Bernanke Stumped by Representative Ron Paul

Minyanville ^ | 9/20/2007 | Scott Reamer

[oblomov]

In today’s testimony before the house, Fed Chairman Bernanke was questioned by Representative Ron Paul in what was a remarkable exchange. Remarkable for how straightforward, lucid, and anti-statist the question was. In his questioning, Ron Paul stated:

“I want to follow up on the discussion about moral hazard. I think we have a very narrow understanding about what moral hazard really is. Because I think moral hazard begins at the very moment that we create artificially low interest rates which we constantly do. And this is the reason people make mistakes. It isn’t because human nature causes us to make all these mistakes, but there is a normal reaction when interest rates are low that there will be overinvestment and malinvestment, excessive debt, and then there are consequences from this. My question is going to be around the subject of how can it ever be morally justifiable to deliberately depreciate the value of our currency?”

His statements continued (about how much oil, gold, wheat, corn, etc. has gone up since the rate decrease) but the heart of his question was the following moral question: ...consciously depreciating the value of the USD has winners and losers (Wall Street/banks/the rich and everyone else), Mr. Bernanke. How do you constantly choose Wall Street over the rest of America?

You will not be surprised to know that B-52 Ben didn’t answer the question. He couldn’t answer the question (at least truthfully). Was he going to say that the Federal Reserve is a quasi-private institution whose prime directive is to cartelize and protect the profits of the banking industry? Was he going to say that the only policy the Fed knows is based on the flawed Keynesian logic that wealth can be created out of thin air via printing presses? Of course not.

[Free Dominoes]

Post 28 seems to agree. If you’re going to worry about anything, worry about Mexicans invading from the south over that border Bush refuses to protect.

[George W. Bush]

I'm not at all endorsing Bernanke or his policies but the idea of returning to the Gold standard is absurd for a handful of reasons, just for starters:

Ron Paul does not demand or envision a complete return to a gold standard. He never has.

The United States has never had an entirely gold-backed currency, contrary to what many people believe.

Ron Paul advocates offering a gold/silver/copper currency in competition with the Fed's fiat money, not as a complete and/or immediate replacement for paper money. You might know this if you bothered to read our comments instead of scouring the St*rmfr*nt and D.U. for anti-Paul material or searching out shrimp pictures for more of your bogus earmark posts which I think you do know to be false. Certainly, your support for a FDT, a real earmarker, shows you don't give a crap about the issue to begin with but you have undoubtedly had a lot of fun stirring up the Paul-haters and FUDding away. That is, after all, your real purpose as it is with the other habitual Paul-haters at FR.

The reason is to stabilize the value of the currency and guard against the constant deflation of the currency, the periodic attempts (2002-2006) to punish anyone who won't plunge themselves into massive debt, the inevitable bank bailouts that follow (the S&L bailout of the first Bush presidency, the imminent bailout of the big banks over their insane loan practices in recent years). And that's not even including the fact that our dollar is now trading evenly against the Canadian dollar for the first time in 31 years, a devaluation of your savings and purchasing power of 30%-50%.

[mkjessup]

You might know this if you bothered to read our comments instead of scouring the St*rmfr*nt and D.U. for anti-Paul material or searching out shrimp pictures for more of your bogus earmark posts which I think you do know to be false.

Now you just crossed the line Jorge.

I defy you, in fact I *demand* that you, by the end of the day, prove that I have EVER 'scoured' websites like S-frnt and/or DU for "anti-Paul material" (which I have NEVER done) and for an encore, I challenge you to find one, just ONE 'shrimp picture' or 'earmark post' that I have made regarding Ron Paul.

Get busy Jorge, either put up or shut up.

You done stepped it in now boy.

[perez24]

I thought that, but I wanted to be sure I wasn’t any more delusional than usual.

That was always my hang-up with third parties. So your guy, girl, parrot becomes President...which of the two parties who don’t like you because their candidate lost will you work with?

[capitalist229]

"raising the interest rates" would not be any different, morally, from Bernanke lowering them

Surely you jest.

In 1980 Volcker saved the currency and the country by raising rates to 18%.

That was a moral act.

BUMP

[r9etb]

What you're saying, then, is essentially that there is nothing intrinsically moral or immoral about raising interest rates.

So Mr. Paul's whole line of questioning reduces to nothing more than a policy disagreement, and not the grand moral issue he's trying to make it out to be.

[A CA Guy]

Ron Paul and his supporters would not be so stupid as to stay in the race as spoilers or to vote for Democrats by not voting for the Republican in 2008.

What do you think they are, traitors and Democrat enablers?

[George W. Bush]

Get busy Jorge, either put up or shut up. You done stepped it in now boy.

Like I'm going to waste my time trolling through the posts of Paul-haters.

[George W. Bush]

Ron Paul and his supporters would not be so stupid as to stay in the race as spoilers or to vote for Democrats by not voting for the Republican in 2008.

If the leftwing mayor is nominated, I will stay home or vote third-party.

In either event, my vote would not be cast for a Democrat. A vote not cast is not a vote in any sense. A vote for a third-party is simply a vote for a third-party.

If all non-voters are really voting for the Dims, then Republicans are outnumbered by 75% of the population and can't win any election. But to admit that is to admit what a stupid talking point it is that any vote not cast for GOP candidate X is actually a vote for a Dim.

[capitalist229]

What you're saying, then, is essentially that there is nothing intrinsically moral or immoral about raising interest rates.

It is moral to save the dollar and the country that depends on its stability.

BUMP

[r9etb]

And thus Ron Paul has a policy disagreement with Bernanke, not a moral one. It's disingenuous of him to try to make it a moral issue.

The power to change interest rates means "up" or "down." It could be moral to do either, depending on the situation.

Otherwise, the only "moral" act would be always to raise rates, and never lower them.

But heck ... in the context of Ron Pau, isn't it really quite ironic that we're having this discussion about which government action is needed to "save the dollar and the country?"

[bvw]

Washington avoided and wanted Americans to avoid political parties. He knew what gangs they can become. Gangs become defined not by ideals, but by simple dint of membership determined by the outward gang signs displayed — the colors one must wear, the hand signals, etc. The GOP is somewhat more sophisticated a party in its gang nature — the voting pattern in the House and Senate I think show that. Dems vote in lockstep. Republicans are more free in step.

But still, the GOP and also the talkers, and the blogs and the forums, we have gangs, or at least a strong gang-like aspect. We demand a unswerving loyalty on some issues. Sometimes those issues are truly key issue, bot mostly they are not, they are instead gang banners flown!

[the invisib1e hand]

dude, get ahold of yourself.

[oblomov]

what do you mean?

[mkjessup]

Get busy Jorge, either put up or shut up. You done stepped it in now boy.
Like I'm going to waste my time trolling through the posts of Paul-haters.

You are once again displaying your utter ignorance, because I am not at all a 'Paul-hater', and if you were even a fraction as smart as you think you are, and were familiar with what I have posted in the past about Ron Paul, you would know that I clearly stated that I would no longer make personal attacks on Paul (and I haven't), I have only taken issue with his positions and policies.

What you're doing pal, is exactly what the leftists and liberals do all the time, you're painting with a broad brush, labeling everyone who doesn't agree with Paul's views a 'hater' (funny, that was the same tactic being used by the Rooty-Tooters just prior to the FR Bug Zapper (c) Festival of Spring '07).

The reason you're slinking off with the excuse that you don't want to 'waste your time' is because you know you've been caught with your damn pants down making an accusation which was unfounded, unwarranted, and 100 percent FALSE.

[George W. Bush]

I am not going to go back four weeks or six weeks to when you swore off nasty personal attacks on Ron Paul and his supporters and search through all your posts.

You aren't that important to me.

[mkjessup]

I must be, since you had to conjure up lies and falsehoods about what I post.

You Paulistinians are a touchy bunch.

[lormand]

"Few politicians understand our pseudo-capitalist economic system as well as Ron Paul."

Who are the remain other ones?

If they are not anti-war, blame America, suicide monkeys, then that is the person to vote for.

[lormand]

"Good job rabid Paul haters! Record time on that keyword spam!"

I guess it matches the pro-Ron Paul spam we get here on FR from the loon wing of American politics.

[US at Risk]

What you're saying, then, is essentially that there is nothing intrinsically moral or immoral about raising interest rates. So Mr. Paul's whole line of questioning reduces to nothing more than a policy disagreement, and not the grand moral issue he's trying to make it out to be.

Lowering rates is a euphemism for printing mo' money, so it ultimately weakens the dollar.

Ron Paul is in favor of abolishing the Fed and letting interest rates react to the market. Whether he can actually do this is another matter. Maybe someone could comment.