BERNANKE SLAMS AUDIT THE FED
Federal Reserve Chairman Ben Bernanke on Wednesday rebutted Republican lawmakers pushing a bill that would give Congress the ability to review monetary policy decisions, saying it could compromise central bank independence.
Bernanke said it would be a “nightmare scenario” if politicians decided to second-guess monetary policy.
“That is very concerning because there’s a lot of evidence that an independent central bank that makes decisions based strictly on economic considerations and not based on political pressure will deliver lower inflation and better economic results in the longer term,” Bernanke told the U.S. House of Representatives’ Financial Services Committee.
The hearing was the likely last chance for retiring Texas Representative Ron Paul, known for proposing the Fed should be abolished, to grill the central bank chairman.
“Trillions and trillions of dollars (are) being printed out of thin air,” said Paul.
The Republican-controlled House is on track to take up Paul’s Fed audit legislation next week. The bill, which has been co-sponsored by more than half of all House members, looks set to clear that chamber…
Paul’s bill would direct the Government Accountability Office, an independent, nonpartisan congressional agency, to conduct a Fed review, and it would remove an exemption monetary policy has enjoyed.
Bernanke said the very notion of a monetary policy audit was misleading.
The funniest part of this story:
“The term ‘audit the Fed’ is deceptive. The public thinks that auditing means checking the books, looking at the financial statements, making sure that you’re not doing special deals, and that kind of thing. All of those things are (already) completely open,” (Bernanke) said.
Completely open? Yeah right!
PAUL RIPS BERNANKE
In what Congressman Bacchus called “a double dose,” Texas Representative Ron Paul grilled Fed Chairman Ben Bernanke on two occasions on Tuesday at the House Financial Services Committee. Congressman Paul scolded the Fed Chairman for being “secretive” while claiming that the financial crisis is “far from over…”
After facing a relatively tamer Senate Banking Committee, the Fed Chairman’s feet were held to the fire by Ron Paul & Co.
While the exchange was rather one-sided, Ron Paul made his points heard. He first criticized the Fed for equivocating independence with secrecy, noting that about $15 trillion had been used for overseas bailouts during the crisis, via currency swaps, which the Congress could not monitor.
Ron Paul then noted that when Bernanke claims the Fed stands ready to support Europe and other geographies during times of financial and economic crisis, it’s actually the American tax payer that is shouldering the burden. The Fed Chairman responded by noting that it is Congress which delegated the responsibility to manage monetary policy to the Federal Reserve.
While the Fed Chairman tried to avoid engaging Ron Paul, he did show his ideological bent when he told Ron Paul that while Congress could eliminate the statue the makes the Fed an independent body, it would result in a more inefficient central bank and ultimately a worse outcome.
The Congressman from Texas also warned that the financial crisis is in the early stages, “it’s far from over,” he added…[youtube height=”400″ width=”550″]http://www.youtube.com/watch?v=g0Lqr2xt3ro[/youtube]
Ron Paul’s Last Day As Chairman Against The Fed[youtube height=”400″ width=”550″]http://www.youtube.com/watch?v=n71ijtWKvSE[/youtube]