Show: Glenn Beck Program
Host: Judge Andrew Napolitano
Channel: Fox News
Judge Napolitano: Today on Capitol Hill Ben Bernanke, the chairman of the Fed, was reamed and rightly so by some members of the Senate Banking Committee. Bernanke wants that second term as head of the Federal Reserve, but Republican Senator Jim Bunning called him “a moral hazard” and then he did this:
Jim Bunning: Where I come from, we punish failure, not reward it. That is certainly the way it was when I played baseball. And it is the way across all America presently. Judging by the current treasure secretary, some may think Washington does reward failure, but that should not be the case. I will do everything I can to stop your nomination and drag out this process as long as I can.
Judge Napolitano: Now, independent and socialist senator, Bernie Sanders of Vermont, has threatened to put a hold on Ben Bernanke’s nomination. Let’s see – a conservative and a socialist agree on at least one thing: no more Bernanke.
With me now is no fan of the Fed, Congressman Ron Paul of Texas. Congressman, welcome to the program.
Ron Paul: Thank you, Judge. Good to be with you.
Judge Napolitano: Likewise. Is Ben Bernanke going to be reconfirmed? Are we going to have 4 more years of this, or is there just the slimmest chance that he might be at the end of the box?
Ron Paul: I don’t think so. I think he will be reconfirmed. But I don’t know whether he will last 4 years. I mean I’m not sure the monetary system will hold together for much longer, so who knows what it will be like in 4 years. But no, he’s going to get renominated. But you know, Jim Bunning went ahead and put a hold on his nomination as well. Now also Jim DeMint put a hold on it, and he said he’s not going to remove that hold until they have a vote on S 604, which is the same thing as HR 1207. So the momentum is picking up for the audit in the Senate right now. So I think that’s all good news.
Judge Napolitano: When you say S 604 and HR 1207, you’re using the congressional nomenclature for your proposal which is close to becoming law, I think, which will authorize the Congress to conduct a full open transparent audit of the Fed. Is that going to happen?
Ron Paul: Well, you said “become law”. No, it’s likely to pass the House, that looks pretty good. Barney Frank said today he will not allow and he doesn’t expect anybody to tinker with the amendment that got passed in the committee. So it’s going to pass the House. But the big question is, can Jim DeMint get it passed over in the Senate, and then hopefully it stays in after a conference. But the Fed is not going to go away quietly. There is a lot of special interest behind this. I mean, they have hired lobbyist, they’re doing movie ads and everything else. But you know the special interests are very powerful and I am sure they have a lot of influence with the administration. The president hasn’t spoken out on this but believe me, the people behind him are not in favor of auditing the Fed.
Judge Napolitano: Congressman Paul, I want you to stay with us please. We’re going to bring in today’s economic panel. Here is Tim Carney, he’s the author of “Obamanomics”. And John Tamney is here, he’s the editor of RealClearMarkets.com. Tim, first to you. I got to read the full name of your book, because it’s just an unbelievable title: “Obamanomics – how Barack Obama is bankrupting you and enriching his Wall Street friends, corporate lobbyists, and union bosses”. How is he doing it?
Tim Carney: Well, Ben Bernanke is a great example of that. He is a bailout baron. He was Bush’s bailout baron and it shows. Obamanomics is about the worst parts of Bushonomics, which is taking big government and putting it at the service of the entrenched big businesses in a way that hurts regular people. And I got to say, Dr. Paul, thank you very much for writing the foreword on Obamanomics.
Judge Napolitano: Dr. Paul writes very good forewords, as some of us know. We’ll get to that in a minute. When I first heard this I thought it was insane, John Tamney, that the government could create money out of thin air. How does that hurt the average American when the Federal Reserve wants to give money to one of its favorites instead of sending a check, just adds the zeros to their accounts at the Fed and says, “just go ahead and spend it as if it were real money.”
John Tamny: It hurts the average American because when the money in our pocket is devalued, we are poorer as a result. If you want to know why oil prices were high this decade, it has to do with the devalued dollar. And so it’s essential to get back to a stable currency regime which would not require a Federal Reserve. If we did that and define the dollar in terms of gold, we would totally disempower the Fed and we would suddenly have money that is real that we can count on it today, tomorrow and 20 years from now.
Judge Napolitano: Congressman Paul, how is it that a so-called compassionate conservative who professed to believe in the free market, like George W. Bush, and an avowed leftist like Barack Obama, can both want the same human being to run the Fed?
Ron Paul: Well, that tells you how powerful the moneyed interests are. They influence both parties, but they influence a lot. You know, domestic welfare policy didn’t change a whole lot with the Republicans, foreign policy doesn’t change with the Republicans or Democrats; they always remain the same. And monetary policy stays the same. But big government is the issue. We can’t have big government, we wouldn’t have it if we had to tax the people for the amount of money we need. So this is a sinister way to tax the people, and this actually compounds itself because the real wages go down. So the unions demand more wages and they push wages up that way. But it’s the depreciation of money that is the real issue. It’s a sinister evil immoral bad economic act, and we have to get to the bottom of it and that’s why the beginning of it is to get people’s attention to look at the Fed and also find out exactly what they’re doing. And fortunately these hearings are serving a benefit for us because a lot more Americans in the last couple of years have been paying attention to the Fed and with these hearings even more so.
Judge Napolitano: Tim Carney, do you think that most Americans even understand that the Fed creates money out of thin air, and it’s fine money, but yet when people pay the Fed or when entities pay the Fed back, they pay it back with real money? So these people make money by loaning phony money, but getting paid back in real dollars. Do Americans understand that?
Tim Carney: They don’t understand that and I think they’d be really angry if they understood the way that when the banks get the money, the phony money, from the Fed, the effect of inflation hasn’t hit the economy yet. So to the banks the money is worth just as much as it was before it got inflated. By the time it trickles down to regular people it’s not worth as much. And this is sort of typical. Obama certainly didn’t invent this, but it fits in with his economic policy of policies that are bigger government, things that hurt regular consumers and taxpayers; propping up the banks and those who are well connected.
Judge Napolitano: You know, John Tamny, president Obama has a lot of non-wealthy people, a lot of little people that voted for him and want him to be in the White House. A lot of hardworking blue collar people, a lot of single parent families and a lot of union members. Don’t they understand that he is destroying the purchasing power of their dollar by enriching his friends, the bankers?
John Tamny: I think ultimately they do and I think you’re going to see it in the elections in 2012. The quickest way every economist has known in history to make the electorate unhappy is to devalue the money they earn. And I think his voters will know as they see it in gasoline prices, they’re going to see it in food prices. They’ll call these shortages, but in fact it’s just a weak dollar driving up the price of everything and so this is going to hurt them.
Judge Napolitano: Congressman Paul, you have a solution for all of this. It’s three words, and it’s the title of your latest bestseller. Will it ever happen?
Ron Paul: Let me see if I remember that, I think it has to do with “End the Fed”.
Judge Napolitano: There you go. Is there the remotest chance that the American public will rise up and take back the free market that has been stolen from them by the Federal Reserve?
Ron Paul: There is always a chance if the people do their work. It will not originate out of Washington. It’s the people who got behind auditing the Fed and put the pressure on the congressmen to join us in that effort. So the people have to become alert and awake and become active. And they are. So, sound money is always very popular. If there is ever a vote for it, members of Congress and others have to endorse it because the idea of money coming out of thin air, printing pieces of paper, it is so silly that we will be forced to [accept it]. And once we have the significant price inflation with us we will be forced, eventually, to talk about sound money once again.
Judge Napolitano: Tim Carney, John Tamny, congressman Ron Paul, thanks for joining us.