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Paul Ryan Bashes Bernanke For Killing Savings, Distorting Markets
Forbes ^ | 2/02/2012 @ 11:49AM | Agustino Fontevecchia

Posted on 02/02/2012 9:37:14 AM PST by 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...

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; Government
KEYWORDS: benbernanke; federalreserve; monetarypolicy; paulryan

1 posted on 02/02/2012 9:37:17 AM PST by Hunton Peck
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To: Hunton Peck

Draft Paul Ryan for President


2 posted on 02/02/2012 9:42:07 AM PST by afraidfortherepublic
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To: afraidfortherepublic

AMEN!!!


3 posted on 02/02/2012 9:46:43 AM PST by Eternally-Optimistic (anything is possible)
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To: Hunton Peck

Good one Paul! This economist said the same thing ... with charts backing it up!

http://confoundedinterest.wordpress.com/2012/02/02/fed-chair-bernanke-addresses-house-budget-committee-admits-savers-being-hurt-goldsilver-prices-jump-up-cue-the-shirley-bassey-tune-goldfinger/


4 posted on 02/02/2012 9:47:27 AM PST by whitedog57
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To: Hunton Peck
"...case of European PIIGS"

What a load of crap! Investors lost confidence in the PIIGS because of their debt; it's unsustainable.

I can't believe Forbes would allow such a flimsy "rebuttal"

5 posted on 02/02/2012 9:47:40 AM PST by Pietro
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To: Hunton Peck

The Federal Reserve is the cornerstone of Progressive plans for government. Remove it, and the likes of Obama could not exist.


6 posted on 02/02/2012 9:49:34 AM PST by PGR88
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To: Hunton Peck
Killing Savings, Distorting Markets

That will not compute with Bernanke. Keynesians believe markets are prone to failure without government intervention and that saving is a "leakage" from the spending stream.

Odd but true!

7 posted on 02/02/2012 9:51:14 AM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: Hunton Peck
Politics (and the fact that we'd probably be better off with a fully market-driven interest rate scenario) aside, there is a fine line between encouraging savings vs. the effect of higher rates putting people out of work to where they don't have anything to save. That said, an uptick in rates might improve confidence too. Either way its a clusterf***.
8 posted on 02/02/2012 9:54:15 AM PST by RockinRight (If you're waiting to drink until you find pure water, you're going to die of dehydration.)
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To: BfloGuy

Couldn’t a higher savings rate improve banks’ deposits, and therefore likely loosen lending a bit and have a greater effect on the credit markets than artificially low rates?


9 posted on 02/02/2012 9:55:53 AM PST by RockinRight (If you're waiting to drink until you find pure water, you're going to die of dehydration.)
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To: BfloGuy

Ryan seems to be the only one who understand that low interest rates are killin America’s savers.


10 posted on 02/02/2012 9:57:13 AM PST by Venturer
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To: Hunton Peck

pffft! They all sit up there and point fingers and say stuff but not much good ever comes of it.

I have lost faith in most all of our gov’t.

Let me know when they actually stop something or reverse it.

DeMint running a glass of water for Romney is it for me.

I can’t even count on crazy Uncle Ron Paul, I read even HE is slinkin’ around with Romney behind the scenes!

Go Newt..if he doesn’t make it, I am thinkin’ our goose is cooked.


11 posted on 02/02/2012 9:57:44 AM PST by Irenic
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To: afraidfortherepublic
Draft Paul Ryan for President

Ryan will take it to Obama head on just like Newt and Palin will. Romney - he will go after Obama at the same level as the GOP's last candidate - remember that one? Don't Call Him Hussein or Liberal


"McCain is in Cincinnati. Mrs. Bill Clinton is reporting that a McCain supporter repeatedly calls Barack Obama [instead] Barack Hussein Obama. This supporter -- it was essentially a talk show host but I'm not sure, was on the mic at a McCain rally and kept referring to Obama as Barack Hussein Obama. Now, may I ask a simple question? Is that his name? It is. So why can't it be used? Because McCain apologized for this. McCain went out there, after the event was over and virtually apologized and said that kind of disparaging reference to his opponent is not the way he runs his campaign."

12 posted on 02/02/2012 10:04:23 AM PST by Cheerio (Barry Hussein Soetoro-0bama=The Complete Destruction of American Capitalism)
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To: Venturer

You are crazy if you are a saver in this economy. Inflation, real inflation is running at what 5% but saving accounts are paying 0% so every year you lose 5% (at least) of your money. Crazy.


13 posted on 02/02/2012 10:08:58 AM PST by jpsb
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To: Hunton Peck
The European Union Times, never one to pull punches, says we are in for it quite soon.
14 posted on 02/02/2012 10:11:11 AM PST by firebrand
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To: afraidfortherepublic
There was, during the summer, a short (one week) push by some people in the Republican party to try and encourage Paul Ryan to run. If I may use a Chris Matthews' quote, "I felt a thrill run up my leg"; or, something to that effect. I would have loved for Ryan to run. However, he came out fairly quickly to put the kabosh on the rumor and say that he was not running.

We have the two or three guys that are going to end up being our nominees. Two of them are deeply flawed candidates. I am not happy about my choices; but, they are my choices and whoever gets the nomination will get my vote because my prime reason for voting this year is to get Obama out of there.

15 posted on 02/02/2012 10:11:54 AM PST by LibertarianLiz
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To: jpsb

I agree it’s crazy. So what do you do with a lifetime of savings.

Buy a Volt? /s/


16 posted on 02/02/2012 10:21:49 AM PST by Venturer
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To: Hunton Peck

” - - - Ryan expressed his concern that Fed policy would cause more harm than good.”

After only 3 years, super intellect Paul Ryan reaches a partial conclusion - - - .

Way to keep the Obama Recession on the wrong track!!!!!!!!!!!!!!!!!!!!!!


17 posted on 02/02/2012 11:40:34 AM PST by Graewoulf (( obama"care" violates the 1890 Sherman Anti-Trust Law, AND is illegal by the U.S. Constitution.))
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To: Graewoulf; All
Here are videos of segments of today's hearing, which may be a better clue to what conclusions Ryan has reached, and when, than relying on Forbes' paraphrase:

Paul Ryan: Why Did the President's Policies Fail?

Paul Ryan & Ben Bernanke Discuss Quantitative Easing

18 posted on 02/02/2012 12:15:11 PM PST by Hunton Peck (See my FR homepage for a list of businesses that support WI Gov. Scott Walker)
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To: All

Ryan just tweeted that he will be on CNBC today at 3:25 ET to talk about today’s hearing.


19 posted on 02/02/2012 12:17:48 PM PST by Hunton Peck (See my FR homepage for a list of businesses that support WI Gov. Scott Walker)
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To: RockinRight
Couldn’t a higher savings rate improve banks’ deposits, and therefore likely loosen lending a bit and have a greater effect on the credit markets than artificially low rates?

Yes, it could and would. But, as I said, the dominant school of economics in this country believes that spending drives the economy and that saving decreases that spending. It's absolute nonsense because money saved is loaned out and spent by others -- it does not sit idle.

But it's what they claim to believe and, at the moment, they are in power.

20 posted on 02/02/2012 3:16:16 PM PST by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: Hunton Peck

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?


21 posted on 02/02/2012 3:19:39 PM PST by Graewoulf (( obama"care" violates the 1890 Sherman Anti-Trust Law, AND is illegal by the U.S. Constitution.))
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To: LibertarianLiz

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.


22 posted on 02/02/2012 5:26:29 PM PST by afraidfortherepublic
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To: Graewoulf
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.

23 posted on 02/02/2012 5:45:19 PM PST by Hunton Peck (See my FR homepage for a list of businesses that support WI Gov. Scott Walker)
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To: Hunton Peck

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!


24 posted on 02/02/2012 8:06:40 PM PST by Graewoulf (( obama"care" violates the 1890 Sherman Anti-Trust Law, AND is illegal by the U.S. Constitution.))
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