Ron Paul will retire at the end of this term. This encounter with Bernanke was his last chance to deal with Bernanke, and Bernanke with him. Paul is Bernanke’s most tenacious critic in the government.
The video has a nice introduction by the chairman of the committee. Then, around 1:30 into the video, Paul begins.
He reviews his first months in Congress, beginning in April of 1976. He notes that the #1 bill at the time was the bill to add more U.S. money to the International Monetary Fund. The Bretton Woods law of 1944, which had created the IMF, had broken down, 1971-76. He notes that this breakdown had been predicted in 1944 by free market critics.
I arrived in Washington as his staff economist in early June: from Washington State to Washington, D.C. I wrote his position paper calling for America’s de-funding of the IMF. My first day on the job was Friday, June 11. I had to have the dissenting opinion finished by Monday morning’s deadline for submission. I started it on Friday and came in on Saturday to finish it. I was the only person in the office. His was the only critique of the IMF funding bill on Capitol Hill.
He does not mention it, but he was soon called to testify before the Senate Banking Committee, chaired by Senator William Proxmire. So amazed was Proxmire that anyone in Washington would oppose this bipartisan bill that he wanted to hear Paul’s reasons for opposing it. At the time, I had never heard of a House member testifying to a Senate Committee. I have never heard of it since.
In the video, he goes on to make the point that the same critics who predicted that the IMF would fail also predicted that the post-1976 monetary order would also fail. He really meant “critics from the same position: Austrian School economics.” (The literal critics in 1944 have been dead for decades.) The pure fiat money system has failed, Paul says. He is right. We are in the early stages of that failure.
He makes it clear that he has always opposed the Federal Reserve System, not merely the chairmen of the Board of Governors, from Volcker to today. It is the system, based on fiat money, that has been his target.
Beginning in 1976, he has been the only person on Capitol Hill to oppose the FED as a system, as distinguished from critics of this or that FED policy.
If you want to know where true power resides, find a nation’s untouchable institution. In every Western nation, this is the same institution: the central bank.
The FED is untouchable: in politics, in the media, and especially in the economics textbooks. There is no other federal government institution equally untouchable and equally powerful. It is beyond politics — independent. The 12 Federal Reserve Banks are privately owned. Yet the FED is universally praised by intellectuals and economists for this independence. The Board of Governors is legally part of the U.S. government, but Congress never tells the FED what to do, or even audits it, especially its supposed holdings of the nation’s gold. No other government institution enjoys such immunity and such praise for this immunity.
The FED gave us the Great Depression in the 1930s, yet it has remained untouchable. It will give us more disasters.
Here is the video.