Ron Paul Liberty Report
  • Home
  • Archives
  • About

Destroy the Economy, Win a Nobel Prize

10/17/2022

 
Picture
By Ron Paul

Former Federal Reserve Chairman Ben Bernanke is a 2022 recipient of the Nobel Prize in economics for his writings on how government should respond to bank failures. Honoring Bernanke for his advice on what government should do when banks fail is like giving a fire safety award to an arsonist.

Bernanke was Fed chairman when the housing bubble, created by his predecessor Alan Greenspan in the wake of the bursting of Greenspan’s tech bubble and the 9-11 attacks, exploded. When the housing market collapsed, Bernanke worked with Congress and the Bush administration to bail out big banks and Wall Street firms.

In the years following the meltdown, the Bernanke-led Fed tried to “stimulate” the economy via massive money creation, near zero interest rates, and “quantitative easing,” where the Fed injects liquidity into the market via purchases of financial assets including Treasury bonds.

The Fed’s post-meltdown policies produced sluggish growth at best, while laying the groundwork for the next bust. A sign that the next crash was around the corner came in September of 2019, when the Federal Reserve began pumping billions of dollars a day into the “repurchasing” market, which banks use to make overnight loans to each other, in order to keep that market’s interest rates from rising above the Fed’s target rate. The covid lockdowns then gave the Fed an excuse to push interest rates to zero and massively expand quantitative easing.

The Fed’s actions are the prime culprit behind the price inflation plaguing America’s economy. The Fed has responded to the price inflation by increasing interest rates, although rates remain much lower than they would be in a free market. The fact that even these relatively small increases helped push the fragile economy into recession shows the instability of our debt-based economic system.

Bernanke, and Congress, should have responded to the meltdown by letting the recession that followed the meltdown run its course. This is the only way the economy can adjust to the market distortions caused when the Fed increases the money supply and lowers interest rates.

Those who worry that this “don’t do something, just stand there” approach would inflict long-term economic pain on the American people should consider the economic depression of 1920. During this depression, the Fed refrained from trying to “stimulate” the economy, and Congress actually cut spending. The result was the downturn was quickly over. Sadly, the lessons of 1920 are largely ignored by mainstream economic historians.

In response to my questioning at a Financial Services Committee hearing, then-Fed Chairman Ben Bernanke admitted he did not consider gold to be money. Of course, gold and other precious metals are money because individuals have selected them whenever they had the freedom to choose a currency. One reason for this is that precious metals are uniquely suited to serve as a stable unit of account. In contrast, government rulers have favored fiat money precisely because it can never serve as an honest unit of account due to its value being constantly manipulated by central bankers. This is often done at the behest of power-hungry politicians.

Therefore, under a fiat monetary system we cannot know the true value of goods and services. This is why to create a sound economy that provides prosperity we should audit then end the fed.


Comments are closed.

    RSS Feed

    Archives

    June 2025
    May 2025
    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015



  • Home
  • Archives
  • About