Elon Musk is keen on auditing the Federal Reserve, the independent agency that makes critical decisions on interest rates that reverberate throughout the US economy.
Musk, the world’s richest man who is also overseeing a mass restructuring of the federal government, isn’t referring to the Fed’s $6.8 trillion balance sheet. The Fed’s finances and operations are already audited extensively by the Government Accountability Office (GAO) and an independent accounting firm. Musk is talking about the Fed’s monetary policy decisions.
But auditing the Fed’s monetary policy raises questions on the importance of the central bank’s independence, especially as President Donald Trump shakes up the federal bureaucracy.
Asked if the Fed should be audited at an annual gathering of conservatives Thursday, the Tesla CEO said, “Yeah, sure” without elaborating. It was the second time this month that Musk expressed support for the idea.
As head of the Department of Government Efficiency, or DOGE, Musk has led efforts to gain access to key government data. This month, a federal judge temporarily blocked DOGE from accessing a Treasury Department payment system.
Musk’s calls to scrutinize the Fed comes after Trump on Tuesday signed an executive order that’s expected to weaken the central bank’s control over big banks. The executive order gives his political appointees unprecedented power over independent regulators, such as the Federal Trade Commission and the Securities and Exchange Commission, though it specifically excluded the Fed’s monetary policy.
A question of independence
In 2015, Republicans pushed for the Federal Reserve Transparency Act, also known as “Audit the Fed,” that aimed to make the Fed’s interest rate decisions subject to congressional approval. The bill didn’t gain traction. Last year, Republican Sens. Chuck Grassley of Iowa and Rand Paul of Kentucky tried to introduce a similar bill without much success.
“I know from first-hand experience that the (Fed) sets monetary policy with the best technical information available and without any consideration of politics or partisanship,” former Fed chair Ben Bernanke wrote in a 2016 analysis published by The Brookings Institution. “I am also confident that political interventions in monetary policy decisions would not lead to better results.”
The second Trump presidency seems to have breathed new life into the idea of reviewing the Fed’s policy decisions. Earlier this month, a user on X argued in a post that the Fed’s monetary policy moves should be subject to a “full audit.” Musk cheered the idea.