Bernanke Slams Audit the Fed

Reports Reuters:

Federal Reserve Chairman Ben Bernanke on Wednesday rebutted Republican lawmakers pushing a bill that would give Congress the ability to review monetary policy decisions, saying it could compromise central bank independence.

Bernanke said it would be a “nightmare scenario” if politicians decided to second-guess monetary policy.

“That is very concerning because there’s a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term,” Bernanke told the U.S. House of Representatives’ Financial Services Committee.

The hearing was the likely last chance for retiring Texas Representative Ron Paul, known for proposing the Fed should be abolished, to grill the central bank chairman.

“Trillions and trillions of dollars (are) being printed out of thin air,” said Paul.

The Republican-controlled House is on track to take up Paul’s Fed audit legislation next week. The bill, which has been co-sponsored by more than half of all House members, looks set to clear that chamber…

Paul’s bill would direct the Government Accountability Office, an independent, nonpartisan congressional agency, to conduct a Fed review, and it would remove an exemption monetary policy has enjoyed.

Bernanke said the very notion of a monetary policy audit was misleading.

The funniest part of this story:

“The term ‘audit the Fed’ is deceptive. The public thinks that auditing means checking the books, looking at the financial statements, making sure that you’re not doing special deals, and that kind of thing. All of those things are (already) completely open,” (Bernanke) said.

Completely open? Yeah right!

Source: Paulitical Ticker with Jack Hunter

Rand Thinks Ron’s Audit the Fed Will Pass House

And is hopeful for a Senate vote. Reports Newsmax:

Kentucky Sen. Rand Paul tells Newsmax.TV that “the Federal Reserve needs oversight” and expects a full vote in the U.S. House of Representatives on legislation that would grant congressional oversight of the independent central bank.

“We need to have checks and balances,” the first-term Republican told Newsmax. “They are an agency that, basically, has destroyed 96 percent of the value of our currency over the last 100 years or so.

“We need to do something to have congressional oversight over what they do.”

On Wednesday, the House Oversight and Government Reform Committee voted unanimously to authorize an investigation of the Fed to make it more accountable to lawmakers.

The measure was sponsored by Texas Republican Rep. Ron Paul, a longtime Fed critic — and Rand’s father.

Sen. Paul introduced similar legislation in January 2011.

“I think it will pass the full House,” Rand Paul said of measure’s future prospects. He’s hoping for a vote this summer.

“There are many who don’t want to have a vote because they fear that a vote will pass. … We just have to get a vote.”

In the Senate, Paul said he’s “doing everything I can possibly do to get a vote. But over in the Senate, it’s just like pulling teeth just to get a vote on anything.

“I think there’s some chance I can get a vote in the Senate…”

Source: Paulitical Ticker with Jack Hunter

Charting Fun with Krugman

By Robert P. Murphy

In a few recent blog posts, Paul Krugman used bar graphs and tables to (allegedly) prove the superiority of his views over those of the Austrians. Yet, as I'll show in this article, I can use Krugman's own data to demonstrate the exact opposite.

Krugman on the Fed and Banking Panics

Perhaps spurred by his Bloomberg debate with Ron Paul, Krugman posted the following regarding financial panics and the US central bank:

There's a very widespread belief on the right that banking crises only happen because either the Fed or Barney Frank cause them; go back to a gold standard, and there would be no need for financial regulation or anything like that.

This is, of course, nonsense; Walter Bagehot knew all about financial crises, which have been a constant feature of modern economies since at least the early 19th century. Just to drive the point home, I thought it might be worth posting Gary Gorton's chart of "panics" before the Fed went into operation:

Panics will happen; the question is how they are contained. (emphasis added)

Now although Krugman doesn't explicitly say "Ron Paul" or "Austrian economists," I think he has to have them in mind here. After all, before the Austrians rose in popularity, hardly anybody talked about the gold standard, let alone abolishing the central bank. It was the Austrians, and most notably Ron Paul, who put those ideas back into the limelight so that Paul Krugman feels the need to address the issue.

In that light, Krugman is simply making stuff up when he says such people think banking panics never happened before the Fed. Murray Rothbard's doctoral dissertation was The Panic of 1819, and Rothbard also wrote on the history of the Fed, so I'm pretty sure he wouldn't be shocked by Krugman's table.

But besides the cheap debating ploy — setting up his opponents as believing something obviously ridiculous — Krugman leaves open the door to his own demise in his final sentence, after the chart, when he writes, "Panics will happen; the question is how they are contained."

Fortunately, Krugman himself provides the answer in a… (Read more)

Source: Mises.org

PAUL vs. PAUL

In their first joint appearance ever Rep. Ron Paul and economist Paul Krugman debate monetary policy, the Federal Reserve, and the role of government!

You do not want to miss this debate.

Please share this video on Facebook, Twitter, Tumblr, Reddit, and around the internet. Everyone who cares about the future of our economy should watch this debate!

Source: Young Americans for Liberty via Bloomberg TV

This is Why Regulations Are a Scam!

A note by Zach Foster

There are times when pure theory becomes too abstract for a student of the Austrian School, and concrete examples are needed to solidify understanding of the stupid greed or false philanthropy of policy makers who seek to "protect" the American people.  Well, see the info-graphic to the left!

Here’s a graph showing just a taste of the overlap between Goldman Sachs corporate lobbyists/officials and federal government officials.  Remember folks, these are the people writing regulations to reign in those “greedy capitalists”—i.e., their competitors.

Instead of competing to produce the best goods or services to win over consumers, they’re using the law in an unconstitutional manner to give themselves an artificial advantage and fat profits and slant the playing field for everyone else.

Under a truly free market, they would have to compete honestly.  The naturally occurring phenomenon of the free market would require them to offer goods or services of the highest quality—with a correspondingly high price—or of the lowest price—with correspondingly low quality—or find a healthy balance between quality and low price that makes goods and services universally affordable and with good utility.

One economic insight to keep in mind this election cycle is that both Barack Obama and Mitt Romney are in the pockets of Goldman Sachs, both having received substantial donations from members of the Goldman Sachs executive board.  Ron Paul is not in anyone's pocket, disavows crony capitalism, and is Washington D.C.'s greatest advocate of the free market.

One of the problems in the common mindset is that people see crony capitalism and grievously mistake it for the free market.  Clearly there is a difference; the former, wedded to interventionism and eventually socialism, causes society and economy to decay, while the latter enables them to thrive.

Graphic courtesy of AgainstCronyCapitalism.org.