So writes Jacob Heilbrunn in the LA Times, which warns:
Once on the fringe, critics of the Federal Reserve such as Ron Paul are suddenly mainstream.
Darn right! Read the whole Keynesian and smeary op-ed. I’ll make a few comments about my favorite parts.
If he didn’t know it already, Federal Reserve Chairman Ben S. Bernanke is learning that no good deed goes unpunished. Bernanke’s measured move to bolster the American economy by purchasing an additional $600 billion in U.S. Treasury bonds — an attempt to pump liquidity into the economy — is triggering a backlash from the right.
Can you imagine it? There are non-Keynesians in the land, who think that there is something wrong with massive money printing for the benefit of the big banks, Wall Street, and the State? You must be an ignoramus to fear price inflation and possible price hyperinflation.
[Criticizing the central bank] is an opportunistic move, one that plays into a broader radical agenda of injecting politics into monetary policy in order to tarnish the Fed’s reputation.
What, politics involved in the State’s central bank? Like the rest of the government, all the Fed cares about is politics (and the banks). As Arthur Burns, Fed chairman under Nixon, once said: “If the Fed doesn’t do what the president wants, it would lose its independence.” NB: most people who want to “politicize” the Fed are inflationists; the Austrians want no inflation, of course. Indeed, we want deflation.
Just as the Kristol-led Project for the New American Century once helped lay out the blueprint for the George W. Bush administration’s crusading foreign policy, so Kristol’s new organization is supposed to lay the groundwork for conservatives of all stripes to return to the economic principles of the Founding Fathers.
Good point. Kristol is attempting to take over the anti-Fed movement, castrate it, and turn it to his own neocon purposes. Thus his creature Palin’s recent comments. By the way, if Kristol can criticize the Fed, how can it be anti-Semitic for Ron Paul to do the same?
Among the most prominent Bernanke critics the mainstream is essentially embracing is the libertarian and isolationist Rep. Ron Paul (R- Texas). His views used to be on the fringe, but Paul, now a “tea party” hero, will become chairman of a House monetary committee in January. In books, articles and appearances on Fox News, Paul calls for the outright abolition of the Fed, and from his new perch, he will have oversight of the central bank.
Make that simply “the most prominent Bernanke critic.” Of course, Ron Paul is not an “isolationist,” a smear word first used against opponents of the US war on Spain. Like all libertarians — and like George Washington in his Farewell Address — Ron wants trade and friendship with all foreign nations, but political connections with none. “Isolationist” is also the charge used against anyone opposed to wars of aggression.
The Federal Reserve was created in 1913 in response to the financial panics of the early 20th century. It issues currency and sets interest rates for banks, balancing the risk of recession and inflation with every decision.
And the good fairies wrote the Fed legislation at at a secret meeting at J.P Morgan’s private club on Jekyll Island, Georgia.
At the same time, the perception that it is an impartial authority devoted solely to guiding the economy is essential to its credibility.
That’s right. The hard work of the Austrians, beginning with Mises in 1912 and continuing with Hayek, Hazlitt, Rothbard, and other great economists, and Ron Paul and the Mises Institute, is paying off. People are understanding for the first time that far from being just a boring name on their depreciating fiat money, the Fed is ripping them off, and funding the welfare-warfare state, to the benefit of the sorts of people who met at Jekyll Island. If the perception of the Fed as impartial is essential, does this mean that the Fed must actually be impartial, or is it enough that people falsely believe that it is?
But from the beginning, the Fed attracted a devoted cult of bashers who, like Paul, see it as working against American self-reliance and the free market, and destroying economic growth as it leads to the rise of socialism and, eventually, to tyranny a la Nazi Germany and the Soviet Union.
Paul’s office in Congress, which I have visited, is festooned with quotes from Hayekian economists [he means Mises, Rothbard, and Hazlitt, none of them Hayekians]. Paul’s book, End the Fed, calls for a strictly private banking system. If the “big government” Fed is abolished, he suggests, all our economic woes will be miraculously cured.
Nope. We’d need to curb spending too, especially the empire, but ending the Fed would be the greatest advance in human liberty and general prosperity in a very long time.
Most conservatives have had no patience for such views. Neoconservative godfather Irving Kristol declared in 2003 in the Weekly Standard that he felt “impatient with the Hayekian notion that we are on ‘the road to serfdom.’ Neocons do not feel that kind of alarm or anxiety about the growth of the state in the past century, seeing it as natural, indeed inevitable.”
Absolutely right. But now here comes the smear.
But those fears are front and center today, and they play into the most extreme Fed bashing, which depicts the central bank as an instrument of a despotic elite that controls world events for its own ends. [Partially right, of course.] George Sylvester Viereck (who was imprisoned by FDR as a Nazi sympathizer in 1941) and Eustace Mullins (an associate of Sen. Joseph McCarthy) charged that President Woodrow Wilson and his aide “Colonel” House conspired with Jewish financiers to establish the central bank in 1913. The Rev. Pat Robertson, in “The New World Order,” returned to such theories, decrying the Jewish Rothschilds and their role in creating “one-world government” under the sway of a “financial oligarchy.” Today, Paul echoes such thinking in his call to end the Fed’s “secretive cartel.
Of course, it is a secretive cartel of big banks, and thus Ron Paul’s desire to audit it. But Austrian criticism of the Fed isn’t primarily that private bankers control the system. Rather, it is that the Fed’s expansion of bank credit causes the business cycle. But Heilbrunn’s central charge against Ron is an outright lie. Mullins, a money-crank who denounced the Jewish Mises and Rothbard, and praised Mussolini’s fascism, has nothing to do with Ron Paul. Mullins, not an associate of McCarthy, was an advocate of giant government. Why not mention Hitler too? Except that he was a dedicated central banker. Pat Robertson, a police statist and imperialist, is an opponent of Ron Paul’s. And national socialist George Sylvester Viereck? Come on. This is “guilt” by made-up association. And, by the way, the two most prominent banking families involved in the founding of the Fed were the Morgans and the Rockefellers.
The Federal Reserve’s utility as a public relations target for the far right, and its real targeting by a small group of activists, could impede the central bank’s ability to fulfill its crucial work of balancing interest rates, unemployment and inflation. Paul has pledged to use his chairmanship in the House as a “mini bully pulpit” to grill Bernanke. In less fraught times, his credo wouldn’t command much popularity, but it appears as though the GOP is preparing itself to undergo a Pauline conversion.
That’s right. And thanks to Jeff Fogel, who notes:
This incredibly ignorant attack on Ron Paul did get one thing right. As the writer quipped, ‘no good deed goes unpunished’. Indeed.
Llewellyn H. Rockwell, Jr. [send him mail], former editorial assistant to Ludwig von Mises and congressional chief of staff to Ron Paul, is founder and chairman of the Mises Institute, executor for the estate of Murray N. Rothbard, and editor of LewRockwell.com. See his books.