Posted on 09/21/2007 1:25:12 AM PDT by 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.
(Excerpt) Read more at minyanville.com ...
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 Reserve’s 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 weren’t 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."
What part of Paul's economic views do you not agree with?
hmm..worth chewing over a little..
There is a difference between issuing executive orders to carry out one’s constitutional authority, and assuming extra-constitutional powers. A common position among libertarians (and many conservatives, such as myself) is the principle of non-delegation. Since the constitution does not grant Congress the power to delegate its lawmaking authority to the executive branch, “regulations” can’t be made by the executive. By extension, the entire regulatory apparatus that sprang up during the New Deal is unconstitutional and unlawful.
Going back on the gold standard is a different matter. It’s as simple as saying that the gold clause of the constitution will be honored, and the gold window is open at the US Treasury. It isn’t making new law, since no law ever closed the gold window. It was arbitrarily closed by Nixon. If you think this is a stupid idea, then amend the constitution to strike the gold clause instead of ignoring the parts you don’t like.
You underestimate the resourcefulness of Americans freed from the nanny-state, and able to coin their own money. As great as it is, the Comstitution has a few subtle flaws. One is the restriction on coinage and money. As it turns money — in the course of human events post 1789 — is privatized already, but not liberated. The US money supply is, today, fascist — run by oligarchy in cahoots with the government.
And how, praytell, would Ron Paul raise interest rates?
And even if President Ron Paul had the power to do so (which he would not) .... "raising the interest rates" would not be any different, morally, from Bernanke lowering them. He'd just be playing to a different crowd.
Muddle muddle muddle....
It’s unfortunate that Paul’s anti-war position causes succh a visceral reaction among many conservatives taht they oppose him as well when he advocates true conservative positions, such as the proper size and scope of government, the role of the government, the relationship between citizen and state, the proper level and method of taxation, the need for a monetary authority, and the desirability of a commodity-backed currency.
In 1996, mainstream GOP candidates for the Presidency advocated going back on the gold standard, and eliminating the Departments of Education, Transportation, HUD, and HHS. Now someone who takes such positions is apparently a candidate for institutionalization.
Sic transit ...
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