Paul Krugman: Auditing the Fed is a Terrible Idea

The Washington Post economics commentator Mike Konczal wrote a very good column recently on why Senator Rand Paul's proposal that the Federal Reserve be "audited" is a bad idea. You should read it; I'd just like to offer a complementary take.

Here's the thing: We know what it means to audit a private bank — it means checking to be sure that it isn't wasting depositors' money or taking undue risks with it. But the Fed isn't in the business of investing, except for tactical purposes. It's there to manage money, not to make it. So what exactly would be audited?