses the green and the red line. Why are these lines getting so 
tall? Because America is selling so much debt. You've got to remember 
that. When President Bush was in the White House when debts were 
considered then massive at that time, we were under $400 billion a 
year. We were trying to sell $400 billion a year in government-backed 
securities on the world market.
  Beginning late in 2008 and going into 2009 and into 2010 and into 
2011, we began to sell over a trillion dollars a year. The number of 
debt instruments that we had to sell in the world marketplace tripled, 
if not quadrupled. So you see that spike, and everyone has to buy more 
of our debt. Individuals are buying more in the green line, foreign 
nations and foreign investors are buying more with the blue line, and 
the Federal Reserve begins to buy more, as you see, in the black line.
  Starting in late 2010 and going into 2011, you see the black line 
come out on top, that the net change in the ownership of Treasurys has 
shifted away from all private and governmental investors combined 
around the globe, and now the biggest shift in each month is our 
Federal Reserve buying our own debt, us taking the money out of one 
pocket, putting it in the other, taking the debt instrument out of your 
pocket, putting it back in the other.
  What's the impact of that, Mr. Speaker, on the long-term American 
economy when we can't find enough dollars on the planet, we can't find 
enough buyers on the planet to invest in American debt? So we the 
American Federal Reserve have to buy that American debt--again, just a 
click of the mouse--because no one else is.
  What if the Federal Reserve closed the doors tomorrow, Mr. Speaker? 
Could we even sell it? I understand the Federal Reserve competing in 
that marketplace. It helps to keep interest rates low, right? When 
demand is high for debt, interest rates are lower. The Federal Reserve 
would have stopped that demand. What's the real cost of borrowing in 
this country? We don't know.
  We have four times higher debt today than we did in the late 1990s, 
by 1997. Four times more debt today than we did in 1997, and yet we pay 
less in interest on the national debt as a percent of GDP today than we 
did then. Why? Because of record low interest rates. Why do we have 
record low interest rates? Because we are exerting every fiber of 
energy that the Federal Reserve can muster to keep those interest rates 
low. I'll show you a chart of those interest rates later. But they are 
the largest purchaser of our debt.
  There is some good news in that, and I want to shift just a moment 
from the Federal Reserve to the Treasury Department. Again, the Federal 
Reserve, Mr. Speaker, is an independent doing its own thing. The 
Treasury Department is completely funded by this Congress, completely 
involved in oversight under this Congress and direction by the 
administration.
  We are experiencing record low interest rates today.

                              {time}  2000

  There is so much uncertainty in our future and, again, I'm trying to 
highlight how some of that has been created by the Federal Reserve just 
so that America begins to have that conversation. The good news is the 
folks over at Treasury, the public folks over at Treasury, the Bureau 
of Public Debt and Treasury have begun to extend the maturity, average 
maturity rate, of our debt.
  Now, what does that mean? Well, you remember reading about all the 
folks in the mortgage market who got caught by those teaser rate loans. 
The rates were low on year one, but they went up in year two and folks 
couldn't afford the payments on year two and the interest rate jumped--
teaser rates.
  Well, right now we're financing America's debt at teaser rates. We're 
borrowing at the lowest rates in history. When we go out and we start 
selling debt instruments, we're not selling everything as a 30-year 
bond, where nobody is going to come looking for the principal for 
another 30 years. We sell that in 28-day instruments, 1 month, 3 
months, 6 months. Short-term instruments finance the plurality of our 
debt.
  Now, what does that mean? That means we have tremendous interest rate 
risk. Whatever the debts are in our families at home, Mr. Speaker, if 
we have those amortized over a long period of time, then we know 
exactly what our payments are going to be. If we're involved in short-
term teaser rates, then we could have the rug pulled out from under us 
tomorrow.
  To the Treasury's credit, go back to 1980 here, average maturity of 
debt, when interest rates have gotten lower, Treasury has begun to lock 
American debt in for longer and longer maturities. Back in October of 
2008, when we were just dumping debt on the marketplace as fast as we 
could because we were spending at the highest deficit levels in 
American history--again, four times the previous levels, as George Bush 
was leaving office--we had to sell it to anybody who was willing to buy 
it.
  The maturity rate, just the average maturity rate just collapsed, 
collapsed. We've been battling back from that time, 48 months in 
October of 2008. Again, that's average, 2008. What were we talking 
about then, Mr. Speaker? About $13.5 trillion in public debt that, on 
average, was due in 4 years or less.
  There is a thing about that, because there's no surplus here. We're 
still borrowing more, but every 4 years the entire amount of debt comes 
due, that's the average. The entire debt turns over every 4 years. 
We're not only borrowing a trillion more each year; we've got to pay 
back the $13 trillion we already borrowed that we're then refinancing 
by selling additional debt.
  To the Treasury's credit, we're extending that timeline one month at 
a time, one day at a time. Here in May of 2012, we've already pushed 
out the average maturity date 32 percent. It's up to 64 months there 
over the summer to try to lock in these low interest rates to give 
America some interest rate protection, to reduce our interest rate 
exposure.
  You can't throw money around the way this Nation is throwing money 
around and think inflation isn't going to get you. It's not a question 
for economists, Is inflation coming? The question is when is it coming 
and how bad is it going to be. It's coming.
  The laws of economics are sound. It's coming. When is it coming? How 
bad's

[[Page H6223]]

it going to be? Our Federal Reserve tries to manage that for us with 
our Treasury Department locking in those longer-term rates now.
  Let me just say that we've begun that discussion in Congress. I think 
we need to begin that discussion, Mr. Speaker, in living rooms around 
the country. It's not just a congressional discussion, of course. It's 
a discussion that the American people need to have.
  Who are we as a Nation? What are we mortgaging away in our tomorrow 
to try to help our today? Is what we're doing making today easier? 
Perhaps it is. But giving the risk of what it does to tomorrow, is it 
worth that risk? We're not having that conversation. We're leaving 
those decisions to the independent Federal Reserve. We're leaving those 
decisions to the Federal Market Committee.
  That was a different choice that we made when the balance sheet of 
the Federal Reserve was $800 billion, still a big number, but $800 
billion. Now it's four times larger. We're working on that here in 
Congress, Mr. Speaker. It began with the Federal Reserve Transparency 
Act; and that's a bill, a bipartisan bill, 274 cosponsors in the House. 
When we finally brought it to the House floor, it passed 327-98.
  That's big. You talk about all the things we don't agree on here in 
Congress, you talk about party-line votes that divide us right down the 
middle--3-1 Congress voted to pass the Federal Reserve Transparency 
Act.
  Now, does that say the Federal Reserve is doing a bad job? No, that's 
not what this bill says. What this bill says is the Federal Reserve is 
doing a lot. It's doing a lot that we never anticipated when we created 
the Federal Reserve.

  There comes a time the American people need to be involved in that 
process and we, as their Representatives, need to be involved in that 
process. This is Dr. Ron Paul from Texas who has been pushing this idea 
for years and years and years. In this Congress, as he prepares to 
retire at the end of this year, the House finally had a vote and passed 
it by a large margin.
  There is another bill in the House that has 48 cosponsors right now. 
It has not moved out of committee, and it's called the Sound Dollar 
Act. It's H.R. 4180. Again, it's looking at some of these questions 
going back to be that Wall Street Journal article I showed in the 
beginning, 6 percent devaluation of our currency in the last 3 months. 
As the Federal Reserve began to act on QE2, an 18 percent devaluation 
in our currency.
  Golly, you work hard all your life, you think, God the stock market 
is too risky for me. I have seen it collapse, more than once: tech 
bubble collapse; builders, real estate collapse; September 11, 2001 
collapse. Too risky, I just can't do it. I'm going to take my dollar, 
and I'm going to put it in a federally insured banking institution so 
that I know when I go to take that dollar out, it's going to be there.
  Well, that's true. But is it still going to be worth a dollar when 
you take it out? The answer turns out to be no.
  If this government wants your money, we can come and we can tax you, 
Mr. Speaker. We can take 20 percent of everything you own, brand-new 
tax, 20 percent of all the wealth anyone has in America. Yes, $10, 
we're going to take $2 of it.
  That's not going to pass this body, and it shouldn't. It's crazy. 
Through monetary policy, we can achieve that very same effect and nary 
a voter said a word.
  I'm not telling you it's bad for America. I'm not telling you the 
folks of the Federal Reserve are out to get America. I'm not saying 
that at all. These are conscientious men and women who love this 
country and who are trying to make sure, in line with their Federal 
mandates, that they are keeping an eye on inflation, that they are 
keeping an eye on interest rates, that they are keeping an eye on full 
employment. These are contradictory goals, and they have got to keep 
them all in the same basket and try to succeed on all fronts.
  But the beneficiary, if they succeed, is the American taxpayer. The 
one who bears the burden if they fail is the American taxpayer. The one 
that's not involved in the discussion right now about whether it's the 
right thing to do or the wrong thing to do is the American taxpayer.
  I believe this November, Mr. Speaker, we are going to have the 
largest voter turnout in American history, and I'm thrilled about it 
because I still believe in America. I still believe in Americans.
  When more Americans turn out to have their voice heard, we're going 
to end up with the right answer. I don't have any idea what the 
American people are going to decide because at the polls they're still 
trying to make up their mind in some cases.
  But when more of us are involved, we're going to end up with a better 
decision for America at the end of the day. We need to get those voices 
involved in Federal Reserve policy.
  This chart, Mr. Speaker, is one of my favorites. It goes back to 
1962. We go deep, deep, deep into history. I say deep, deep, deep 
because I'm in my forties; this is before I was born. So I call that 
deep, deep, deep into history. If you were born before 1962, it might 
not seem like that far to you, but it's 50 years, Mr. Speaker, of 
American interest rate policy.
  We see here the end of the Carter years and the beginning of the 
Reagan years before the Reagan tax cuts had a chance to take effect and 
get the economy back on track. We're talking about sky-high interest 
rates, but over 50 years of American history, 50 years of American 
history through Vietnam, through the oil embargoes, through Carter, 
Reagan, Bush, and Clinton. You look way out to the end of this chart, 
Mr. Speaker, 2012. You see a collapse in the average 10-year interest 
rate to the lowest levels that most of us have ever seen in our 
lifetimes.

                              {time}  2010

  These are the interest rates that America ordinarily pays. But we're 
manipulating the system to pay the lowest interest rates in history. At 
the same time, we're borrowing the most money in history. The laws of 
economics tell you that's not what goes on with supply and demand. If 
there's more demand for debt and less supply and folks to buy, interest 
rates are supposed to go up. We have more demand than ever before. We 
have less supply of buyers than ever before in the world marketplace. 
And yet interest rates are at their lowest level in history.
  There's going to come a time, Mr. Speaker, that we're going to have 
to pay the piper. This is normalcy. This is historical normalcy. What 
we're experiencing today is temporary, and, by definition, has to be. 
The same thing is true on 30-year interest rates. In fact, it's even 
more dramatic. This goes back to 1977, Mr. Speaker, out to 30-year 
interest rates today. The 30-year U.S. Government interest rate down 
around 3 percent, Mr. Speaker. Who is it, Mr. Speaker, who wants to 
trade away $1 today with the agreement that they'll get $1.03 back next 
year. And that same deal over the next 30 years. Who thinks that dollar 
is only going to devalue 3 cents a year going out over time?
  As I close, I want to make it clear there's a lot of shin-kicking 
that goes on in this town. I'm not trying to kick the shins of the 
Federal Reserve. I've got a lot of constituents who think I should. 
I've got a couple of constituents who think I shouldn't. But what I 
don't have enough of are voices across the Nation demanding that we 
take a look at it.
  I recommend this article to you. September 11, 2012, again, written 
by Senator Phil Gramm. That's Phil Gramm of the Gramm-Rudman-Hollings 
Act. Do you remember that? That was our last serious effort at deficit 
reduction. This is a gentleman who has been concerned about free 
markets and American job creation and American debt for a generation. 
He served here in the House, served in the United States Senate. He 
crafted, again, some of the biggest budget bills, most progressive, 
most opportune when it came to seizing the moments to try to change the 
fiscal direction of the country for the better. He's writing on 
September 11 about our fiscal future and what's happening at the 
Federal Reserve.
  I'll close with the same way that he closed. He said:

       Some day, hopefully next year, the American economy will 
     come back to life. Banks will begin to lend, the money supply 
     will expand, and the velocity of money will rise. Unless the 
     Fed responds by reducing its balance sheet, inflationary 
     pressure will build rapidly. At that point, the cost of our 
     current monetary policy will be all too clear.
       Like Mr. Obama's stimulus policy, Mr. Bernanke's monetary 
     policy expansion will

[[Page H6224]]

     ultimately have to be paid for. The Fed softened the 
     recession by its decisive actions during the panic of 2008. 
     But the marginal benefits of its subsequent policy have 
     almost certainly been small. We may find the policies that 
     had little positive impact on the recovery today will have 
     high costs, indeed, when they must be reversed in a full-
     blown expansion.

  There's not a man or woman in this country, Mr. Speaker, who's 
registered to vote who's not thinking about their tax bill, who's not 
thinking about the economy, who's not thinking about job creation, and 
who's not going to go to the polls and vote accordingly. Mr. Speaker, I 
encourage you to encourage your constituents, as I'm going to encourage 
mine, don't just think about tax policy. Think about monetary policy. 
What we're doing here in Washington to cut budgets, that's what we'll 
call fiscal policy. What the Federal Reserve is doing with its balance 
sheet and with interest rate, that's going to be monetary policy. And 
it makes a difference. The decisions we make today have to be paid for 
tomorrow. Perhaps it's the right thing to do today, but if it happens 
in secret, if it happens unbeknownst to the American taxpayer, the 
American job creator, the American jobholder, who will ultimately have 
to foot that bill, then it's not the right course of action for 
America.
  Let's have this debate. Let's talk about it in the light of day. And 
let's make that decision, Mr. Speaker. Balance those costs and those 
benefits and do what we know will be best for the American family for 
another generation to come.
  With that, Mr. Speaker, I yield back the balance of my time.

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