The House Financial Services Committee voted Thursday to add Rep. Ron Paul’s (R-Texas) broadly supported proposal to audit the Federal Reserve to a larger banking reform package.

The 43-26 vote marks the most progress that “Audit the Fed,” a proposal that Paul introduces every two years, has ever made.

It comes just two days after an audit of the 2008 AIG bailout showed that the Federal Reserve mishandled the $85 billion bailout, leading a group of House Democrats to urge passage of Audit the Fed.

The measure would allow the Government Accountability Office to audit all of the Federal Reserve’s programs, including its monetary policy, requiring the first audit to be completed within 12 months of the bill’s passage.

“This is the bill that would allow the people to win over the special interests,” said Paul, whose book End the Fed argued that the central bank was harmful to a free society. “There is no doubt that the individuals opposing this amendment represent the secrecy of the Federal Reserve.”

Federal Reserve chairman Ben Bernanke and other special interests did indeed oppose the measure. Rep. Barney Frank (D-Mass.), for instance, said that inflation could rise if the Federal Reserve were audited, as did some economists.

Paul and Rep. Alan Grayson (D-Fla.) amended the measure slightly in response to criticism that audits could undermine the Fed’s independence in monetary policy, by exempting meeting minutes and transcripts, requiring a 180-day waiting period before releasing details on the Fed’s actions, and removing a provision which would have allowed the GAO to make recommendations on monetary policy.

Writing in theWashington Post, former Fed vice chairman and Princeton economics professor Alan Blinder called the Federal Reserve “one of the great and enduring achievements of the Progressive Era. It has enabled the long time-horizons of technocrats to triumph over the short-term perspectives of politicians, bringing us low inflation over the decades.”

From 1913 to 2008 the U.S. dollar has suffered 2,052% inflation according to the government’s own figures, which are often lowballed. This is “low inflation over the decades”? Before the Federal Reserve inflation was almost nonexistent except in times of war. Why exactly are we to keep this system around?

Oh yes, I remember now, so that it can leech off us, slowly, so we don’t easily notice. This absurdly high level of inflation, which the special interests want you to believe is “low” and “under control,” is required to finance big, out of control government. Of course, as we all know now, it can’t last. Usually such schemes, run by politicians, collapse in a few short years; it was the “long time-horizons of technocrats” which allowed the ultimately doomed scheme to survive as long as it did. But even the technocrats running the Federal Reserve can’t escape economic reality.

If you haven’t already, pick up a copy of End the Fed and find out how else the Federal Reserve’s very existence is harming ordinary people like you and why Audit the Fed is a critical first step for the people to regain control of their money and their government.