According to Rep. Ron Paul, Bernanke has used up all of his options in order to help the economy and is out of tools to use. Paul believes that in order for the economy to get back on track that central bank and the Federal Reserve need to stop bailing their "friends".
Published August 28, 2011
Fox News
Chairman Ben Bernanke is not calling for another fix to the economy by the Federal Reserve because he's already used up all the quivers in the Fed's bow, Rep. Ron Paul said Sunday.
Paul is a 2012 Republican presidential candidate and supports the U.S. returning to the gold standard to protect its currency and force a balanced budget. He has been highly critical of the Federal Reserve and its chairman over plans for "quantitative easing," a two-part program which flooded the market with dollars in an attempt to make money more available for borrowing and lending.
Paul argued that Bernanke's plan to buy bank assets and drop more than $2 trillion into the economy did not yield the results the chairman hoped, a conclusion that Paul says Bernanke implicitly acknowledged during a speech last week in which he offered no new bailout programs from the Fed.
"He really hasn't pulled back. Symbolically, he has and he is not having another QE3," Paul said. "But he has maintained a (view) to keep interest rates low until 2013. You can't keep interest rates low without monetizing debt because if somebody else doesn't buy it, he has to buy it. So he's continuously quantitatively easing."
Paul said that artificially holding down interest rates was instrumental in the housing bubble that burst in 2007 and sparked the economic meltdown from which the U.S. economy is still trying to recover.
He said if government -- and its central bank -- stopped trying to bail out its friends, then the economy would soon return to normal.
"Let the people who live beyond their means, let them go bankrupt," he said. "Hands off, give us a sound currency, free up the markets. Property rights. Enforce contracts. Make sure people go bankrupt when they go bankrupt and don't bail out their buddies."
He added that one good thing out of Bernanke's speech is that he effectively returned the responsibility for the economy back to Congress and a fiscal approach.
"He at least sort of said, 'Oh, it's up to the Congress. It's all Congress' fault. They need to deal with it. So he's sort of throwing up his hands. But all he needs to do is quit monetizing debt. Interest rates would go up and Congress would be forced to cut debt," Paul said.
Paul has been holding steady near the top of the polls for the Republican nomination despite being described as "unconventional" because of his libertarian streak. The 12-term Texas congressman surmised that he's in vogue now because many Americans realize it's time to return to the principles on which the nation was founded.
"I'm fascinated with your word 'unconventional,'" he told "Fox News Sunday. "Isn't it strange that we can apply that word to freedom and liberty and the Constitution and limited government and a balanced budget?'
Paul said that while some question whether he's just in the race to be the "prophet" who guides the discussion, he's definitely vying for the actual job of president.
"I'm in it to win it. And you're absolutely right, I do say that I am more interested in influence and power. As a matter of fact, as president I would reduce the power of government. I wouldn't seek it. I would never take the power from the Congress. I would not go to war without congressional approval," he said.
"I resent the power that has galvanized in the executive branch and in the judicial system and I would want to shrink the size of government," he added. "That doesn't mean I don't want to win. That means I want a new approach at least from current standards for the presidency."
Paul's approach to foreign policy has also been called unconventional, or in some circles, isolationist. He has opposed most wars launched by the U.S., saying that it leads to too many unintended consequences, and has harshly criticized U.S. participation in NATO military action against Libya.
Paul said that his approach to international relations rests on national security, not "pretending that we can pick the dictators around the world."
He added that the U.S. government should take cues from its military.
"The one telltale sign of the support I'm getting is because of my foreign policy. I get more donations from active military duty people than all the other candidates put together, which tells me a lot and tells the American people a lot," Paul said.
"Military people wanted to defend this country but they don't want perpetual war when they are undeclared and you don't see the end and you don't know who the enemy is and it's too many restrictions on how they retaliate against the enemies ... Our (National) Guard units should be here taking care of us when we have floods, but no, they're overseas and the military is worn out, it's time for a change if for no reason than we're flat out broke," he said.
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