Ron Paul Grills Ben Bernanke -- 7/18/12

before recognizing dr. Paul for a statement i want to note that this may be his last last committee meeting with the chairman of the Fed Federal Reserve and throughout his time in office dr. Paul has been a consistent and strong advocate for sound monetary policy and his leadership on the committee especially during these hearings when we've had the Federal Reserve Chairman appear before us have certainly made the hearings more interesting and provided several memorable YouTube moment so Michelle could I you haven't registered said it having served a long time with ron paul with whom i agree on a number of issues i am very pleased that I was able to serve one term with him as the chairman because there were times during our joint service when despite his seniority I thought he'd never get to it so I'm glad that he finally achieved that chairmanship that you should had long ago thank you thank you your comments chairman and the ranking member but I am delighted to be here today but I just want to refresh a few people's memory i was first elected to congress in 1976 in april in a special election and the biggest bill on docket at that time was the revamping of the IMF it was a major crisis going on from the breakdown of the bretton woods agreement and they had to rewrite the laws they wanted to conform the laws with what they had been doing for five years and that was a major piece of legislation but it was only a consequence of what was predicted in 1945 because when 1945 established the Bretton Woods it was predicted by the free market economists it would work it would fail and this whole idea that they could regulate exchange rates and deal with the balance of payments it totally failed and so they had to come up with something new in 1971 76 is that transition period and those same Economist's at that time said this was an unworkable system too and it would lead to a major crisis of too much debt too much malinvestment be worldwide to be worse than anything because it would be based on the fiat dollar google globally and that many of the problems that we have domestically would be worldwide and that certainly has been confirmed with the crisis that we're in and has not been resolved yet we're still floundering around and we still have a long way to go I have over the years obviously been critical of of what goes on on monetary policy but it hasn't been so much the chairman of the committee of the other federal reserve whether it was Paul Volcker or our Alan Greenspan of the current chairman it's always been the system I think they have an but they can't do because it's an unmanageable job and it's a yeah it's a fallacy it's a it's it's a flawed system and therefore we shouldn't expect good results and and generally we are not getting results policies policies never change we stay the same thing no matter what crisis is we still do more of the same if if if spending and death was the problem spending more and in greater debt and have the Fed just buy more debt doesn't seem to help it all and here we are doing the same thing we we don't talk about the work ethic and troop reductions and true savings and and why this excessive debt is so bad for us we talk about solving a worldwide problem of insolvency of nations including our own by just printing money creating credit and now the Fed in the last four years triple the monetary base and it has a trillion dollars more money sitting there the banks are sitting with trillions of dollars it's just the creation of money doesn't restore the confidence that is necessary and until we get to the bottom of this and restore the confidence I don't think we're going to see economic growth this this whole idea that you have the job of managing money and we can't even define the dollar nobody has a definition of the dollar is an impossible task so I have hoped in the past to try to contribute to the discussion on monetary policy the business cycle and why it benefits the rich over poor and so far my views have not prevailed but I've appreciated the opportunity and I appreciate this opportunity to have served on the bank committee thank you thank you dr. Paul the gentleman from Missouri mr. clay is recognized for three minutes Thank You mr. chairman and let me thank chairman bernanke for appearing at today's hearing let me also publicly thank our chairman dr. Paul for his honorable service in Congress into his country dr. Paul for three four five minutes yeah Thank You mr. chairman I had a question prepared but I think I better follow up on the question you asked Chairman Bernanke dealing with the audit of the Fed because when when the Fed talks about independence what they're really talking about is secrecy not not transparency and it's the secrecy that I don't like and that we have a right to know about what what the GAO cannot audit and and I believe it would be the position of the Chairman is it cannot audit monetary policy and you express yourself on monetary policy but it would not be able to look at agreements and operations with foreign central banks and governments and other banks or transactions made under direction of the FOMC discussions or communications between the board and the Federal Reserve System related to all those items so it really it's it's it's really not an audit with without this it's still secrecy and why this is important is because of what happened four years ago it's estimated that the amount of money that went in and out of the Fed for the bailing out overseas was 15 trillion dollars how did we ever get into this situation where Congress has nothing to say about trillions and trillions of dollars of bailing out certain banks and governments through these currency swaps and the chairman has publicly announced that he's available there's a crisis going on in Europe part of this dollar crisis going on that's been building its unique to the history of the world a monetary policy we stand ready who stands ready the American taxpayer because we're just going to print up the money as long as they take our dollars will print the money and we'll bill them all on we're going to destroy the middle class the middle class is shrinking the banks get richer the middle class gets shrink they shrink they lose their houses they lose their mortgages this system is biased against the middle class in the poor so I would say that this is if if we protect this amount of secrecy it is not good policy and it's not good good economics at all it's very unfair but my question is mr. chairman whose responsibility is it under the Constitution to manage monetary policy what which branch of government has the absolute authority to manage monetary policy the Congress has the authority and its delegated to the federal reserve that's a policy decision that you made yeah but they can't transfer authority you can't amend the Constitution by just saying we're going to create some secret group of individuals and banks that's amending the Constitution you can't do that and all of a sudden allow this to exist in secrecy and whose responsibility is it for oversight which branch of government has it has the right of oversight Congress has the right of oversight and we certainly fully accept that and are and I and we fully accept the need for transparency and accountability but it is a well-established fact that an independent central bank will provide better outcomes if you want to go at there's no constitutional reason why you couldn't buy Congress couldn't just take over monetary policy if you want to do that I guess that's your right to do it but I advising you that it wouldn't be very good from an economic policy point of view if if it's allowed to be done in secret this is the reason why I want to work within the system what I want to say is Congress ought to get a backbone they ought to say we deserve to know we have a right to know we have an obligation to know because we have an obligation to defend our currency it's the destruction of the currency that destroys the middle class there is a principle in premarket banking that says if you destroy the value currency through inflation you transfer the wealth from the middle class and it gravitates to the very wealthy the bankers the government the politicians they all love this it is it is the fact that the Federal Reserve is the facilitator but you couldn't have big government if everybody loves big government love the Fed because they can finance the wars and all the welfare you want but it doesn't work it eventually ends up in a crisis and it's a solvency crisis and it can't be solved by printing a whole lot of money so I think the very first step is transparency and for us to know we have a right to know and you may be correct in your assumption at least I'm sure you believe this but maybe I should be talking to the Congress that we should stand up and say yes we demand to know trillions and trillions of dollars being printed out of thin air and bailing out their friends they stand ready to do it the crisis is just in it as far as I'm concerned my opinion is it's in the early stages it's far from over we're in deep doldrums and we never change policy we never challenged anything we just keep doing the same thing Congress keep spending the money welfare expands exponentially wars never end and deficits don't matter and when it comes to cutting spending Republicans and Democrats to get together and say oh no we can't really cut and if we do cut we just cut proposed demon regular time stay in there use regular order with denim and facilitate it all thank you dr. Powell sustainability Thank You mr. John mr. chairman thank you very much in mr. Bernanke thank you for being here I won't say two of my worst votes in 18 years the right war we didn't have to go to Iraq and the second the repeal of glass-steagall and if I was not going to yield my time I would ask you about reinstating glass-steagall i think i would write you a letter with that question sir but at this time because he's one of my dearest friends I supported him for the Republican nomination to be President United States I yield my time to dr. Ron Paul I thank the gentleman from North Carolina I want to make a very brief statement about our previous discussion about the audit the Fed bill that bill has nothing to do with transferring who does monetary policy this was it's strictly a transparency bill monetary policy reform I believe will come but that's another subject this is just to know more about what the Federal Reserve is doing mr. chairman one of your key points that you've made through your academic career as well as being a defend has been the need to prevent deflation would you agree without that is generally yes sir right and that you you argue that the Depression was prolonged by the Federal Reserve not being able to really so in that sense I think you really have achieved you've had the chance you were put in a situation that you alone didn't create it as far as I'm concerned a system created and other managers helped create this and there was this what I see is a natural tendency to deflate and liquid day in clear the market and and under your philosophy you say we can't allow this to happen we have to prevent it and i would say you've done a pretty good job you know the the monetary base has been tripled and in the last 12 months i think mm1 has grown about sixteen percent m2 and over nine percent so it seems to be like a monetary system the monetary numbers are still growing but the pricing houses you know everybody knows there's a bubble I'd like to believe that the free market economists knew about it and predicted it others did not but the prices soared up everybody knows there was a bubble and then they collapse when those prices of houses collapsed do you call that deflation no legislation is a prices of current goods and services so inflation inflation doesn't capture house prices it includes the house of the rental okay and I think one of the problems even getting a full-fledged discussion out is sometimes a definition of words about what inflation and deflation means because as far as I'm concerned deflation is when the money supply shrinks and inflation is when the money supply expands but just about everybody in the country specially the financial markets and the way I think the conventional use of inflation is the CPI and I think it's you know a lousy measurement because if it's the money supply increase if price is going down is of houses is not deflation wonder why it is the inflation is measured by the CPI going up rather than the money supply going up our argument is that once you distort interest rates and increase the supply money you end up with this gross distortion that is demanding demanding some correction so I would I've worked on this for years and we're not going to solve it today the definitions would be much better if we if if prices of houses going down is not deflation and CPI going up shouldn't be in inflation but we've had trouble five years the monetary system you say this is not all end and all you can't solve every problem with monetary system and monetary policy we've had this for five years and we're still in a mess is there ever a time let's say we go five more years and we have the same problems but much worse is there a time you might say I have to reassess my philosophy on monetary policy or do you think it'll be the same no matter what kind of crisis can you foresee any kind of problem that we would have that you would reassess your assumptions i I can't conjecture what specifically but of course yeah I'm evidence-based I look at see what happens and try to draw conclusions from that certainly with the the definitions obviously to me are you know very very important and if if we don't come to this conclusion and we use these terms in inflation demands corrections and and occur in the market wants to correct so this is why we believe that you're we're going to have perpetual doldrums and and finally have a big one do you consider this this recession that we're facing today something that is significantly different since 1945 much worse and different in a way yes because of the financial crisis yes thank you thank you thank dr. Paul no that was a double dose you gotta oh I was pleasantly unexpected I guess

Channel: CongressmanRonPaul

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Keywords: liberty, freedom, ron paul, ben bernanke, Ron Paul (U.S. Congressperson), federal reserve

Id: R_NMgAnvncA

Length: 15min 50sec (950 seconds)

Published: Wed Jul 18 2012