Ron Paul on the Federal Reserve
Federal Reserve Chairman Ben Bernanke is testifying on Capitol Hill today (CNBC is airing the proceedings), and Ron Paul has been pressing him to account for his policies. This statement, which Dr. Paul made yesterday, outlines some of the key issues:
Mr. Chairman,
Price controls are almost universally reviled by economists. The negative economic consequences of price floors or price ceilings are numerous and well-documented. Our current series of hearings have been called to discuss the most important, but least understood, price manipulation in the world today: the manipulation of the interest rate.
By setting the federal funds rate, the rate at which banks in the Federal Reserve System loan funds to each other, the Federal Reserve inhibits the actions of market participants coming together to determine a market interest rate. The Federal Reserve and the federal government do not deign to interfere in setting the price of houses, the interest rate on mortgages, or the prices of wood and steel. The Fed’s actions in setting the federal funds rate however, because it reflects the price of money to a borrower and thus affects demand for money, affects prices throughout the economy in a manner less pervasive but just as damaging as direct price controls.
The example of the Soviet Union should have taught us that no one person, no group of people, no matter how scientifically trained, can arbitrarily set prices and not expect economic havoc. Only the spontaneous interaction of market participants can lead to the development of a functioning price system that allows the needs and wants of all participants to be met. The sense I get from reading much of the punditry is that the federal funds rate is set often by the whims of the Federal Reserve governors. Even mechanistic explanations such as the Taylor Rule rely on inputs that are often left up to the discretion of the Fed policymakers: what is the potential GDP, do we use CPI or PCE, overall CPI versus CPI less energy and food, etc.
The setting of the interest rate strikes me as quite similar to the way FDR used to set gold prices in the 1930’s, at his whim, resulting in economic havoc and uncertainty. When market actors have to devote much of their time to discerning the mindset of government price-setters, to parsing FOMC statements and minutes, they are necessarily diverted from productive economic activity. They cease to become purely economic actors and are forced to become political forecasters. This is not a problem isolated to this particular case, as businesses are forced to reckon with tax increases, expiring tax credits, import tariffs, subsidies to competitors, etc. However, because the interest rate determines the cost of borrowing and therefore determines whether or not marginal long-term business investments are undertaken, this politicized interest rate manipulation has far more impact than other government policies.
This setting of the interest rate introduces the business cycle into the economy. Until we understand the results these Federal Reserve actions have, we will be doomed to repeat these periods of boom and bust. I urge my colleagues to study this matter, and to resist the urge for greater Federal Reserve intervention in the market.
February 27th, 2008 at 11:40 am
Stick ‘em Dr. Paul!
I love the look on Bernake’s face every time he has to speak with the good Doctor.
The revolution has only just begun.
February 27th, 2008 at 11:47 am
Bravo, Dr. Paul!!!
February 27th, 2008 at 11:50 am
I agree, Shea. The following is a tape on electronic voting machines and voting fraud.
http://www.youtube.com:80/watch?v=X9nKSMCSKEw
February 27th, 2008 at 11:55 am
Ron has great courage bringing these issues to light.People must learn facts about what has happened while we were sleeping. Please be careful,the powers that control the FED are absolutly capable of any criminal acts imagined.
“PEOPLE OF AMERICA PLEASE HELP EXPOSE THE THIEVES WHO HAVE TAKEN FROM US THE ENTIRE WEALTH OF THE U.S. MANY TIMES OVER.”
Information will slay the dragon. The pen IS mightier than the sword.
We are true,we will prevail.
February 27th, 2008 at 11:57 am
Great, I hope somebody caught it on video.
February 27th, 2008 at 12:03 pm
I hope U.S. Representative Ron Paul, at the same hearing, presents to Federal Reserve Ben Bernanke the Ron Paul economic stimulus plan. Moreover, a copy of that plan could be given all members of the House and the Senate.
February 27th, 2008 at 12:11 pm
go get em’ Ron
February 27th, 2008 at 12:18 pm
I missed the part with Dr. Paul, but in the analysis, one of the fellows (didn’t catch his name) said that when Ron Paul spoke, everyone in Chicago from where he was speaking cheered. Did someone record it? I want to see it.
February 27th, 2008 at 12:24 pm
watching CNBC after Bernanke hearing. Rick Santelli (not sure of the spelling) mentioned that the floor traders on the floor of the Chicago Board of Trade cheered Dr. Pauls comments as he was speaking with Bernanke. Welcome to the revolution Rick! Sunlight is creeping in to the dark halls of financial coruption.
go Ron Paul!
February 27th, 2008 at 12:31 pm
James-
We all like sunshine…
(sorry, I couldn’t resist…)
February 27th, 2008 at 12:33 pm
RP KICKED ***!
February 27th, 2008 at 12:35 pm
I always love watching Dr. Paul go up against Ben Bernanke!
I also love Rick Santelli! He is the only regular on CNBC that seems to have a clue. I love watching him spar with Liesman.
February 27th, 2008 at 12:37 pm
I watched the testimony live on the internet today. I hope they make the video available.
February 27th, 2008 at 12:39 pm
Someone posted it:
http://www.youtube.com/watch?v=yybFGh1sUcQ
February 27th, 2008 at 12:45 pm
Thanks, Robert. I’ve put up some footage on the main Daily Dose page as well.
February 27th, 2008 at 1:41 pm
Dan: what efforts are you making to insure this testimony gets in to a media release so many Americans can see it on the MSM?
February 27th, 2008 at 1:43 pm
Can someone or everyone do something so there is another Republican debate as the should be. We will win these primaries if there is a debate. If no debate we will see the same numbers again. How can they deny a debate. This is it! This is the chance for all to see. Please everyone, we need to make sure there is a Republican debate before the next contests. Call PBS or a town hall in Texas or anywhere. Why is this staff not demanding a debate right now? If Ron gets to debate the other two he will win. This is are chance. Someone or everyone please organize it. These are the freedoms we are fighting for. If we can’t get a debate now that just makes no sense.
February 27th, 2008 at 2:00 pm
You tell ‘em Ron!!!
February 27th, 2008 at 2:01 pm
i heard huckabee camp is pressing mccain for a debate.. i know that they’ll try to deny ron paul at a seat at the table.. AS always..
we need to start pressuring the MSM into a debate. we need to contact all rival camps.. even the democrats and try to get them to help with the pressure.
if hillary and obama supporters want to hurt mcCain.. so do we…. we can ask them to write in to the MSM for Ron Paul to debate against huckabee and mccain.
it will only help spread ron paul’s message.
February 27th, 2008 at 2:15 pm
Les Ulmer the Problem is that the Dem’s WANT to go up aganst McCain’s crazy campain of war war war for an easy victory. They KNOW that Ron Paul would actually have more than half a chance of defeating there canadate. So dont look to the demecorats for help until after the convention. If mc crazy wins the nomanation.
February 27th, 2008 at 2:17 pm
the democrats do not want Ron to debate either cause Ron is the only one that will beat them. That’s why they want McCain so they can beat him. How can they refuse to debate Ron? Who is in control of this election process? If there are still contests there are still debates. What is going on here? All are energy right now should be to get a Republican debate before the primaries. Ron would then win the contests. Someone do something about this please.
February 27th, 2008 at 2:21 pm
This seems apropriate to this current discussion….
http://biz.yahoo.com/ap/080225/campaign_budget_reality.html?.v=1&.pf=taxes
February 27th, 2008 at 2:36 pm
Bernanke said it in the last 10 seconds of the video…..”It all depends on the price of oil..if that continues to rise, it’ll be hard to maintain the current rate of inflation” give or take a few words.
Bottom line is, they’ve tied the dollar to the price of oil. So basically we have instead of a “gold standard” of currency, we have an “oil standard” of currency, according to the Fed Chairman.
Does this explain why we’re in the middle east fighting wars? Does it also prove, we won’t be leaving any time soon as long as our foreign policy is tied to our monetary policy?
It’s time the 2 be separated. It’s time for a revamping of both houses and the executive branch. Get involved people at the lowest level…it’s not changing otherwise. We need people to replace the bums when they die in office. Which Ron Paul Republicans will be moving up into Senator Byrd, and Sen. Warners seats? That’s how we’re gonna have to do it
Yours Truly
February 27th, 2008 at 2:37 pm
Thanks Dan for the footage of U.S.Representative Ron Paul vs Federal Reserve Chairman Ben Bernanke today
The Fed Reserve Chairman contrinues to parrot the worn out mantra that the consumer price index is in the 2% range. As a 82 year old I rightfully resent this distortion of the facts, suffering from the recent 2.3% increase in social security. I can assure Chairman Bernanke, as millions of legitimate social security beneficiaries can, that the cost of goods and services last year increased 10 to 12% and has gained speed in the first quarter of this year.
The chairman’s effort to put the responsibility for the inflation of goods and services on the shoulders of the U.S. Teasury via the money supply was instantly and accurately rebutted by Congressman Paul. The Federal Reserve stands guilty of monetary inflation which cause the dollar to be devaluated and prices of goods and services consequenty to rise. GUILTY AS CHARGED!
By the way young folks, there is a large number-millions- of old timers who need to be informed about U.S. Representative Paul. Get them on your side for the coming convention. The freedom index recently records that his is one of two who had a score 0f 100% when voting on legislation before Congress. All of his votes are based on the Constitution. Bravo!
February 27th, 2008 at 2:57 pm
Sorry, I ended my previous statement a bit abruptly, ignoring one of my main points of the post.
My point about tying the Dollar to Oil, was based on Bernanke’s comments, what I failed to point out, is that he is either lying, because the dollars value dropped as the price of oil has risen, this doesn’t show the stability one would expect when the dollar is tied to the availability of a commodity. Obviously, I’m no economist, but I would expect, the fact that Congressional spending, the war, Fed Policy, and our national production, all tie into the value of the dollar.
In my most humble opinion, seems to me we’ve made things too complicated, no wonder Congress shirked their oversight responsibility of monetary policy, at least this generations any way. The congress that allowed the Fed Res Act of 1913 to go thru was just simply irresponsible, and it looks like all subsequent Congress have been both irresponsible and increasingly ignorant.
Bravo Bankers. You have succeeded in rendering the U.S. Congress Ignorant of Monetary Policy, by not allowing them to deal with it. Our politicians that have either been trusting, or enabling the bankers and their way of business, have bankrupted the American people. How do we go about fixing it immediately? There needs to be a real effort to educate our children about money, where it comes from, and what makes it valuable. How many of US, adults actually understand it. Dear God, how do we fix it?
February 27th, 2008 at 2:57 pm
Poor Mr. Bernanke.
He is had to endure the wrath of Dr. Paul.
It is true, that Bernanke’s job is mandated by the Federal Reserve Act of 1913 and he doesn’t have the power to change the system from a fiat currency to a hard standard.
Dr. Paul berating him in public will maybe open up the eyes of the other members of Congress.
Has Dr. Paul devised a bill that would phase in the elimination of the Federal Reserve and fiat currency? Basically a repeal of the FedRes Act of 1913.
Let’s go.
February 27th, 2008 at 3:05 pm
TO Vic Myers - in the comments under Ron Paul vs. Federal Reserve Chairman Ben Bernanke, Robert in NJ, mentioned 2 bills Congressman Paul has sponsored, waiting for co-sponsors. I just contacted my congressmen asking them to cosponsor the bills. The website below has info. on them
At the bottom of the website below you can contact your congressmen about this:
http://action.downsizedc.org/wyc.php?cid=85
February 27th, 2008 at 3:21 pm
Talk about a rollercoaster of a day. After watching the video my brother calls me to tell me he is voting for Osamma. I had a mild freak out and ended up hanging up on him after he told me I was wasting my vote.
Over a year of hard work and dedication… and Im wasting my vote?
Awesome job RP. Keep their feet to the fire. Change is coming.. whether they like it or not. whether its you or not and whether they try to stop it or not. The country cannot sustain the path it is on. Its impossible.
February 27th, 2008 at 3:28 pm
We have to let the economy collapse in order to make room for the Amero.
Then everything will be better!
February 27th, 2008 at 3:36 pm
now if we could just get another Republican debate together before the next primaries Ron willie the front runner. If we fail to get a debate we are going to see the same numbers again. We have a chance to flip this around now. There are three candidates. Amercica deserves to hear a debate before the contests. Why is no one doing anything about this? Everyone knows if Ron gets to debate them he will win. That is why the debate was cancelled. There is still time to debate. This should not be hard to get done. We are gonna miss the best possible chance for everyone to hear Rons message and they will vote for him. If we fail to get another debate we are letting them pass right infront of everyones eyes whether open or closed. More people should be making sure a debate happens. Who can do something about this?
February 27th, 2008 at 4:28 pm
The point Dr. Paul made about the gold standard was to show that it is not oil going up, but the paper federal debt note is going down. Bernacke did an obvious run around stating that “we all know…” Dr. Paul wants a gold standard. SNAKE SLIME! Down on your belly wormtongue! They’ve printed 4 trillion debt notes last year, devalueing our savings. If you had $100,000 in savings, it is only worth $57,000 now. If someone came into your house to steal your money, and you caught them red handed, what would you do? I’m sure there would be many different answers. Gold is the same, and silver is the same. What makes them more expensive is the devaluation of the debt note. That and if some people buy it up. Like Spain, China, Saudi, and Japan are doing. And the Euro is $1.51 now! Learn your chinese and your french and german quick. The saudi’s own all of our ports. They own our airlines. The Brit ******** and the chinese are taking our property through default on bank loans. You think it’s bad now? I urge you all to imagine what it will be like with no electricity, and food lines and martial law. You’ve got 2 years.
February 27th, 2008 at 4:54 pm
Ross Says:
Can someone or everyone do something so there is another Republican debate as the should be. We will win these primaries if there is a debate. If no debate we will see the same numbers again. How can they deny a debate. This is it!
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Dan, what specific actions are you folks taking at National to see that another deabte occurs with Ron Paul included?
February 27th, 2008 at 5:10 pm
Thank you Wisdom Seeker. You show great wisdom. It would be very wise for all of us to make sure Ron will debate the two other candidates before the primaries. People are focused on a march to get a message out? This could only lead to someone getting hurt by mistake. Ron has the message and he can easily speak it to everyone now before the primaries so he can win them. He will be the front runner before there is a march and then no need to risk people getting hurt or unplanned riots. We all worked so hard to get down to 3 left. Now if there is a debate he will be heard and put them all in there place. This is the momment we have all been waiting for. There is supposed to be debates in an election. That’s what its about. You made the descision not to have one? Let’s make it a point to have one. Contact the other people needed to get this going and let’s debate. Before the next contests. Or else we are going to see the same numbers. Let’s win now while we can.
February 27th, 2008 at 6:14 pm
Patrick, I don’t think we have two years, I expect and am planning for Martial Law before the election. That’s just me, I was raised to be prepared. It’s like Y2K, if nothing happens before September, then I have supplies for the winter and no doubt will have paid less for them now than later. Everyone should atleast take a look at how they would fair if the dollar did collapse tomorrow, if the foreigners lose confidence it’s over, that quick. Good Luck Everyone - God Blees
February 27th, 2008 at 6:51 pm
Somebody needs to impeach Bush!!!!!!
February 27th, 2008 at 7:56 pm
For Ross:
The numbers will be the same since we have computers counting the vote in secret.
What matters is the DELEGATES Folks! Get them all…
February 27th, 2008 at 8:36 pm
Its time to bring criminal charges to those that have mishandled our country.Imagine there would have been enough money on intrest alone to run social security if it were’nt pissed away…..all of it.Thats criminal yet nothing is done.They put hard working people in jail for not paying taxes(that most can’t afford to pay)yet our entrusted leaders can squander it.Thats absurd and iys time to organize and bring charges against those who have disobeyed the constitution.
February 27th, 2008 at 8:53 pm
We have a huge deficit.
We owe interest on that deficit and the juice is running.
Last year Congress financed the juice, spent all the revenues and borrowed even more with interest.
While Dr. Paul is complaining that Bernake’s passing Funny Money we need to tell our Congress to balance the budget and pay current interest charges and pay down the principal. We need to cease and desist with the borrowing of money from the Fed or whatever.
The test should be simple. Congressmen that thwart a balanced budget and paying down the debt need immediate replacing. If they borrow money for operations then tar and feathers are in order and a lifetime of taxing labor!
It helps if budgeting is assigned a single committee, a Select Committee on the Federal Budget, for example.
February 27th, 2008 at 8:55 pm
It helps if budgeting is assigned a single committee, a Select Committee on the Federal Budget, for example.
http://www.econlib.org/library/Enc/FederalBudget.html
link added
February 27th, 2008 at 9:07 pm
John, very true. Our electric plants are mostly run on coal, so we’re good for a while. But the point is that foreigners will run our country if we don’t do something now. Bank of America is looking for a bail out of 300 billion. That means our elected officials will steal it from us once again.
February 27th, 2008 at 9:38 pm
What is Ron Paul and his campaign going to do about this?
http://lonestartimes.com/2008/02/26/rpcq1/
Is he going to stop airing these ads, stop making these claims, and give a retraction/apology or is he going to simply ignore it?
February 27th, 2008 at 11:11 pm
http://www.house.gov/paul/press/press99/pr102999.htm
WASHINGTON, D.C. - Congressional Quarterly magazine has announced its issue featuring the first ever “CQ 50.” The magazine chronicles 50 of the most effective members of Congress, and included in that list is Representative Ron Paul. The list includes just fifty Members of Congress, both from the US Senate and the House of Representatives.
In the story entitled, “50 Ways To Do the Job of Congressman,” the magazine notes Paul’s effective advocacy of a strict interpretation of the Constitution and his consistent application of that standard through his votes on the House floor.
“When CQ first contacted my offices some time back saying I would be named one of the 50 most effective legislators in Congress, I was obviously pleased to be recognized by this important institution. It is indeed gratifying to be honored in this way. It is sometimes difficult to take a strong and principled stand in light of how Washington operates, but I think my being included in this list goes to show that a person can stick to his principles and still have an effect on the direction of the country,” Paul said.
February 27th, 2008 at 11:14 pm
Guys lonestartimes has been ripping RP. Put them in their place! It is time that RP take a stronger stand. Mae West put it best with “Nice Guys come Last”.
February 28th, 2008 at 7:53 am
Ron Paul on the American Power Structure 1988
http://video.google.com/videoplay?docid=-4245169480003136735&hl=en
February 28th, 2008 at 9:30 am
WAY TO GO, RON!!! THE ONLY POLITICIAN WILLING TO SPEAK THE TRUTH.
WOE BE TO US, IF WE DON’T HEED HIS PRESCIENT WARNINGS
March 16th, 2008 at 6:52 pm
THE FEDERAL RESERVE SHOULD BE ABOLISHED
In Article I, Section 8 of the U.S. Constitution, the people of the United States granted Congress the power “to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.” The people never gave congress the constitutional power to delegate this money-creating and regulating responsibility to any private group. Yet this is exactly what the Federal Reserve Act of 1913 did. The bill was publicly promoted as a plan to reform the nation’s monetary system and stabilize the currency by taking control of it out of the hands of big bankers. In reality, of course, the Federal Reserve Act was written by the big bankers for the purpose of solidifying their control over our currency.
Many Americans today wrongfully believe that the Federal Reserve is somehow part of the federal government, possibly even the Treasury Department. Many do not know that the Federal Reserve is actually a cartel of private banks that was given the power to be the sole issuer of U.S. money, with full control over its quantity and thus its value. Since this group of private bankers (the Fed) provides credit to the U.S. government when we spend money we don’t have, the Fed also is able to profit handsomely from the ever-increasing national debt. Because the Fed makes more money when the country goes deeper into debt, there is no incentive for the Fed to support any reductions in federal deficit spending. The more credit we need, the more money this cartel of private banks will make.
The actions the Fed takes can drastically affect the economy simply by making decisions about the money supply and interest rates. The president, congress, big business, investors, home buyers and anyone else with an interest in our economy waits with baited breath every time the Federal Reserve Board meets. If they decide to raise interest rates, politicians and industries could fall, homes might not be purchased and jobs could be lost. If the Fed decides to lower the interest rates, politicians, industries, investors and consumers may prosper. There is too much power vested in a handful of people whose names would not be recognized by most Americans.
Why do we allow such a small group of people on the Federal Reserve Board to wield so much power over our country’s economic well-being? As average Americans strive to earn a living, cope with rising costs of food, fuel and hopefully save or invest for the future, Congress and the Federal Reserve Bank are working insidiously against them. On a daily basis, every dollar they have is being devalued.
Even though most Americans seem unaware of the current plight of the US dollar, especially in relation to the Euro, there is definitely a dollar crisis in the world economy because of the immense size of the international debt of America. America has now become the largest debtor in history, owing somewhere between $70 and $100 Trillion. The reckless deficit spending by our government, coupled with Federal Reserve currency devaluation, has become one of the greatest threats facing America today. Because Congress is routinely spending more than it can tax or borrow and the Fed is routinely printing “Fiat Money” (Dollars backed by nothing) out of thin air to make up the difference, this classic “one-two punch” threatens to further destroy the value of our dollars.
The actions of both major political parties would seem to indicate that they want the Fed to print more “Fiat Money” to support their extravagant and unchecked spending habits. Most politicians want the printing presses to run faster and faster, create more credit, issue rebate checks, etc., so that the economy will somehow be magically healed by this dangerous financial potion, or so they believe. The President and members of Congress may love a system that generates more and more money for their special interest projects and earmarks, but the rest of us have good reason to be concerned about our monetary system and the future value of our American dollars.
Issuing “Fiat Money” has allowed our government to live well beyond its means, but that practice cannot continue much longer as it is slowly destroying the value of our dollars. History shows us that when the destruction of monetary value becomes rampant, as the actions of our congress and the Fed would indicate, nearly everyone suffers and both the economic and political structure becomes unstable. The Federal Reserve System has been the tool used by the major bankers to allow them to gain control over the smaller regional and local banks. The Fed has also acted as the financing agency for Congress’ unprecedented deficit spending on an ever growing, more intrusive federal bureaucracy and the expansion of the welfare state. Some people believe that the private bankers in the Federal Reserve wield so much power that they can intentionally manipulate the economy in order to influence the results of our presidential elections.
Our government and the American people do not need the help of any private banking cartel to manage our monetary system. We need to repeal the Federal Reserve Act and return control of our currency to Congress where it belongs, as was the intent of our Founders. We also need to have a serious national discussion about how real currency reform can be achieved. As long as the private bankers in the Federal Reserve have control over our nation’s money, Congress’ control of the purse-strings will not have the benefits the country’s Founders intended.
I support legislation introduced by Congressman Ron Paul, of Texas, entitled “Federal Reserve Board Abolition Act (H.R. 2755) that will restore financial stability to America’s economy by abolishing the Federal Reserve.
REF: H.R. 2755: Federal Reserve Board Abolition Act
http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.2755:
By:
JOHN W. WALLACE
Candidate for Congress
New York’s 20th Congressional District
www.FreedomCandidate.com