Ron Paul: The Fed encourages never-ending war
It’s been rather quiet on the Ron Paul front, but the presidential candidate recently questioned Federal Reserve Chairmen Ben Bernanke on monetary policy, one of the Libertarian’s favorite themes.
While Paul’s quest to end the Fed, or to at least increase its transparency, may seem to be a losing battle to many observers, he’s certainly educated the public on the Fed’s culpability in encouraging reckless banking and investment practices, as well as government largesse.
One of the best exchanges between Paul and Bernanke was as follows:
Paul: Under the Constitution, who has the authority to manage monetary policy?
Bernanke: The Congress has the authority and it’s delegated it to the Feder Reserve. That’s a policy decision that you’ve made.
Paul: But they can’t transfer authority. You can’t amend the Constitution by just saying ‘Ee’re gonna create some secret of individuals and banks.” That’s amending the Constitution. You can’t do that! … Which branch of government has the right of oversight [of the Federal Reserve]?
Bernanke: The Congress… We fully accept that, and fully accept the need for transparency and accountability. But it is a well-established fact that an independent central bank will provide better outcomes… There’s no constitutional reason why Congress couldn’t just take over monetary policy. If you want to do that, I guess that’s your right to do it, but I’m advising you that it wouldn’t be very good from an economy policy point of view.
Paul: If it’s allowed to be done in secret, this is the reason why I want to work within the system… Congress out to get a backbone… We have an obligation to defend our currency… If you destroy the value of currency through inflation, you transfer the wealth of the middle class and it gravitates to the very wealthy—the bankers, the government, the politicians, they all love this…
The Federal Reserve is the facilitator… If everybody loves big government, love the Fed: they can finance the wars and all the welfare you want. But it doesn’t work and it eventually ends in a crisis…. I think the very first step is transparency…
Bernanke: All of the actions we took during the crisis—the swaps, all of those things—are fully disclosed. It’s not a question of information, it’s a question of whether or not you want to give the Fed those powers. If you don’t want to, of course, Congress has the right to take them back.
Bernanke is distorting reality here. The Federal Reserve has never been concerned with full, self-imposed disclosure. Any disclosures come about through court orders and congressional initiatives. And his challenge to Paul that “Congress has the right to take [the monetary policy powers] back” illustrates how powerful the system truly is. Bernanke realizes that the system is so entrenched that it will likely never be dismantled. Too much money and power is at stake.
And Bernanke is wrong to claim so affirmatively that the question is simply one of Constitutional power. Monetary policy is a matter of information. If the goings-on were transparent, then the system could be changed. Resistance to that change keeps the Fed’s real-time actions before and during crises secret. It’s only after events have transpired that the Fed discloses its information—when they are forced to, of course.
Despite what one might think of Ron Paul and some of his more conspiratorial impulses, the man must be admired for admonishing the Fed by saying “government keeps spending the money… wars never end.” It cuts straight to the prime dilemma of our time: That we bail out those who make reckless financial decisions, spending money on their mistakes, and operate in a continuous state of warfare. Lift the veil of everyday hallucinatory existence and this is what appears.
Bernanke may seem the unlikely target of Paul’s anti-war rhetoric, but since the Fed underwrites government’s military expenditures (government accumulates debt to pay for “defense”), Paul’s point was more salient than many Americans could possibly imagine.
Americans need to understand the role the Federal Reserve plays in American economic hegemony and war-making abroad. That it simultaneously encourages psychopathic lending and investment practices on Wall Street with its bailouts and America’s bloated empire, which is one of the great causes of American deficits and debt.
“I have over the years obviously been critical about what goes on in monetary policy, but it hasn’t been so much the chairman of the Federal Reserve, whether it was Paul Volcker or Alan Greenspan or the current chairman, it’s always been the system,” Paul said. “I think they have a job that they can’t do because it’s an unmanageable job, it’s a fallacy, it’s a flawed system, and therefore we shouldn’t expect good results, and generally we are not getting results.”
“This system is biased against the middle class and the poor,” added Paul.
One isn’t likely to hear this from a Democrat let alone a Republican, but this is where Ron Paul is different. His personal war against the Fed may seem to be that of a fringe-dwelling true believer, but his campaign has certainly opened more eyes to the corporate-government complex that is destroying America in its lust for power and money.
Next week, the House is set to take up and likely pass Paul’s Federal Reserve Transparency Act to create more transparency in the monetary decisions of the Federal Reserve. A full victory? No, but Paul’s efforts were certainly worth something.