Ron Paul Has the Final Say
by Bob Adelmann
In his last
public opportunity to quiz Federal Reserve Chairman Ben Bernanke,
appeared before the House Financial Services Committee on July
18, Texas Congressman and Republican presidential candidate Ron
Paul took the time to put
things into perspective:
For the past
few years the Federal Reserve System has received criticism from
all sides of the political spectrum, and rightly so, for its unprecedented
intervention into the economy and its bailouts of large Wall Street
banks and foreign central banks.
This has been
Pauls theme ever since he entered Congress following a special
election in April 1976. In a position paper that his staff prepared
in June of 1976, Paul attacked a pending bill in Congress to fund
the International Monetary Fund following the breakdown of the Bretton
Woods agreement when President Nixon took the dollar off the gold
standard in 1971.
responsible for that paper, Gary North, remembers starting work
on Friday, June 11, 1976, and being given the task of preparing
the paper in time for the Monday deadline. He worked all weekend
on it, and when it was published, it made such an impression on
Senator William Proxmire, then chairman of the Senate Banking Committee,
that he invited Paul to testify before his committee. Says North:
At the time, I had never heard of a House member testifying
to a Senate Committee. I have never heard of it since.
But that testimony
launched a three-decades-long campaign by that lone congressman
to question the existing monetary system, especially the centerpiece
of that system, the Federal Reserve.
In his July
18 testimony, Paul recalled his primary problem with the IMF
the same problem he has with the Fed is that it is a central
bank that was deliberately designed to enrich its supporters and
friends in the banking system and protect them from the costs of
making bad decisions, while impoverishing the middle class and the
poor who pay those costs.
He said he
has always been an opponent of the system and not the chairmen of
the Fed, be they Volcker, Greenspan or Bernanke. The system
itself is flawed, he said, and more debt is never the
answer. He decried the lack of any attention by the Fed to
the real market solutions to the continuing unending series of economic
and financial crises that face the United States and now the rest
of the world, namely the work ethic, real savings, and real
He said he
wanted to contribute to the conversation and then asked
the Fed chairman a series of questions:
the Constitution, who has the authority to manage monetary policy?
has the authority but transferred it to the Fed in 1913.
Paul: But Congress
doesnt have the power to do that! Thats amending the
Constitution! Mr. Chairman, who has the right of oversight [of the
Congress. We accept that, and the need for transparency. But it
is a well-established fact that an independent central bank will
provide better outcomes.
the Fed operates in secret. Congress has a right to know, an obligation
to know. Central banking destroys the middle class. The Fed is the
facilitator for big government, financing wars [and it] eventually
ends up in a crisis. [The] first step is transparency. We demand
trillions and trillions printed out of thin air.
[You] keep doing the same thing: spending never ends, wars never
of our actions have been fully disclosed.
At this point
the reader needs to remember that what limited disclosure the Fed
has allowed has only come following congressional action and court
demands. The Fed never supported transparency, but disclosed only
when it was forced to.
Paul then clarified
the difference between his position and that of the Fed. It starts
with definitions. The most beaten up word in the economic language
is the word inflation and next to it is its sister,
deflation. Back to the testimony:
Paul: The need
to prevent deflation is one of the purposes of the Fed, right?
Paul: But [increasing
the money supply] never allows the markets to clear. Youve
done a pretty good job [with that]! M1 [a measure of the supply
of money in the economy] has grown by 16 percent [in the last year
while] M2 [a broader measure] has grown by over 9 percent. Do you
consider the decline in house prices as deflation?
Inflation is increases in [the] prices of goods and services.
one of the problems in our discussion the meaning of words
and what the words inflation and deflation mean. Because by my definition
inflation and deflation is when the supply of money increases or
decreases. If [youre] watching changes in house prices and
goods and services, youre watching the wrong thing.
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© 2012 The New American