Event: Congress’ Joint Economic Committee
Date: 5/5/2009
Transcript:
Ron Paul: Welcome, Chairman Bernanke. I have a couple of questions, but first I want to mention that I find it awfully frustrating at times when we always talk about inflation and we only talk about the prices and say, “We have prices under control, there is no inflation”. We have to realize that the monetary base, the liquidity was doubled in a few short months. To me there is a lot of inflation out there. It’s already inflated, we’re in the midst of inflation. Because the prices haven’t gone up doesn’t mean we don’t have the distortion. And it was that system that gave us the financial bubble. Artificially low interest rates, the mal-investment, all the mistakes made. And now we’re trying to correct all that by doing the very, very same thing.
So, I think someday we’re going to have to address this somewhat differently because I’m not very optimistic that we can solve our problems with more spending and more borrowing and more inflation in order to solve those problems. But you’ve answered this question several times, I want to bring it up again and this question has to do with when will some of this liquidity be drained? And I don’t think the answer you’ve given is very specific and I don’t expect to get a more specific answer, but I’m going to try.
What if we have a situation where prices, which is not the best measure of inflation, but let’s say the consumer price index (CPI) is going up 8% to 10% and there is no economic growth. Where are you then, because that’s not impossible, it’s happened. It’s happened in our history, it happens throughout the world, it’s a common thing, it puts you between a rock and a hard place. If you drain, interest rates go up and the economy further crashes. If you don’t, you have the explosion.
Can you give me an idea what you precisely would do if you face the situation where prices were going up 10% with no economic growth?
Ben Bernanke: Well, I think that’s an unlikely scenario but we certainly would have to take steps to ensure price stability, because if inflation gets out of control we know it has very adverse effects on the economy, both in the medium and long term and so we would obviously have to address that.
Ron Paul: Which means you would have to raise interest rates?
Ben Bernanke: This is exactly the same problem which is always faced by monetary policy, which is in a recovery when the economy is starting to grow but has not yet gotten very far, perhaps, and unemployment is still above where we would like it to be. You know, you have to take away the punch bowl, as someone once said, in order avoid the inflation risk.
Ron Paul: I see this as the real problem because we practice economic planning through manipulation of money and credit. Socialism always fails because they don’t have a pricing structure. Interventionism and inflationism fail because we don’t have a free market pricing system of money; the interest rates. Therefore it fails, it comes to conclusion and inevitably it leads to a more socialized economy. Just witness what we’re talking about. Taking over companies, taking over insurance companies, taking over banks. This has been the prediction of the free market economists and yet we continue down this path of socializing our entire economy.
I do want to address one other subject and it has to do with transparency. You said you have made a commitment to transparency and openness, which is very good and there is a lot of us that want that. And I have dealt with that and have a legislation, HR 1207, dealing with that. But in a real sense, I know what you’re doing here, but the code really protects you from telling us some of the things we’d like to know. For instance, in 1978 when the GAO was given the authority to audit the Fed, it put the exclusion in there that you can’t ask these questions. Precisely, if I wanted to know about all your agreements and discussions with foreign central banks, with foreign governments, with international financial organizations, you have no obligation and you haven’t volunteered to do this. So is there a way that you would, since you’re moving in this direction, move and consider supporting a position where Congress has a right to know these very, very crucial, vital issues dealing with their money?
I mean, everything you do deals with their money. Would you ever be open to repeal some of these provisions?
Ben Bernanke: Yes I would. Now, if you let me be specific. We have many programs where we lend money, we take collateral, and obviously we are repaid. I want to assure you, first of all, that we have very substantial oversight and controls, we have precise internal divisions which monitor these things, we have an independent IG and we have an external auditing company, a private company which provides audits every year and has given us a clean bill of health on all our financial controls, all levels of Sarbanes-Oxley requirements. That being said, if Congress needs more information about the operations that we’re doing, exactly how we manage our collateral and how we manage our lending and those sorts of things, I think we can talk to you about providing more information about that and if necessary working with the GAO.
Where I’ll be very careful, where I’d like to be just very clear, there’s been some discussion of the GAO “auditing monetary policy”. I don’t know what that means, but I certainly would resist any attempt to dictate the Federal Reserve how to make monetary policy. It’s the independence of monetary policy which is crucial to the maintenance of price stability and economic growth in this country. And that would not be acceptable but if it’s an issue of making sure that we’re appropriately managing our systems and doing what we’re saying we’re doing in terms of our lending, we want to be open, we want you to understand that we’re taking every precaution to protect the taxpayer.
Ron Paul: Of course, the policy is the only thing that really counts.
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Clean mean and to the point. The fed/banks are in the game of usury…they benefit and the public pays the bill.
Have the availability of money handled by the Treasury (eliminate the federal reserve as they are useless in creating fiat money and changing the cost of borrowing). Any bank borrowing money from the treasury at 1% is permitted to loan the same money up to 3%. There is plenty of profit in that return. The more they loan the more they make. Any bank accumulating their own funds can loan it at their own rates. Their money…their risk. Between the two there can be competiton. Simple clean and honest. The economy would boom up.
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I’ve got a couple of questions.
First of all, what would we do without some form of monetary exchange? Not that the current one is a good choice– it certainly doesn’t seem to be. But when people speak of closing the Fed instead of fixing it, it sounds like there might be a risk of throwing the child out with the water so we should tread cautiously. I know that I could not survive as Jefferson felt we should and I seem to be reliant on the financial world that Hamilton created.
Next, what should money truly be? I used to think the answer was ‘gold’ or other precious metals but its index shows fluctuation so it may not be as conservative a choice as I once thought. But then, maybe the changes in the index are caused because of money not being tethered to gold as it once was.
Until these questions are answered satisfyingly, issues like the Feds involvement in JFK look like yet another conspiracy theory. Bringing them up while the other questions are unanswered only casts a dark cloud on the meat of the situation.
I’m not saying that you are wrong, just that I am still uncertain enough that I can’t accept what I’ve seen so far.
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This crazy talk about J.P. Morgan, Rockefellers and Rothchilds robbing the people of their hard money does not happen and cannot happen in the Fed is structured. The thief would be the Executive Department and Congress, not just the counterpart private banks. Such nonsense insults the intelligence of average Americans. When rabid dogs barks their protest, we know that they cannot
think straight. The issue here is like the swine flu pandemic,the spread of ignorance that contaminates. Kalantiaw. THIS WAS A POST FROM SNEAKVILLE THE BONE HEAD. You obviously have not done any research at all! Get off your video games and get busy. Google the “federal reserve trail of blood”. Google the “current ownership of the federal reserve and if after you read who owns it and you still believe that rediculous statement above that you posted then your are eith 12 years old or just a plain old dumb ass!Since J.P. Morgan and John D.Rockefeller joined forces in 1913 and formed only the third Central Banking system this country has had in it’s history and then 8 months later formed the IRS all of which was Done through bribery, murder, intimidation and influence and they then hired the U.S Government as their enforcers they have owned your ass. Take a bill out of your pocket ( if you have one) and look at it fool. It DOES NOT SAY U.S. DOLLAR! It says Federal Reserve Note! To the Fed “Money is debt and debt is money”. THATS ALL THEY CREATE IS debt. THEY ARE PRINTING UP TRILLIONS OF DOLLARS IN COUNTERFEIT MONEY SIMPLY TO DESTROY OUR DOLLAR. I don’t know if you are aware but the descendents of the
Rothchild family along with Rockefeller family members meet twice a day in England and at these meetings they set the price of gold, oil, silver, platnium and natural gas. Gold is currently selling for around a $1000.00 per ounce yet the Federal Reserve places a value on the millions and millions of ounces of gold in our treasury or Fort Knox at the slimy price of $42.20 per opunce. Why? It’s simple they are destroying the dollar as to create a global currency backed by what they will call chip gold (microchip) which will be valued at $50,000.00 per ounce and regular gold will be called “pagan gold” and wait until you see what the exchange rqate will be. Go to brasschecktv.com and watch the video by Salbuchi and internationaly known analyst and economist from Argentina and listen to what the Fed did to his country. Nuff said for now..got to go eat a blood pressure pill due to dealing with so many unformed jugheads.
Wolfman
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We are making PROGRESS RON PAUL!! Keep up the good work Sir!! Also keep a list of those who WOULD NOT SIGN UP, CO-SPONSOR, and DO THE HONEST and JUST THING. If we cannot indict them, we will VOTE THEM OUT. They DO NOT represent the ideals of this GREAT NATION, The United States of America!! For We Are ALL Creatures of The Law, and Subject To It; No-one is Above The Law–Except in their own Corrupted Minds…. Daily these “Financial Terrorists” wreak havoc, chaos, and devastation to our Financial Markets and Concepts of Free Enterprise….. Promises by BARACK HUSSEIN OBAMA are nothing more than lies, and deceptions to lead us all astray…. The proof is in the “CHANGE” that has come to AMERICA. That change has been in a downward direction and spiral. I thank GOD for you RON PAUL; and every other HONEST GOD-FEARING AMERICAN that has the guts, determination and integrity to stand up against TYRANNY……
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What needs to happen is that 2/3rds of the eligible voters in this country need to ignore party lines and when they walk into the voting booth in 2012 and every time thereafter and DO NOT VOTE FOR THE INCUMBENT until Congress and the House realize that the citizens are in charge and not the lawyers and the lobbyists.
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Dr. Paul please for the sake of all Americans KEEP UP THE GOOD WORK!
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