Liberty Maven

Ron Paul failed to wipe the floor with Bernanke in the last Congressional Hearing. Here’s why. Shift tactics next time!

by Jake, the Champion of the Constitution
Originally published November 20, 2008 at http://www.nolanchart.com/article5511.html

Although I greatly admire Ron Paul’s ideas, as I watched the latest RP vs. the FED battle, I was quite disappointed. The FED is gasping for air. They caused the mother of all bubbles, and it’ll finally pop next year. Dr. Paul took over 4 minutes of his precious 5 minutes pontificating about the glory of Austrian economics and the horror of the FED instead of pressing home an attack. Art of War 101: “Cut off his head before waxing eloquent.”

Don’t get me wrong. There was a time for pontificating, such as his famous “They’re being ROBBED!” speech, but that was back pre-crisis when very few people recognized the Congressman from Texas. Ron Paul is a brilliant economist in his own right, and there is enough horsepower in his brain to help change the world. What if Paul had instead unleashed a blizzard of questions, and enveloped Bernanke in an actual conversation? As Chris Powell of the Gold Anti-Trust Action Committee (www.GATA.org) wrote here, Paul could have asked:

1) Are the Fed or the Treasury intervening or encouraging or subsidizing certain actions by others in the precious metals and general equities markets, just as the Fed and Treasury commonly intervene in the currency and bond markets?

2) Does the U.S. government have any connection to the derivative positions in gold, silver, and interest rates built up at JPMorganChase and other financial houses?

3) Why is the Federal Reserve refusing to disclose all its records involving the U.S. gold reserve?

4) How often does the President’s Working Group on Financial Markets meet? What does it do? Does it intervene in the stock market or encourage certain actions in the market by third parties? Does it keep records of its proceedings? Are those records available to the public? If not, why not?

5) Do the Fed and the Treasury convey to certain financial houses information that is not simultaneously available to all other market participants? Exactly what private communications do Fed and Treasury officials have with financial houses? What is the necessity of that privacy? How does that privacy not confer a favoritism that is potentially very lucrative?

Surely Paul himself could frame all these questions and many better ones without any help. Instead he always digresses and then at the last minute tiptoes up to a big issue only to have time run out with the Fed and the Treasury witnesses saved by the bell. Even as Paul knows better than nearly everyone else in Washington, it is hard not to wonder if he is afraid of being the one to prompt the answers he very well might get.”

Granted, Dr. Paul did bring up the gold price and a new global currency, but we are not dealing with just any other bureaucrat, it’s the head of the vaunted FED.  Dr. Paul has a chance that none of the rest of us do, which is to give Bernanke more rope to hang himself and his ilk, obtain more information, and he failed to do so. The Chairman of the Federal Reserve is equivalent to REX, as ex-Chairman Greenspan bluntly answered in September 2007:

JIM LEHRER: What is the proper relationship, what should be the proper relationship between a chairman of the Fed and a president of the United States?

ALAN GREENSPAN: Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don’t, frankly, matter. And I’ve had very good relationships with presidents.

JIM LEHRER: But you don’t feel any responsibility for keeping interest rates low?

ALAN GREENSPAN: Well, let me tell you. We had no choice. I mean, we’re the vaunted Federal Reserve.

In fact, if I had to choose who did more good for the American people on this week, it would be this Wall Street Journal article from ex-FED, ex-Vice President of the Federal Reserve Bank of Dallas Gerald O’Driscoll, where he writes about reinstating a gold standard (my italics):

The economy now confronts deflationary forces. If past is prologue the Fed will concentrate on those deflationary forces for too long and rekindle an asset boom of some kind. The fiscal “stimulus” being contemplated by Congress could be another economic accelerant. If both the fiscal and money stimulus efforts kick in just as market forces also kick in, we’re likely to see another unsustainable boom that will be followed by a bust.

The incoming administration must think about that possibility because the timing of boom and bust cycles seems to be shortening. The next bust could come five or six years from now — or about in the middle of an Obama second term. Should that happen, Mr. Obama would be unable to blame Republicans for the mess and would be tagged as the second coming of Jimmy Carter.

To avoid such a fate, Mr. Obama needs to stop the next asset bubble from being inflated by imposing a commodity standard on the Fed. A commodity standard (such as a gold standard) imposes discipline on a central bank because it forces it to acquire commodity reserves in order to increase the money supply. Today the government can inflate asset bubbles without paying a cost for it because the currency isn’t linked to the price of a commodity.

With a commodity standard in place, the government would also have price signals that would alert it to the formation of a bubble. Why? Because the price of the commodity would be continuously traded in spot and futures markets. Excessive easing by the Fed would be signaled by rising prices for the commodity. In recent years, Fed officials have claimed that they cannot know when an asset bubble is developing. With a commodity standard in place, it would be clear to anyone watching spot markets whether a bubble is forming. What’s more, if Fed officials ignored price signals, outflows of commodity reserves would force them to act against the bubble.

The point is not to deflate asset bubbles, but to avoid them in the first place. Imposing a commodity standard is a practical response to the repeated failures of central banks to maintain sound money and financial stability. What would be impractical is to believe that the next time central banks will get it right on their own.”

Deflationary and inflationary forces are running amok. The dollar is heading into what could possibly be a terminal crisis. The FED has chosen “The Japanese Special,” a monetary policy of printing paper, or the Gamble of Qualitative Easing. Nearly 100 years after its birth, the all-knowing and powerful FED has still not learned how to rule as REX and centrally plan the economy. I am not even sure if they are trying. Central banks have been an anchor on the people of this caged world for long enough. It’s time to cast off for a new ocean.

For Honest Money and the Republic,

Jake, the Champion of the Constitution                [Reach the Author Here!]

www.CampaignForLiberty.com

www.ENDtheFED.us

END THE FED! Protest to take place on Saturday, 11/22/08
Published: November 16, 2008
“Scenes are now to take place as will open the eyes of credulity and of insanity itself, to the dangers of a paper medium abandoned to the discretion of avarice and of swindlers.” -Thomas Jefferson to Thomas Cooper, 1814

(Photos) ( photo2)

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We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

“Whenever the legislators endeavor to take away and destroy the property of the people, or reduce them to slavery under an arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from further obedience, and are left to the common refuge which god hath provided for all men against force and violence.” – John Locke

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Nolan Chart Facebook Group Page Created

Summary of Articles for Jake, the Champion of the Constitution (11/15/2008)

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The Money Matrix Series

1. America, Were Michael Phelps’ Eight Olympic Gold Medals Worth Winning?
2. The Money Matrix – Prelude (PART 1/15)
3. The Money Matrix – What is a Dollar Bill Worth? (PART 2/15)
4. The Money Matrix – What Makes Money Money? (PART 3/15)
5. The Money Matrix – If You Don’t Know Who the Sucker Is, Then It’s You! (PART 4/15)
6. The Money Matrix Explores Seigniorage – Do not give in to evil, but proceed ever more boldly against it. (PART 5/15)
7. The Money Matrix – How the FED Works (PART 6/15)
8. Save Ron Paul’s Voice – A Money Matrix Addendum
9. A Money Matrix Addendum: Citigroup and GATA Call for an End to the Suppression of the Gold Market
10. MY PROPHECY – The Federal Reserve Will End! A Money Matrix Addendum

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