The Fed's Interesting Week

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by Ron Paul: The
Free Market as Regulator

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has been an interesting week indeed for the Federal Reserve. Early
this week, it was announced that President Obama intends to reappoint
Fed Chairman Ben Bernanke to a second term in January, signaling
a vote of confidence in him. Bernanke seems to be popular with the
administration and with Wall Street, and with good reason. His lending
policies have left big banks flush with newly created cash that
covers up old mistakes and allows for new ones. By buying up mountains
of Treasury debt he has also enabled spending to soar to ridiculous
levels that should startle any responsible economist, and scare
any American concerned about the value of the dollar. However, these
highly sensitive decisions about our money are not made by economists,
they are made by politicians. Bernanke, like most of his predecessors,
is the politician’s best friend. However, there is no reason
to believe any other central planner would behave any differently,
considering the immense political pressure on the Fed.

Fed policies
have been as bad for the economy as they are good for politicians
and bankers, as the recently released numbers on the debt and deficit
demonstrate. For the first time since World War II the annual budget
deficit is projected to be over 11 percent of the nation’s
gross domestic product. It is also projected that by 2019 the national
debt will be 68% of GDP. Our path, if unchanged, is completely untenable.

The administration
claims that it inherited a dire situation from the last administration,
which is absolutely true. However, that hasn’t stopped them
from accepting all the policies and premises that got us here, and
accelerating those policies to rapidly make a bad situation much
worse. The bailouts started with the last administration. They have
gotten bigger with this one. The last administration gave us expanded
government involvement in healthcare with a new prescription drug
benefit. This administration gave us a renewal and expansion of
SCHIP, and now the current healthcare takeover attempts. In reality,
we can afford none of this, but shady monetary policy allows Washington
to continue along its merry way, aggravating all our economic problems.

Not everyone
in government finds it acceptable that the Fed wields so much power
and privilege in secrecy. Last week, a federal judge ruled against
Fed secrecy, compelling them to release under the Freedom of Information
Act information regarding which banks received emergency loans,
and under what terms. The Fed will, of course do everything in its
power to fight this ruling and it is certainly not the last word
on the issue. Still, it is encouraging to see that the interests
of the taxpayers were defended victoriously in court, while the
Fed only sees the plight of its big-banker friends.

Meanwhile HR
1207 and S604, legislation to open up the Fed’s books to a
complete audit, continue to gain momentum in Congress as the people
continue to insist on real transparency of the Federal Reserve.
One way or another, the days of Fed autonomy are coming to an end,
as well they should. No one should have the power to debauch the
currency and gut the economy as they do. It is time they answered
for their actions, so the people can understand that we truly are
better off with freedom instead of Fed tyranny.

the Ron Paul File

1, 2009

Dr. Ron
Paul is a Republican member of Congress from Texas.

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