Presidential candidate and Congressman Ron Paul has brought the role of the Federal Reserve into focus in a way that it never has been. He has a lot of young voters questioning the Fed's very existence and, in a congressional hearing made famous on YouTube, he referred to Ben Bernanke as a "price fixer."
In a column in the the New York Times, Harvard professor and Mitt Romney advisor N. Gregory Mankiw says everyone should just relax -- Politicians should stop complaining about the risk of a recession and just let the Fed do its job:
Congress made its most important contribution to taming the business cycle back in 1913, when it created the Federal Reserve System. Today, the Fed remains the first line of defense against recession. ... Because housing woes are the source of the current slowdown, the Fed's tool kit is well suited for the task at hand.
That all makes perfect sense until you stop and think about the fact that there's a strong argument to be made that it was the Fed that got us into this mess. The notion of "Let's ask the drunk who hit me with his car for a ride to the hospital" is not necessarily one that I subscribe to. Here's what Jim Cramer had to say about all this in a conversation with Ron Paul:
"Now, you have been, I think, spot on in saying that the Federal Reserve created the stock bubble with low margin rates and it created the housing bubble with low mortgage rates, yet I never hear about anyone talking about investigating the Fed in Congress. It's a creature of Congress. Why don't we do it?"
Given that, Ron Paul and others have a pretty good reason to question the power of the Federal Reserve.
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Reader Comments (Page 1 of 1)
12-23-2007 @ 7:18PM
RP supporter said...
Just 40 years ago a coke or a cup of coffee costs 10 cents, a gallon of gas costs 30 cents, a new car costs $2,500 and a new house cost $25,000. Today a coke or cup of coffee is over $1.00, gas is $3.00, the new car cost is about $25,000 and the new single family house averages $250,000 or more. Over the last 40 years, prices for all these commodities have increased by a factor of about 10 times or more.
This means that in the last 40 years, the dollar has lost 90% of its purchasing power. Today you need $10.00 to pay for what you use to be able to buy for $1.00.
Why has the US $ lost 90% of its value? Because in the last 40 years the Federal Reserve has printed increasing amounts of paper money to fund excessive government spending for wars and welfare programs – and this paper money has no gold backing. The result has been constant inflation.
The US is on the brink of a financial catastrophe. The dollar is in freefall on foreign exchange markets and there are increasing signs that governments and investors around the world are looking for alternative currencies to use for investment vehicles. The US government is in debt to Foreign Governments a total of over 2.3 Trillion dollars and that borrowed money has been spent on wars and welfare (yes – that’s 2.3 TRILLION dollars). And these foreign governments are not all friends – almost $700 billion is owed to China and the Oil Exporting Countries in the Middle East.
Ron Paul is the ONLY candidate that is discussing this coming financial collapse and understands the incredible economic dangers we face.