Skip to comments.Bernanke Stumped by Representative Ron Paul
Posted on 09/21/2007 1:25:12 AM PDT by oblomov
In todays 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 isnt 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 didnt answer the question. He couldnt 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.
(Excerpt) Read more at minyanville.com ...
Wait a sec, I thought John Edwards was out of the Senate?
I fear that Congressman Ron Paul is being used as Senator Hillary Clinton’s “Ross Perot” for 2008. It worked twice for her husband (President Bill Clinton NEVER won a majority of the populace, yet was elected twice) and she knows it.
Too bad he’s dangerously clueless regarding foreign policy...
Good job rabid Paul haters! Record time on that keyword spam!
Yeah, but do the people who keep repeating this "Paul is the Perot of 2008" line know the difference between a primary and the general election?
If Paul had a clue what the Islamists were up to it would have been easy to support him - but he doesn’t...
Wait a minute - don’t all of the FReeper Ron Paul haters say that those who support him are just a bunch of code pink surrender monkeys? In that case, he would pull more votes from the Democrat than the Republican.
This is especially true if Hillary is the nominee - Ron Paul, were he to run 3rd party, would take a lot of the anti-war vote from her. They’ve never forgiven her for her pro-war votes back in 2003 (when she assumed she would be crowned Queen of the Dems with no serious opposition from the left).
Those of us who believe in significantly lower taxes (elimination of the IRS), less government (elimination of numerous federal departments), sound money (no more Federal Reserve and a return to the gold standard), secure borders, American sovereignty, the US out of the UN and Nato, no more NAFTA, SPP, or NAU - we seem to be persona non grata with the Republican party in general and FR in specific. According to the polls, we’re only 1 to 3 percent of the Republican base, so what’s your worry?
Your slandering Paul with a conspiracy theory that he is in cahoots with Hillary makes you look even kookier than what your ilk claims Paul’s supporters to be.
What exactly are the Islamists planning that couldn’t be stopped by stopping muslim immigration?
Consider that IF, by some unknown and as yet undiscovered law of cosmic illogic, that Ron Paul actually was elected President of the United States: the economic chaos that would result as of the day after Election Day (anticipating Paul’s views and policies on the economy) would make the upheavals of 1987, yea - even 1929 look like a minor ‘whoops’, because the uncertainty would without a doubt bring on a bear market, investment capital would dry up until it was clear what a Paul Administration would mean for the economy, you can be sure the DJIA would be dropping, and the value of the U.S. dollar would be virtually unpredictable. There would be good news for all the gold speculators however, because investors would be moving to precious metals for sure.
And those are just some of the economic issues that would be spooked by a Ron Paul victory next year.
On a global scale, you can be sure that our terrorist enemies would be rubbing their hands in glee because they would know that if Ron Paul is true to his word, there will be a major American pull out from the Middle East, and that would mean that al Qaeda, Hamas, Hezbollah, Iran, all of those dirtbags would be anticipating their being able to fill that power vacuum with impunity.
Israel might be compelled to launch a pre-emptive strike on both of her enemies Iran and Syria, why? Because Ron Paul has made it clear that he doesn’t think we should be providing any aid or support to Israel or any other nation in the Middle East. Ron Paul would do to Israel what Jimmy Carter did to the Shah, and the results would be even uglier. Israel would (in former SAC parlance) ‘use it (their military and/or nuclear capability) or lose it’.
Fortunately, Ron Paul is not only going to NOT be the GOP nominee, he is never going to be President. It is true that he has some good ideas, he does profess Christ as his Saviour (although he said he is very uncomfortable about discussing his faith, which begs the question ‘why’?), and in his own mind, he no doubt truly believes that his policies would be best for America.
And they would, if this were 1901.
Are you serious?
This Perot thing only works when the GOP candidate is at best a weak-kneed RINO. Bush Sr totally lost most conservatives (if not all) and Bob Dole was equally non-inspirational. If Republicans nominate a conservative, who knows what the word means and can explain conservatism in understandable terms, there will be no need to fear a third candidate.
Reagan did not have to worry about a challenge from the right. He dealt with his opposition from the left (”moderate”, Rockefeller Republican, whatever you want to call them), namely Bush Sr.
Moral Question=Social Justice
Too bad hes dangerously clueless regarding foreign policy...His foreign policy (anti-victory, anti-Israel) is why the Paul Qaeda loves him.
Ron Paul is getting most of his support from way out disgusted democrats!
Wow! I had no idea that the amazing Kreskin was a FReeper.
Back, back, way back, Hey! Hey!
If Ron Paul were in charge his first act would be to stabilize the currency by raising interest rates.
That would be bad for gold, but that's the whole point.
Stop devaluing the dollar and there will be no need for gold except to back the dollar.
No disrespect, but can the President actually raise interest rates?
Do you realize countries that backed their currency in dollars were the countries that suffered the worst and the longest during the Great Depression?
First to your senario: Yikes...
Second very true, they do play like it’s 1901. Those nuke thingys are just fiction.
What an asinine question.
And talk about class warfare. Wall Street is simply a place where "the rest of America" invests their funds and demands a return on their investment for their risk in doing so.
If someone is "stumped" by this guys questions it would be because he strings so many false associations together in one query.
by stopping muslim immigration?
I really like that concept. If anything, it’s a start. Wouldn’t it be great to try for a 4 or 5 year term??
Now if we can get that little parcel of land bordering Mexico secure, we may have something.
You’re late, WWTD used that lame joke first, and your beanie hat’s propeller is missing.
I’m glad you know so much more about economics than Walter Williams, who has endorsed Ron Paul. Nice going, Kreskin.
Paul, or for that matter, any other elected in 08 may not have a chance to show what they could do. W is allowing the dollar to really tank.
Oil, as most experts are predicting should be hitting close to 100.00 dollars a barrell soon. That should equate to about 4.00 plus dollars a gallon. Lets hope mom and pop can afford public transportation or many other working stiffs as well.
I think I'll play in the sandbox with Williams. You can keep spewing idiotic predictions from your litter box.
Bush Sr lost most of the voters after his “no new taxes” went south. If you look at Bush during his failed re-election, he looked defeated from the very start. Dole on the other hand was kind of the token republican candidate. As though the party owed him something for his service. Hope we do not make the mistake again with McCain.
I’m with you. His domestic policy views are SO PERFECTLY RIGHT!
But geezlouise, how can he be so naive about the war?
I disagree with you 180 degrees on your economic take. Yes, there would be upheaval, as the Fair Tax and the gold standard took root, and the artificial crap that’s propped us up shook out. But it would happen slowly, not ‘the day after he was elected’. Let’s be honest though- this economy is based on fiat money and a larely fake market. We desperately need a dose of reality and a prioritization of genuine wealth.
“Thought” well there is the rub....
Nothing against Mr. Paul, but I'm having a hard time following this.
If it isn't "human nature," what is it, a remote control?
And who forces people make "malinvestments?"
And does one always know what a "malinvestment" or what "too much debt" is before conditions have changes enough to make them so?
This line of questioning is ... well, perhaps there's not enough context here, but it seems a little bit strange.
Excellent points by Ron Paul. The only winners were those on Wall Street, the malinvestors, and those hawking their overpriced stocks leveraged by low interest debt. Wall Street sings the tune, the FED joins in with their instruments, and we all are compelled to dance to it, all the while the dollar continues its precipitous fall. And the media and the squeeky wheels applaud.
>>There’s no guarantee there will even BE a currency to ‘stabilize’ by the time he gets to the Capitol steps.
Don’t be ridiculous. Most likely, one of Paul’s first acts would be to put the US back on the gold (or perhaps a bimetal) standard. FDR and Nixon unconstitutionally took us off of it by executive order, so certainly all it takes is an executive order to put us back on...
>>If it isn’t “human nature,” what is it, a remote control?
human nature + government intervention in the economy that leads people to make mistakes of judgment.
This is not to say that people don’t make mistakes otherwise, just that the mistakes would be much less severe and prolonged if the government did not put its finger on the balance.
>>And who forces people make “malinvestments?”
No one is forced. That’s why we get to kid ourselves that we still have a free economy.
>And does one always know what a “malinvestment” or what
>”too much debt” is before conditions have changes enough to make them so?
No, we don’t know what the malinvestments are until something blows up. We don’t know who isn’t wearing a bathing suit until the tide goes out.
I dunno, I’m a disgruntled Republican, feeling like a betrayed Republican, wanting answers but “top tier” guys won’t even show up. And when they do it doesn’t even resemble debate. Everyone I know who’s for RP is just mad as heck. BTW the biggest story is RP’s noncoverage, the impossibility of choosing him in a poll, and his rejection by “conservative” groups.
Ron Paul is dangerous.....Hillary’s TROJAN HORSE.
Ron Paul shoul be watching his back. Those who speak the truth about the Federal Reserve may end up in a bad plane crash.
"OMG, Ron Paul's ideas will crash the economy!!!! We've got to keep spending!"
"OMG, the Muslims are coming to get us...can't Ron Paul see that???"
"OMG, Ron Paul thinks our Holy Hero Bush might have been wrong in his response to 9/11!!!
"He's an idiot! A loony! He's nuts! He needs Thorazine! He's a surrender monkey! We're all GOING TO DIE!!!! AAAAAAAAAH!!!!"
Well, I'm tired of all of these hysterical replies...and I'm not even supporting Ron Paul. He's an economically literate, libertarian-minded candidate who is asking some very valid, pointed questions about the domestic and foreign policy conduct of our government over the last two decades. Whether those questions are met with blank stares or hysterical denunciations, the replies pointed out that something is very wrong at the top - and FReepers, who are supposed to be rational and skeptical about government at all levels, are starting to sound like a team of teenaged Republican Party cheerleaders.
Ron Paul will get his 5% of the vote in the primary and fade from the scene. But if we continue to put up with a government who tells us, "Don't worry your pretty little heads about border security/government spending/the falling dollar/anything at all - just keep borrowing and spending", the USA will end up in the middle of the 21st century about where the British Empire ended up in the middle the 20th. It may already be inevitable. As the article says, further down:
"Back in July of 2006, I wrote a piece introducing this moral element into the discussion of the Federal Reserves monetary policies. I wrote then words that today, after a pre-emptive, forestalling 50 basis points decrease and more than $1 trillion in worldwide central bank injections of credit, are as germane as ever:
A constant loss of value in the monetary unit forces all manner of dire consequences on economic actors: it favors consumption over saving, speculation over investment, capital over labor, and the young over the old; it prevents accurate economic calculation about the future and thus clouds investment horizons; it hollows out a country's middle class making for more class conflict between haves and have nots there are grave time preference consequences as well that impact not only long term investment projects (as noted above) but also the very manner in which parents raise their children and how children care for their ageing parents, as well as the lessons of frugality and hard work that once were the bedrock of this nation.
"Bravo to Ron Paul for giving voice to the hundreds of millions or pensioners, savers, working stiffs, poor, fixed income beneficiaries, laborers, gasoline-, bread-, milk-, and egg-buyers who werent able to ask Mr. Bernanke why he like every Fed chairman before him since 1913 screwed them for the benefit of the top 5% of the population of this country."
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