Launches an Old Testament Diss Against Ron Paul
by Robert Wenzel: George
the TSA and Homeland Security
that at a town hall meeting with soldiers and their families, in
Fort Bliss, Texas, Fed Chairman Ben Bernanke said:
a believer in the Old Testament theory of business cycles. I think
that if we can help people, we need to help people.
isn't in his prepared
remarks, so it must have come during the Q&A.
being an odd metaphor from a guy who, while a teenager, helped
roll the Torah scrolls in his local synagogue, you know that
the metaphor is aimed at Ron Paul. Bernanke is pushing Austrian
Business Cycle Theory (which Ron Paul supports), as a "Pain
Theory" of solving the economic crisis, when he says that "we
need to help people". He's implying that something different
from the old time economic theories can now be used to "help
people" during an economic crisis.
This, I remind
you, is coming from a guy who as Chairman of the Federal Reserve
crashed the economy and destroyed the housing market, and where,
as a result of the crash, roughly 9%, to this day, remain unemployed.
Some help he is.
The poor performance
of the economy is, of course, the result of past Federal Reserve
money printing manipulations that distort the economy. Once the
money printing stops, even for a short period, like it did in the
summer of 2008, the economy attempts to readjust to a non-manipulated
structure. Thus, people who find themselves in jobs that are only
the result of the distorted Fed manipulated economy end up unemployed
and need to move into jobs that are developing in the non-manipulated
The only way
the Fed can truly help these people is to stay out of the way and
allow the economy to reshape in non-manipulated fashion. This will
result in people finding jobs in the non-manipulated economy, which
has a much stronger structure and very unlikely to result in an
overall general crashes that have become the norm when central banks
are created and start to print money.
"New Testament" is about printing money to hold up the
manipulated structure, which benefits the banksters, but also ultimately
leads to massive price inflation, which screws most of the non-bankster
Business Cycle Theory is not about extending pain. It is about ending
the madness with as little pain as possible.
I have written before:
theory" that is identified with Austrians and embraced by
some is distorting.
not, for example, say that a heart surgeon attempting to save
a man's life by heart surgery is in favor of pain as the way to
save the man, even though pain is most assuredly a byproduct of
a major heart operation.
never be a critique of a heart surgeon, "Oh, he causes pain."
We all know such an operation is performed only to prevent further
pain, and possibly death. In the same way, an Austrian economist
who calls for a laissez faire attitude during the down phase of
the business cycle is doing so only because he knows that the
down the road alternative is worse. A resumption of money printing
may prop up the earlier central bank manipulated capital structure,
short-term, but it will only mean a greater liquidation down the
road or hyper-inflation.
Austrian calling for liquidation of malinvestments is more like
a surgeon calling for a malignant tumor to be cut out. In either
case, do you really want the alternative, for them to grow?
economists aren't into pain any more than heart surgeons and cancer
surgeons. Austrian economists look at the business cycle and are
really saying, "Look you better stop this now because it
will only get worse." That's not a pain theory. It's a theory
to limit pain.
Bernanke should go back to reading "Old Testament" economics.
His "New Testament" economics is going to end up creating
hell on earth for all of us.
with permission from Economic
Economic Policy Journal
Best of Robert Wenzel