"Dear Dr. Paul...There are serious questions about the legality of Quantitative Easing. You are among the few who are well-qualified and well-placed to get to the bottom of it. Most people believe, and the media confirm them in that belief, that the Fed can legally create dollars ‘out of the thin air’ in any quantity, and can do with them as it pleases. This may well be the pipe dream of Dr. Bernanke who is quoted as saying that the U.S. government has given the Fed a tool, the printing press, to stop deflation — but it hardly corresponds to the truth. The Fed can create new dollars only if some stringent legal conditions are satisfied, and then, it can only dispose of them in certain ways prescribed by law." Antal Fekete
The much anticipated hearing on "The Relationship of Monetary Policy and Rising Prices" chaired by Ron Paul and includes such witnesses as James Grant has started. It should be quite interesting because the last time we checked, Grant had refused to drink the Kool Aid.
Oh this will be fun...
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.
No doubt this will be spun as an "editing error". We've heard this before: "fake, but accurate", right? Will FOX news anchor Bill Hemmer resign in disgrace?
Ron Paul Says Next US Crash Will Be Comparable To That Of Soviet Union, Claims QE2 Is "Total Failure" And Fed Is A "Central Planning Cartel"Submitted by Tyler Durden on 02/10/2011 13:59 -0400
Ron Paul has just stepped up his war of rhetoric with his nemesis the Archchairsatan Rudolf Vissarionovich von Bernankestein (because never before have we had a genocidal central planner hell bent on printing the world's fate out of a deflationary collapse), and in an interview with Larry Kudlow said what everyone who is watching the day after day melt up (and wondering what comes next) openly thinks: that when all is said and done, and there is no incremental vapor and no incremental HFT levitation effect, that the US collapse will be comparable only to that of the Soviet Union. Needless to say, we are confident he is optimistic. Some economic observations from Paul: "We have so much unemployment, it is so undercounted. The free market economists report that there is probably 22% of unemployment. They pumped in $4 trillion, they should have added a lot of jobs, but how much did it cost us, and that of course is the price inflation that will come. We are moving into another 30 year period where we are going to see a reversal of interest rates, and we are going to see a crashing of the bonds like we saw 30 years ago and it's going to last a long, long time. The Fed deserves the blame for the inflation, and for the unemployment." On the amount of damage done by the Fed: "I think it's unimaginable, it could be so devastating, and could bring a strong, worldwide run on the dollar. We are in uncharted territories. I think we will see changes in our economy and our country almost equivalent to the change that occurred in the Soviet system. I think it will bring down our empire, we won't be able to afford our welfare state, and we won't be able to afford taking care of the world." And as Zero Hedge suggested previously, Ron Paul believes that the Fed's policies will actually lead to a spike in unemployment when all is said and done. Lastly, on Ron Paul view of Bernanke's central planning:"One time when Greenspan was before the committee, I told him if you can make this fiat system work as if it is the market system working, you have repealed economic law. It is positively baffling that we as a country have accepted that one individual can control the economy."
Federal Reserve Chairman Rudolph Shalom Von Bernankestein will testify before the House Budget Committee starting at 10 am Eastern today. Congressional employees of the Fed and the Banking syndicate are expected to question the Fed's plans on avoiding inflation and the current unemployment rate. We expect more of the same "QE is working because after spending $2 trillion we got 650,000 part time jobs, and we are certain it is working because rates are surging, and wholesale mortgage are now again at the higest since April, which doesn't make sense but I am a Princeton economist (Ph.D.) and you don't get this complicated stuff."
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).
For all those with a penchant for crunching manipulated numbers and wish to make a change by taking on the Fed (ironically, making some fiat in the process), this may be your chance: Ron Paul, chairman of the Domestic Monetary Policy subcommittee, and his chief of staff Jeff Diest are seeking to hire a young economist, “thoroughly Austrian, and preferably with an advanced degree. The candidate needs strong knowledge of the Fed and monetary policy generally, and must be an effective writer. He or she will be responsible for organizing hearings; summarizing data and Fed actions for Dr. Paul; writing statements; dealing with Financial Services committee staff; and various other tasks.” Sorry Joe LaVorgna, despite your ubercreative "weather worker" adjustment, you are on the exclusion list.
Any time you bring the two Pauls together in an interview, and start discussing items such as the debt ceiling, government spending, and monetary policy you know the results will be good. Sure enough, in this rare ABC interview with father and son, the sparks fly, and among the topic touched is the most popular story on Zero Hedge from yesterday, namely President Obama fabulous hypocrisy, who after bashing the debt ceiling as a senator 4 years ago, has bet the outcome of his entire economic policy on maxing out every single credit card available to him. Paul's response: "we have to face the fact that we are bankrupt and we can't pay our bills." Not exactly bedtime material if one's name is Hu Jintao. That said you know the Paul-led interrogation of Bernanke will be something else, even if it is ultimately totally fruitless.
In what is increasingly shaping up to be a showdown of epic proportions, the brand new chair of the Monetary Policy Subcommittee, Ron Paul, whose sole purpose in life for the past 20 years has been putting the Federal Reserve out to pasture, and returning to the gold standard, will soon spar with none other, than his, and every middle-class American's nemesis, the Chairman. And it could soon get even messier. In an interview with Fortune magazine's Nin-Hai Tseng, not only does the Texas doctor make it all too clear that he once again has presidential ambitions, but when asked whether he wants to end the Fed, gives the following brilliant reply: "Well, I don't expect to. The Fed's going to end itself when they destroy the system. So yes I would end the Fed but I would do it gradually and have a transition." Good luck Ron. However, there will be no gradual transition. If anything, it will be protracted, very much involuntary, and quite likely violent, as it would mark the end of a century-long scheme to transfer countless ounces (no pun intended) of tangible wealth to the ruling oligarchy in exchange for worthless and infinitely dilutable linen.
Despite rumors that various splinter forces within the Republican party are attempting to block Ron Paul's fateful chairmanship of the Monetary Policy Subcommittee, we now have confirmation that the only sane politician left will now be Ben Bernanke's direct nemesis during any and all future Congressional spectacles starring the printing unchallenged one. And with US debt creeping ever closer to the debt ceiling, coupled with the dollar for dollar monetization of the US deficit, such spectacles will soon be plenty.
In addition to calling for the abolishing of America's insolvent "welfare state" regime (and not to mention the Fed), Ron Paul floats the idea of allowing Americans to opt out of payroll tax in exchange for never receiving Social Security benefits. As the SSA will be pretty much insolvent in a few years, and not provide any benefit to anyone soon thereafter, this seems like a reasonable trade off.
Ron Paul Comments On QE2, Says Fed Will Self Destruct, Shocked That Krugman Has "Any Credibility Whatsoever"Submitted by Tyler Durden on 11/08/2010 11:09 -0400
There were few surprises in today's commentary by Ron Paul on QE2: the only man in Congress (with Grayson now gone) who is sufficiently intelligent to realize that the primary culprit behind the US economy's boom-bust cycle is the Federal Reserve, continues to press for the termination of Ben Bernanke's public "service" which has resulted in a collapse in American purchasing power in the 100 years since the first Jekyll Island meeting. Yet Paul takes a 'John Lennon' approach to the problem, believing that active intervention may not even be needed, as the Fed ends up cannibalizing itself: "I think the Fed will self-destruct. People will desert the dollar. I think the Chinese are hinting that already. They are not wanting our dollars as much as raw materials. This is a deeply flawed monetary system. Here we have a small group of people who can create $600 billion with the stroke of a pen... I don't know where people are coming from to think that this can work. What really astounds me me is how tolerant the people are, the people in Congress and the financial market, where did this authority come from? Now somebody outside of the government can spend trillions of dollars and not think anything about it. It doesn't work, it's a failure. And next year it will be more. Bernanke is very clear on what he is going to do - he is going to create money until he gets economic growth and there is no evidence to show that just creating money causes economic growth." All logical and expected. Which is why nobody will endorse the Paul stance, it as it means an end to the trillion dollar wealth transfer system from the middle class to the kleptocracy.
Here is why an open-ended QE2 may be a very moot point: Slate reports that Ron Paul, Ben Bernanke's greatest nemesis, will chair the all important monetary policy subcommittee. In other words, Bernanke v Paul theater will soon be a weekly feature. Too bad Alan Grayson will be no longer present.
And now back to the popcorn.