It is tempting to express disappointment at the watering down the Senate did to Congressman Ron Paul’s vision of how to audit the Federal Reserve. Dr. Paul himself is, in an interview with the Sun this morning, characterizing the Senate’s bill as only “slightly better than nothing.” He is even warning, “It does political harm,” in that it gives the Fed “cover — and people can hide from it.” The bill that cleared the Senate is aimed at finding out merely what the Fed did during the recent bailouts but not what it is doing, say, at the discount window or in the way of loans to other central banks and governments and international financial institutions. It may lead to an auditing merely of procedures and not of numbers. The right move in the House-Senate conference is a pursuit of a wide audit that would open the Fed to daylight.

In the longer scheme of things, however, it’s possible to see the a more encouraging side to this story, at least for those of us who came in to the campaign for monetary reform in the 1970s, after President Nixon closed the gold window in 1971 and brought Bretton Woods to its bang-less, whimpering end. A decade later Congress established the United States Gold Commission. The commission backed the current system. But it produced Dr. Paul’s famous minority report, in which the congressman from Texas was joined by another member of the commission, Lewis Lehrman, a New York businessman and intellectual. Now here we are, albeit 30 years later, and a version of what Dr. Paul has been asking for, even if a watered down version, has passed the Senate 96 to zero, and Dr. Paul ranks nearly even in the polls with the sitting president.

Everywhere one goes, moreover, there is a growing recognition, among both ordinary Americans and the high and mighty, that something is off. We noted, in a story yesterday, that a group of the most distinguished judges on the federal bench is so upset about the decision of the Congress to rescind a promised cost-of-living adjustment in their pay that they are appealing to the Supreme Court. How can judges sue over their own pay? It turns out that judges are a special case, because it is flatly unconstitutional to diminish the pay of a federal judge while the judge continues in office. So our story covers the possibility that their own lawsuit will eventually confront the judges with the need to do something about the fact that a dollar that only a decade ago was worth a 265^th of an ounce of gold is today worth less than a 1,200^th of an ounce of gold.

No one perceives this vast unease more clearly than the Fed itself, which has been fighting the idea of an audit on Capitol Hill and, if an audit does emerge from the Congress, can be expected to fight it in court. The Fed may win the battle in the short run, dodging the kind of wide and full audit that Dr. Paul wants. We’re not immune to the thought that the coalition that is pressing for an audit includes figures on the left, and even far left (the Nation magazine’s report on the NPR Web site is here), not normally associated with open government and free market capitalism. But at bottom the shift that is taking place is encouraging. Partisans of fiat money are now on the defensive. Countries, like Greece, are collapsing because they have been pursuing a socialistic course, and millions of Americans are demanding to look under the hood of the Fed to see what is being lent out in the way of our money. The step in the Senate is best seen as but a beginning.