Ron Paul To Ask Fed Why After Trillions In Free Money, Unemployment Is Still Sky High

Tyler Durden's picture

While everyone is relishing the Fed's third and only mandate these
days, namely to send the Russell 2000 to 36,000 and cotton limit up to
infinity and beyond, while everyone else is terrified to short stock in
advance of what increasingly appears like near certain additional
quantitative easing, congressman Ron Paul has announced that the first
Monetary Policy subcommittee meeting will focus on one of those two now
forgotten Fed mandates, that of creating jobs. “I’m very pleased to
hold our first subcommittee hearing in the new
Congress on a topic that could not be more critical, namely
unemployment.  Despite enormous amounts of monetary and credit expansion
by the Federal Reserve in recent years, the nation’s unemployment
picture remains bleak.  While many focus on the impact of fiscal
policies on employment,  the effect of monetary policy often goes
unexamined.  In my view we are now experiencing the bust that inevitably
results from the misallocation of capital and human resources in a
period of artificially cheap credit.  It is important to understand the
Federal Reserve’s role in creating today’s unemployment crisis, while
also highlighting that high unemployment and low economic growth can
persist even in the face of tremendous monetary inflation.
” Of
course, the answer to all of these problems is simple: no debt ceiling
raise. If the Fed can't monetize any more debt and make the Primary
Dealers ever richer (now that the PD ranks have just been expanded from
18 to 20 to include SocGen and derivative (!) trader MF Global, and its
CEO Jon Corzine) from commissions on indirect debt monetization, its
power is gone. But that will mean doing something for less theatrical
than a few hearings, and far more responsible: such as preventing
rampaging inflation across America (see cotton chart posted previously).

Paul Announces Subcommittee Hearing On The Federal Reserve’s Impact on Unemployment (link)

Domestic
Monetary Policy and Technology Subcommittee Chairman Ron Paul announced
today the Subcommittee will meet for a hearing to examine the impact of
Federal Reserve policies on job creation and the unemployment rate. The
hearing will be held on Wednesday, February 9th at 10 am in room 2128
Rayburn.
 
Subcommittee Chairman Paul said, “I’m very pleased to
hold our first subcommittee hearing in the new Congress on a topic that
could not be more critical, namely unemployment.  Despite enormous
amounts of monetary and credit expansion by the Federal Reserve in
recent years, the nation’s unemployment picture remains bleak.  While
many focus on the impact of fiscal policies on employment,  the effect
of monetary policy often goes unexamined.  In my view we are now
experiencing the bust that inevitably results from the misallocation of
capital and human resources in a period of artificially cheap credit. 
It is important to understand the Federal Reserve’s role in creating
today’s unemployment crisis, while also highlighting that high
unemployment and low economic growth can persist even in the face of
tremendous monetary inflation.”
 
The Federal Reserve has taken
unprecedented action to provide liquidity to financial markets and some
U.S. corporations; however, unemployment remains above 9 percent.  The
hearing, entitled Can Monetary Policy Really Create Jobs?, will focus on
the Fed’s recent actions, the likelihood those actions will reduce
unemployment, and the critical role of the private sector in job
creation.

While the Obama administration and Democrats in
Congress believe increased government spending will improve the nation’s
economy, Republicans on the Financial Services Committee know economic
growth depends on providing the private sector, especially small
businesses, with the certainty they need to create jobs.  The Fed’s
policies, as well as the Obama administration’s unsustainable debt and
spending, continue to prevent small business owners from growing and
hiring because of continued uncertainty over new taxes, higher interest
rates, and the expanding role of government in the economy. 
 
On
November 3, 2010, the Federal Reserve announced that it planned to
purchase $600 billion in long-term Treasuries (dubbed “QE2”).  This is
the second time since the 2008 financial crisis that the Federal Reserve
has engaged in quantitative easing. The latest round of quantitative
easing, along with the Fed’s action to bailout financial companies, has
added trillions of dollars to the government balance sheet.