"The Federal Reserve, in collaboration with the giant banks, has created the greatest financial crisis the world has ever seen," said Rep. Ron Paul, R-Texas. "The problem with debt must be addressed."
On Tuesday, The Captain of our sinking financial ship, Bumbling Ben Bernanke, went before the House Financial Services Commitee for the bi-annual Congressional inquisition of the Fed on the Economy and Monetary Policy.
The Commitee showed up carrying ugly sticks, and from the git-go appeared out for blood. Congressman Ron Paul went for Bumbling Ben's jugular immediately. In a two and half minute rapid fire opening statement, Mr Paul laid bare the truth about the US Federal Reserve's complicity in the ongoing financial crisis, and effectively called Bernanke onto the carpet. The rumble was on.
Bumbling Ben, sitting in front of the Commitee and the C-Span viewing audience, sat there as smug as ever and proceeded as usual to hide behind the illegal Federal Reserve Act of 1913.
Questions about unemployment, debt, stimulus, and government regulation of the players in the financial markets were common. Unfortunately there were far too few questions of Bumbling Ben regarding his ill fated monetary policy. Ron Paul of course got his monetary policy shot in during his opportunity to grill Bernanke. Mr. Paul lectured Bumbling Ben on the "real" definition of Inflation, a growing money supply. Mr. Bernanke replied Inflation is "the growth in prices of goods" while refusing to admit the Fed is "growing the money supply".
Florida Congressman Alan Grayson stepped to the plate in the very late innings of the Inquisiton carrying the biggest of ugly sticks to take a swing at Bumbling Ben. Bernanke was caught with his pants down as Mr. Grayson proceeded to fillet, grill, and fry Bumbling Ben about currency swaps with foreign banks and where he gets the authority to hand out "half a Trillion Dollars" of the taxpayers money to foreigners without consulting the Congress [and the Constitution] first. Hiding once again behind the Federal Reserve Act, Bernanke refused to answer Mr. Graysons questions demanding to know "where the money went".
"I don't know," was Bumbling Ben's reply. Congressman Grayson laughed in his face.
The House Financial Services Commitee Inquisiton of Ben bernanke revealed little in the way of answers about the Economy and Monetary Policy. It did, however, serve notice to Bumbling Ben Bernanke and his FOMC cronies that the Congress and the American people are watching closely now, and unlikely to remain content to sit in the dark any longer and allow the Fed to continue sqaundering the nation's wealth as they line the pockets of their friends on Wall Street.
The American public must not allow the Fed to come up for air here. We must continue to pressure them for answers to our questions regarding their actions behind closed doors that we are being asked to pay for. We must continue to pressure our elected representatives to "go after the Fed" and either clean that Constitutional travesty up, or close it down.
VIDEO HIGHLIGHTS OF THE HOUSE FINANCIAL SERVICES HEARING CAN BE VIEWED AT THE LINKS BELOW.
Ron Paul Opening Statement Fed Hearing
http://www.youtube.com/watch?v=pSRvnXtrmtE
Ron Paul with Federal Reserve Chairman on definition of inflation
http://www.youtube.com/watch?v=dGyA4LeaEvg&eurl=http%3A%2F%2Fnews%2Egoldseek%2Ecom%3A80%2FRonPaul%2F1248198029%2Ephp&feature=player_embedded
Florida congressman Alan Grayson laughs in Ben Bernanke's face - priceless!
http://www.youtube.com/watch?v=00ECLxK2YTs&eurl=http%3A%2F%2Fjsmineset%2Ecom%2F&feature=player_embedded
Senate Banking Hearing with Fed. Reserve Chairman Bernanke [full hearing]
http://www.c-span.org/Watch/Media/2009/07/22/HP/A/21200/PENDING+homepage+Senate+Banking+Hearing+with+Chairman+Bernanke.aspx
US Fed's Bernanke On Defense At Capitol Hill Hearing
WASHINGTON -(Dow Jones)- U.S. Federal Reserve Chairman Ben Bernanke spent the first day of his Capitol Hill testimony on defense, with Republicans criticizing the central bank and attacking the Obama administration's plans to make it a new super regulator of the financial system.
But Bernanke fired back with a strong defense of the central bank's crisis measures. He rejected assertions that the Fed's liquidity programs are stoking inflation and argued in favor of the Fed keeping its consumer protection role.
Bernanke also made clear that he thinks the central bank can monitor systemic risk while maintaining its ability to protect consumers.
"I'm proud of the work we've done," he told the House Financial Services Committee.
Bernanke said inflation concerns are misguided, and reiterated to lawmakers that central-bank policy makers expect inflation to be subdued for the next two years.
"I don't think the financial markets are indicating a great deal of concern about inflation," he said, pointing to long-term Treasury rates that are still " quite low."
Furthermore, Bernanke defended the Fed's plans to purchase up to $300 billion in longer-term Treasury securities against charges that the Fed is monetizing the debt and stoking inflation. When those purchases are completed, the Fed will still have fewer Treasurys on its balance sheet than it did two years ago, Bernanke said. "We are not taking a significant portion of U.S. Treasurys."
"Let's be clear about what's going on - the Federal Reserve is not putting money out into the economy. What we're doing is creating bank reserves. It's not chasing any goods," Bernanke continued.
Posey of Florida, like Paul of Texas earlier, was unconvinced.
"It's going to cause inflation," Posey insisted.
Additionally, the committee's top Republican, Spencer Bachus, R-Ala., said CIT Group Inc.'s (CIT) near-collapse represents another example of the poor job the Fed has done in identifying and averting systemic risks.
Bachus also criticized the Obama administration's plans to deem the Fed a new regulator of systemic risk. Asking the Fed to take on such a role would only result in a "false sense of security which will inevitably be shattered at the expense of the taxpayer," said Bachus.
http://money.cnn.com/news/newsfeeds/articles/djf500/200907211440DOWJONESDJONLINE000599_FORTUNE5.htm
Bernanke says Fed can take on supercop role
WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke ran into skepticism Tuesday from U.S. lawmakers wary of expanding the Fed's duties to police big financial companies. They argued that the Fed failed to spot problems that led to the financial crisis in the first place.
"The Fed has made some big mistakes," said the House panel's highest-ranking Republican, Spencer Bachus.
An Obama administration proposal to make the Fed the supercop of globally interconnected financial companies would be "just inviting a false sense of security that inevitably will be shattered at the expense of the taxpayer," Bachus warned.
Bernanke countered that the administration's proposal would be a "modest reorientation" of the Fed's powers, not a great expansion of them.
Bernanke also argued against congressional proposals to let the Government Accountability Office, Congress' investigative arm, audit the central bank. He feared that audits that delve into the Fed's interest-rate decisions could compromise its independence in setting interest-rate policies.
"A perceived loss of monetary policy independence could raise fears about future inflation," he warned.
Rep. Ron Paul, a Reopublican and a frequent Fed critic, rejected that argument and said the Fed already makes political calculations.
"Just the fact that (the Fed) can issue a lot of loans and special privileges to banks and corporations," Paul said. "That's political."
Rep. Bill Posey, a Republican, who wants the Fed to be more open, argued that some people rightly say "you can find out more about the operations of the CIA, than the Fed. The public has the right to know."
http://finance.yahoo.com/news/Bernanke-says-Fed-can-take-on-apf-2960346446.html?x=0
Don't Reappoint Ben Bernanke
By John Tamny
...in an August 2005 Wall Street Journal op-ed, he asserted that there is a "highest level of employment that can be sustained without creating inflationary pressure." More recently the Bernanke Fed addressed the prospect of future inflation amid economic weakness. This time it was the Phillips Curve in reverse, specifically an FOMC release that noted that due to "increasing economic slack here and abroad, the Committee expects that inflation will remain subdued."
It would be hard to contemplate a more impoverishing notion than the one that says economic growth is the cause of inflation, and economic weakness is its cure. What this means is that should the U.S. economy reverse direction in such a way that unemployment falls, the Bernanke Fed would use rate machinations to pour cold water on it as a way of keeping unemployment higher than it otherwise might be. For this reason alone, Obama should not re-nominate Bernanke.
Importantly, there are other reasons to send Bernanke back to academia. As is well-known, the Fed's basic mission as approved by Congress centers on unemployment and inflation. If both are kept low on the Fed's watch, our central bank is doing its job. Sadly for Bernanke, the direction of both unemployment and inflation point to an impressive failure on the part of the Fed in terms of its core mission.
Indeed, the rate of unemployment--admittedly not the most reliable of government statistics--sat at 4.8% when Bernanke took over in January of 2006. Since then, the rate of joblessness in the U.S. has risen all the way to 9.5%.
As for inflation, while economic thinkers will continue to debate whether it's the Fed or Treasury that sets the tone when it comes to the value of the dollar, those who believe the Fed should keep the greenback strong and stable can't possibly be happy with its decline on Bernanke's watch. The dollar has collapsed against gold since his nomination. Trading at $470 per ounce back in 2005, gold has nearly doubled against the dollar during his Fed tenure.
Fed apologists will doubtless point to low government measures of inflation as a counterargument, but as has regularly been shown, the consumer prices which make up the Consumer Price Index (CPI) change for all manner of reasons that have nothing to do with the value of money. Looking at gold's surge, we can see that inflation has been and remains very much a problem. But hostage to a Phillips Curve mindset learned on campus, Bernanke is blind to the very inflation that holds down the economy like nothing else.
http://www.forbes.com/2009/07/17/ben-bernanke-federal-reserve-opinions-columnists-john-tamny.html
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