After listening to Ron Paul speak at the Congressional hearings today (2/27/08) about the deleterious effects of printing money on the value of the dollar, and subsequently on all prices, Ben Bernanke paused in reflection and then spoke about his ‘mandated’ responsibility to deal with domestic consumer prices.
Ron Paul cited the reported level of inflation and suggested that surely that level was not acceptable. Then he spoke about the importance of protecting the dollar from debasement as the best way to stop inflation. He cited the price of oil in terms of dollars and how that has tripled over the last five years whereas the price of oil in terms of gold has remained the same. This was a clear proof of the importance of having a sound money.
Bernanke then said that it is Congress who makes the decision about whether the dollar should be fiat or tied to gold. This is an open door for Bernanke. The Congress sits eagerly each time the Federal Reserve Chairman addresses them, awaiting his recommendations.
Is it possible that Ben Bernanke will do the right thing? If he does the right thing Bernanke will ask Congress to reinstate the gold standard.
If he does the wrong thing and continues in the same direction he will cause great destruction and he probably will sink into an overwhelming and consuming mental depression.
Wednesday, February 27, 2008
Wednesday, February 20, 2008
Bernanke Doesn’t Care!
The interest rate is not some toy to play with. The interest rate is a real price in the real world.
What Bernanke and his overlords want to do is to lower the interest rates. What does a lower interest rate mean in the real world? A lower interest rate means that we would like to wait until sometime in the future for our goods, it means that we have a relatively low time preference.
But this is not the case. People sense that we are in a recession. People don’t want to wait, they want the things and the jobs to make the things (the goods and services) now not later.
Bernanke doesn’t care. He looks at a number and fails to understand what it means and then he pushes the buttons to print more money to lower the interest rates. The Federal Reserve system is his toy and he plays it in the way that pleases his overlords.
There are three important points:
1. Bernanke does not know the meaning of the interest rate.
2. He plays according to the rules of his overlords.
3. They do not care about you.
What Bernanke and his overlords want to do is to lower the interest rates. What does a lower interest rate mean in the real world? A lower interest rate means that we would like to wait until sometime in the future for our goods, it means that we have a relatively low time preference.
But this is not the case. People sense that we are in a recession. People don’t want to wait, they want the things and the jobs to make the things (the goods and services) now not later.
Bernanke doesn’t care. He looks at a number and fails to understand what it means and then he pushes the buttons to print more money to lower the interest rates. The Federal Reserve system is his toy and he plays it in the way that pleases his overlords.
There are three important points:
1. Bernanke does not know the meaning of the interest rate.
2. He plays according to the rules of his overlords.
3. They do not care about you.
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