Ron Paul: Fed’s autonomy is coming to an end
August 31, 2009 by goldguru · Leave a Comment
The Fed’s Interesting Week
By U.S. Rep. Ron Paul
It has been an interesting week indeed for the Federal Reserve.
First 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. But there is no reason to believe that 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 percent of Gross Domestic Product. Our path, if unchanged, is completely untenable.
The administration claims that it inherited a dire situation from the last administration, which is absolutely true. But 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. 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.
