Fed Governor: Rand Paul's 'Audit the Fed' movement is a serious threat

That's what Fed governor Jerome Powell had to say at an informal meeting with a group of reporters in Washington last week.

His message was similar to the speech he gave on the subject of Senator Rand Paul's "Audit the Fed" campaign at Catholic University's Columbus School of Law on February 9.

Powell explained that the Fed's balance sheet is really simple, and that when it comes down to it, the Fed has a simpler balance sheet than your average community bank.

The Fed releases its balance sheet every Thursday afternoon at 4:30 pm, produces quarterly financial statements, and releases an annual audited financial statement.

But what Senator Paul wants to do isn't actually financially audit the Fed. He wants to audit Fed policy. Powell, unsurprisingly, doesn't think much of that.

He explained that "Audit the Fed" means making monetary policy subject to short term political interests. That would be bad because governments have a history of getting in fiscal difficulty and looking to central banks to inflate their way out.

"I see [the movement] as very serious over time," Powell said. "It is not a secret that this is thought of as a stepping stone toward abolishing the Fed."

At the same meeting, Powell also spent a bit of time discussing how the future of digital currency fits in with the American payments system.

"We don't have a direct regulatory role in digital currency, [but] we do look at financial innovation," Powell said. "It is early to say they are going to play a role in the medium term."

However, he added, "There are [technological] aspects of some of these currencies that could play a role in payment systems."