Paul Ryan Bashes Bernanke For Killing Savings, Distorting Markets

Forbes ^ | 2/02/2012 @ 11:49AM | Agustino Fontevecchia

[Hunton Peck]

In a fascinating exchange between Federal Reserve Chairman Ben Bernanke and Congressman Paul Ryan, the Republican from Wisconsin accused the Fed of eroding peoples’ savings, creating a false sense of security by manipulating the yield curve, and bailing people out by indirectly engaging in fiscal policy.

Bernanke hasn’t been comfortable the last couple of times he was forced to testify in Congress. On Thursday, the Fed Chairman was questioned by the House Budget Committee on the state of the economy.

After giving his usual description of the economic outlook (inflation has remained moderate, unemployment is high, Fed will do whatever it can to keep the modest recovery on track), Bernanke faced the sharp tongue of Paul Ryan, Chairman of the House Budget Committee.

More than questioning him, Ryan expressed his concern that Fed policy would cause more harm than good. Ryan told Bernanke the Fed was “too loose for too long,” effectively causing a dislocation of capital that led to the real estate bubble and subsequent financial crisis.

Ryan said he felt fear that because Bernanke denied the Fed was responsible for the crisis, via ultra low interest rates for too long, his current policy mix could cause economic disruptions to a possibly catastrophic magnitude.

The exchange was essentially a Paul Ryan monologue, Bernanke answered most questions as he did reporters’ questions in last week’s post-FOMC press conference. Regarding the effects of quantitative easing on savers, Bernanke acknowledged that flattening the yield curve eroded savings and caused hardship on some, but noted a weak economy was even more dangerous.

Ryan also accused Bernanke of “putting a cap on price discovery” and creating a false sense of security by keeping rates low. While a reasonable argument, Bernanke debunked it by citing the case of European PIIGS...

[Graewoulf]

Thanks for the hot links.

It is truly baffling to me why it has taken Ryan 3 YEARS to say that there is a problem.

It is also baffling to me why Ryan does not insist on Bernanke’s immediate resignation.

BTW, could it possibly be that the Ryan brain freeze is proof that he is really a RINO?

[afraidfortherepublic]

We, in Wisconsin, have been trying to get Paul Ryan to run for higher office for years. He won’t budge. He has a wife and small children, and I believe that his life has been threatened. He also feels that he is in his proper niche as chair of the budget committee in the House. Maybe in the future.

[Hunton Peck]

I'm not sure what your basis is for saying that Ryan has remained silent for three years. For that matter, it's not clear what problem you're referring to that you say he hasn't addressed in that time.

If the problem in question is quantitative easing, he addressed that at least as early as 2010, after the last round of it, in this column: Refocus The Fed On Price Stability Instead Of Bailing Out Fiscal Policy. The round currently under discussion is, I believe, the first since Ryan assumed the chairmanship of the budget committee.

As to why he hasn't called for Bernanke's resignation, I can't say. Maybe he doesn't think that just changing the name on the Chairman's door would help get the Fed out of the fiscal policy arena.

[Graewoulf]

Some problems are obvious by inspection. Others take some degree of fact-finding investigation. Ryan has chosen to simply jawbone for THREE YEARS! That is the problem: all talk and no action!

For example, after Porky Pelosi’s Pork-Barrel Bill in early 2009, the 6 month data available revealed that it was a failure. TARP money was never spent on what Congress mandated it be used for. Trillions and Trillions of Dollars later Ryan is still chattering away, scolding and caving-in to every “deal” the Democrats dream up.

Ryan has not been silent, he just is all talk and no action. A RINO to the core!