Video on Bureaucratic Failure: Federal Reserve Inspector Doesn't Know What's Going On

Would you entrust governments to serve the best interest of the public when they can't seem to even know what is happening within their bureaucracy?

This video from Huffington Post reveals of a shocking example of blatant government incompetence or complicity.

If it can happen in the US, then it should apply elsewhere.

Quoting the Huffington Post (bold highlight mine):

``The inspector general tasked with overseeing and auditing the Federal Reserve knows pretty much nothing about what the Fed is doing. That's the conclusion that comes from watching the exchange Tuesday between Rep. Alan Grayson (D-Fla.) and inspector general Elizabeth A. Coleman.

``Coleman could not tell Grayson what kind of losses the Fed has so far suffered on its $2 trillion portfolio, which has greatly expanded since September.

``She appeared unaware that the Fed engages in trillions of dollars in off-balance-sheet exchanges.

``She is not investigating the role of the Fed in allowing the collapse of Lehman Brothers.

``She did not know where the Fed has invested its $2 trillion on the liability side of the balance sheet. "I do not know. We have not looked at that specific area at this particular point on," she said.

"We do not have jurisdiction to directly go out and audit reserve bank activities specifically," she said, though the IG's Web site proudly declares that her office "conducts independent and objective audits, inspections, evaluations, investigations, and other reviews related to programs and operations of the Board of Governors of the Federal Reserve System."

From the standpoint of today's crisis, either incompetence or deliberate opaqueness, you can be sure that present policy actions have less chances to be successfully reversed once inflation accelerates.

We are, thus, reminded of Ludwig von Mises who warned, ``Success and failure are of lesser importance than formal observance of the regulation. This is especially visible in the hiring, treatment, and promotion of personnel, and is called "bureaucratism." It is no evil that springs from some failure or shortcoming of the organization or the incompetence of officials; it is the nature of every enterprise that is not organized for profit."