Watch The Highlight Of Today's Congressional Hearing: Ron Paul vs The Bernank

Tyler Durden's picture

The must watch 5 minutes from today's second day of Bernanke hearings before congress is the following interaction between the Chairman and his archnemesis: Ron Paul. The first brilliant rebuttal by Ron Paul has to do with the ongoing "Federal Reserve lecturing" on why Congress should not allow out of control deficits to escalate. As Paul so correctly put its, "the Congress and the Fed are symbiotic because the Congress spends and they know there is a moral hazard involved because they know that if interest rates go up, the Fed accommodates them. So the Fed really facilitates this spending, and until we realize this I think the Fed is involved with our deficit and encourages it as well as the Congress." This is an absolutely smack on point which goes to the whole heart of the real premise behind QE2: keeping rates low so there is no prohibitive lever against runaway deficits. That, and of course, ending up the primary holder of US debt so that the Treasury can convert "interest expense" into "revenue." And if the 10% of the public that benefits from a Dow 36,000 believes the false "wealth effect" myth in the process (nominal, not real) so much the better. It did, after all, work for a while in Weimar Germany. And while Paul touches on other key topics such as purported price stability (there recently was a scientific paper proving there has been no real change in price stability before and after 1913, which we will track down shortly), real plunging employment and the definition of the dollar (to which Bernanke's repartee that "Consumer don't want to buy gold" should probably be reevaluated in light of today's all time record high price). Yet one exchange that was missing, which was not between Paul and Bernanke had to do with Bernanke's reasoning why in his view it was not possible to get back to the gold standard: "there is not enough gold." That, unfortunately, is the most patently absurd claim ever and coming from a Fed Chairman we are pretty confused by its implications. Surely Ben realizes that all that matters is the price equivalent ratio of conversion. There will be more than enough gold if gold is converted instead at $2,000/oz at $20,000, or failing that, $200,000 and so forth. There will be more than enough gold if one ounce is equivalent to a million piece of linen or more, or more realistically, at $6,300 as Dylan Grice quantified previously. We guarantee it. And after all, that is the whole point of a gold standard: not to dilute the currency infinitely.

h/t @m33t3r


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slow_roast's picture

Ron Paul needs to be given his own 1 hour grilling session!  He makes those other congress-fuckers look like tools in the propaganda trade.

DoChenRollingBearing's picture

The Bearing was watching the Hearing on CNBS right before they called on Ron Paul to question Bernanke.

Before the Chairman even got the name of the next questioner out of his mouth, Haynes cuts in and goes to a commercial.  The Bearing was curious to see who CNBS was omitting and changed over to Bloomberg.


Ron Paul.


I am a Man I am Forty's picture

yep, i noticed the same, it was obvious

Village Idiot's picture

"The Bearing was curious to see who CNBS was omitting and changed over to Bloomberg."

You have got to be kidding me!  I know you aren't. "It's" just all out in the open now, isn't it.  No pretence and no Vaseline. Amazing.

Max Hunter's picture

It's even worse than that.. The people are actually begging for it..

flacon's picture

Why the frickin' hell can't we have more than a FIVE MINUTE - ONE QUESTION session. We need a three hour long GRILLING during prime time with ALL the networks covering this. Cancel the Simpsons, American Idol etc. THIS IS SO IMPORTANT and all we are fed is a frickin' FIVE STINKIN' MINUTE sound-bite!


All that to say: I hate the way these sessions are run!

asdasmos's picture

Yeah! Even Sprott gets 5 mins!

Eric Sprott

BNN talks to one of the world's leading investor's and investment strategists Eric Sprott, CEO of Sprott Asset Management and finds out just how precious the metals are.

JR's picture

They do it almost every time, and now that Paul’s the chairman it’s even more censored speech by the controlled media to thwart representative government.  I think CNBS should register as a banker lobbyist along with Barney Frank. (I hear Dodd has become a Hollywood lobbyist for the Motion Picture Association of America.)

ebworthen's picture


The Producer in that time slot has no balls.

Larry Kudlow gave Ron Paul a good five minutes at ~ 7:35 P.M. Eastern - good stuff - Paul mentioned Shadowstats, 10% real inflation, intentional devaluation of the non-PM backed currency, etc.


Xkwisetly Paneful's picture

and has never once gotten any legislation passed actually limiting the size or influence of the federal government. Hard to tell who is more irrelevant him or Ralph Nader.

faustian bargain's picture

So where are these mythical creatures who actually do pass that type of legislation? Anyone? Bueller?


Your comment is absurdly pointless.

Xkwisetly Paneful's picture

Absurdly pointless is actually posting just that.


Called scoreboard watching, tough to be in congress for 30years or whatever propose 1000's of bills and pass none.

But it sure sells a shitload of books.  The latest should be how to be in congress one's entire life and pass nothing.


idolatry for a token. all hat no cattle.

DoChenRollingBearing's picture

I am responding my reply above with the below announcement that I just cross-posted at the newer China thread this evening:


Press Release


DoChenRollingBearing announces that he is likely to re-enter the physical gold market as a buyer very soon.

The Bearing wanted to allow some opportunity for alert and quick acting ZH-ers to front-run him.

This will also allow the Bearing to fight with more gusto against trolls and allow him to write things like:

Gold, bitchez!

Careless Whisper's picture

I think he needs the 1 hour to explain his question. He asked a very profound question, but it took me a while to figure it out. He asked Bernank what was his definition of a dollar? Why is a "federal reserve note" considered a "dollar"? The question goes to the heart of the whole central banking system. Implying why can't we have a "dollar" that is backed by silver, gold, or whatever, and Bernank gave a totally rediculous answer that makes no sense. Unfortunately Ron Paul didn't have any time left to follow up because the answer was just insulting.

RichardENixon's picture

Dr. Paul spent most of his time pointing out to Bernanke the total failure of the Fed's "program" under Bernanke's and Greenspan's tenure. The expression on Bernanke's face as he listened to this was priceless, at least in terms of FRNs.

Irwin Fletcher's picture

Yes, but I wish he'd spent less time describing what ZH readers already know, and more time grilling the Bernank into saying things that will damage his credibility, at least to those who ignorantly accept his credibility now. In time, perhaps. His position is logically inconsistent, and it's only a matter of time before people who own pitchforks realize it.

Cognitive Dissonance's picture

...and it's only a matter of time before people who own pitchforks realize it.

Or those who realize they can exchange their debased FRNs for pitchforks. Don't forget the new pitchfork customers. I understand the potential market is HUGE.

Irwin Fletcher's picture

Man, when I hear CNBC raving about GDP increasing due to pitchfork sales, I'll lead the march to Princeton.

Nate H's picture

I know you're jesting, but this comment underpins a central problem (and danger) prevalent in the blogosphere and this site in particular. That people seem to be 'rooting' for the truth about our monetary/financial system without understanding the consequences of broad awareness of that truth. The world is completely interconnected via just in time supply chains.  To wit: the average farm in the US and Europe has about 60 off-the-farm inputs needed in its operation - over 50% of these come from overseas.  Any 'truth' while the market still is bigger than governments runs risk of overnight currency reset, which stops trade and stops supply chains within days. Think about it. And be careful what you wish for - beans, guns and silver coins arent going to help in a trade depleted (unprepared) world.

We need more time to prepare. Regionally connected supply chains. Import sub.models etc.

Ie. we should be very worried that few if any pitchforks are made in the USA anymore.  

Irwin Fletcher's picture

Well if there's any doubt that Americans want to destroy themselves, consider the first durable good that comes up with a google search of pitchfork and "made in usa"

We need not destroy everything, especially the truth, and THE TRUTH MUST COME OUT!!!

Nate H's picture

I used to think so, but have concluded that our claims (people expectations of what they own or will own in the future) are 400-500% of what we can afford to pay back let alone service. I.e. 80%+ of digital wealth is phantom and is going away, either via govt nationalization or currency reform. Few are considering the consequences of that to supply chains was my only point. I.e. what the FED is doing is self-survival and 'wrong'  at end of a paradigm  -but it also keeping things afloat for a while. I know of some institutions and governments looking into this (but way too slowly).  The public, in this particular situation, can't handle the truth.

Irwin Fletcher's picture

It's a common theme on ZH that Americans consume more than their worldly share, and that the global supply chain will reflect that reality in the future. When Americans are confronted with that truth, most will prepare accordingly and reduce their consumption. I hope we evolve toward true wealth, in the form of efficient farming, clean air, electronic defense against alien meteors, and social justice. My hope is that my kids won't be killed by stray bullets in the process. I hope technology will propel the world's standard of living rather than armed conflict destroying it. We'll handle the truth now while we're ahead in the quality-of-life race, or regret our denial later.

Nate H's picture

technology is in a battle with depletion, and is losing. Energy underpins every economic transaction in our society and although we have plenty of energy we do not have plenty of cheap energy, in the 3-5cKwH range - on which industrialization depends.  Efficiency gains and new technology may subtract 20-30% of a process cost - which pales in comparison to a doubling or trebling of energy prices - which will happen going forward each time economy recovers (even from 20% deficit spending from govt over 2 years)


And I wish for the same things that you do..

shortus cynicus's picture

Just drill enough deep in Yellowstone Park, and you find a lot of energy.

An hurry up, before this energy finds you on its own! Then it will be to late.

Nate H's picture

Obviously to drill harness and deliver that geothermal energy (not to mention shale oil and other overhyped answers) takes more energy than the source throws off (or doesnt give the energy return that this society/infrastructure requires)

Sathington Willougby's picture

Funny you put that out there.  I remember Matt Hoffman started building bikes and he quickly found out that manufacturing them overseas meant his ass.  Those kids put their lives on the line when they ride those bikes and they don't use cheap pig iron crap soldered with chopstick jigs.


See vid:


Antipodeus's picture

It's not very pointed, is it?  And the handle's MUCH too short - not enough leverage!  8=))


ebworthen's picture


Nate H,

Nice thought but too late.

Only collapse and a lot of death will connect regional supply chains.

The house of cards has been built, and can only blow down - it cannnot be "dis-assembled".


FEDbuster's picture

FRN's (or falsely referred to as Dollars) are convertable to gold, current ratio one oz of gold = 1430 FRNs.  As the Bernank said they can be converted into any commodity or service at most any time.  The conversion ratio changes every second of every day.  The big question is will FRNs buy more or less in the future?  History shows that FRNs have devalued by about 97% over the past 98 years, while gold has maintained (or even grown) in it's purchasing power over the same period. 

The "reserve" status of the FRN has enabled us to rip off the goods and commodities from the rest of the world for the time being.  When the FRN loses it's reserve status, we will see the true value of our current currency.  As Marc Faber said, "It took roughly a 100 years for the "dollar" to lose 97% of it's value under the FED, the next 97% loss of value won't take as long."

One_Eyed_Pony's picture

When Congressman Brad Sherman spoke, he countered Ron Paul 's statements with the posted BLS CPI numbers are HIGHER than in reality.  Bernake confirmed Sherman's statement , that actual cost index is .1-.2% less than the propaganda numbers of the  Who are these propagandists fooling?

So rep. Brad Sherman (D-CA) is nominated as THE FED 'TOOL' of the Day.





covert's picture

right on. except, there doesn't seem to be any connection between congress and the fed. strange cause congress started it. who owns the fed anyway? are the conspiracy theroies, or hypothesis right?


Al Gorerhythm's picture

Ron Paul needs to be given his own 1 hour grilling session! 

True dat. That should give him enough time to get to his question. Bumbling performance. Fuck, how long has he been waiting to get at this asshole and he come unprepared? Like taking a sponge to a knife fight. Congressman, drop the intellectual philosophy that pads your approach (Keyenesian, fiat, symbiotic) and get to the meat of the matter.

For the odd JSP who might watch this by mistaking it for an American Idol judging panel, ask questions that they can understand and symathize with. Such as: If the Fed is a private bank, where did it get it's dollars for international and private corporation bailouts?; What is a dollar and What gives it value? Does a Fed dollar hold its value over time? If not, can it be money one can rely on for savings? ; Why doesn't the Fed want to bail out Main Street?; Why are you always failing at your mandates? Your history of price stability over time is woeful, can you explain why you have failed to maintain the purchasing power of your dollar and full employment?; Because your Fed dollar has lost between 96 to 98 cents in purchasing power, it now requires savers of dollars to withdraw more of them to purchase the same goods than yesteryear, these are facts so how can you claim success in the area of  price stability and how can a depreciating asset be called money? Isn't the purpose of excess to requirement savings supposed to hold value?; If your injections of countless trillions of dollars had no effect on the employment rate, then of what good are they. As they're your dollar, under your control,  please justify your position and try to validate the worth of your organization to the benefit of our country.

You have 5 minutes. Bombard him with questions that he has to answer in his time. Use another platform to deliver your philosophical leanings to the public. Enter yourself in American Idol, now there's a captive audience!




Hedgetard55's picture



"President Madoff"? The Professor looked quizical for a second.

"Yes, the Chinese have released him and set him up as top dog in the new colony, New Xian, they are calling it."

I clicked the safety on my MAC-10 to ON and pointed it down towards the ground. I wasn't really prepared to use it on the Professor - he was way too valuable a commodity. There were other dangers down here I was more concerned about - albino alligators and rats, rats of the human kind. The MAC-10 could put out a nice volume of lead if neccessary, but the close quarters and the hard walls made that dangerous for me as well. My eTAZER

could handle the Professor if neccessary, but I did not think it would be a problem once he heard about his new deal.


"He sent you this". I passed a small pouch to the filthy ex FED Chairman. He pulled a flask out, opened it and sniffed.


"Talisker, 10 year old. The only single malt from the Isle of Sky in Scotland. I can't believe Bernie remembered". He took a slug. Looking back in the pouch he took out a cigar and a book of matches. "Cohiba, no doubt. If that rat bastard thinks this makes up for the 500 large he stole from me..." He lit up.


I don't know much about Scotch or smoke, but apparently the Professor still did, even after a year of living like an animal in the sewers of the City.


I handed him a q-tip and said "Swab the inside of your mouth". He did and handed it back. "Just a precaution, Professor". I slipped the sample into the portable DNAnalyzer on my hip and waited for the confirmation to come through. It would take about a minute.


Just then I heard a sound from my right, and a poor disheveled and filthy creature, a man I supposed, appeared in the tunnel.


"Everything OK, Jimmy?" he said.


"Yea, Fred, no problem. Just an old friend come to visit" the Professor replied. A strange look came over Fred as he noticed the Cuban and the flask, not to mention a man in a LEVEL 2 bio-hazard suit, and he disappeared back into the shadows.


"Time to roll, Professor. I don't like what I saw in that man's eyes, like a light bulb going off. And there WAS a million dollar bounty on your head, even if a million barely bought a few crusts of bread at the end."


I clicked the safety on the MAC-10 to OFF.


To be continued...

AZSovreign's picture

He did NOTHING!! no monkey hammer, no exposing all the fraud, NOTHING!!


Controlled Opposition.

iinthesky's picture

What can someone do in the span of 3 minutes. Thats all the time they get to ask a question then the other whores get their minute in the spotlight. I dont know why they hold these hearings.

Dr. Richard Head's picture

Bingo.  Plus, Barny Fwank likes to skim time off of Mr. Paul's time.  Barny is great at sneaking off a bit here and a bit there. 

After only 4 years of helping in this battle I have grown weary.  How Mr. Paul continues on is beyond me.'s picture

He did NOTHING!! no monkey hammer, no exposing all the fraud, NOTHING!! Controlled Opposition.


Your post has had no effect on the Fed. None whatsoever. Therefore you are a fraud and an example of "controlled opposition" when measured by your own criteria.

AZSovreign's picture

Your post is pure ignorant drivel, how exactly can I be a fraud for stating the truth about Mr. Paul? Furthermore my post wasn't directed at the Fed, so go back to smelling your upper lip atleast you know what that is.


Give me 3 minutes with the bearded wonder and I will show you direct questioning.'s picture

Give me 3 minutes with the bearded wonder and I will show you direct questioning.

I'm sure you're quite the legend in your own mind.

Saxxon's picture

I agree; he set up the straw man 'What is a Dollar?" Econ 101 question for Bernank to ramble about.  I continue to feel Sen. Paul is being used as a relief valve; and that there is no hope of change or even improvement within the current crony system.

Bringin It's picture

You're right Saxon.  Not within the current system.  So it has to fail and reset.

nedwardkelly's picture


I kind of wondered myself... It seems that Ron Paul is one of the 'hopes' for 'change' with regards to all the bullshit going on, but what did I just see? I thought he rambled some in his question, got a pro forma reply from the bernank, then it was on to the next questioner.

Nothing changes.

pods's picture

I agree. I could not even watch the whole thing.  Not worth my time.  I like RPs ideas, but at a congressional hearing you do not get into a lecture about fractional reserve banking.  

Simple questions:

"Where in the FEDs bylaws does it allow the outright purchase of any security that does not have the full faith and credit of the USA?"

"They why did the FED purchase F&F securities when the GSEs bylaws explicity state that their securities are not backed by the full faith and credit of the USA?"

"So the rules the US CONgress set up for you to function under do not carry the force of law, or are you operating outside of the rule of law in the USA?"

"Then why are we even here?"


Done.  Revolution the next damn day.  Could have been done in '08.


melachiro's picture

Well then we will see the anti-semites out en masse on this post I suppose.

israhole's picture

Israel leeches off the US. My vote goes to whoever will DUMP ISRAEL! even though I like a few jews that I know. Most are Israel-first rats that think this country is just a step in their conquest of the planet.

Xkwisetly Paneful's picture

But the Arabs don't getting $2.40 a gallon for something that costs a buck to take out of the ground.