Ron Paul appeared once again on Larry Kudlow's The Kudlow Report on CNBC yesterday, in which he debated the secrecy of the Federal Reserve with Keynesian stooge/economist Peter Morici, who goes on the pro-Fed defensive. This statist goes out of his way to make a true statement by saying the following:
In order to create money, you have to buy bonds to issue the dollars. So they are always involved in fiscal policy. And, as for this inflation and...and...and this fiscal cri....this financial crisis, well, I think Congress had a lot to do with it. You know, they've had a hand in monetary policy or financial policy. For example, the Community Reinvestment Act, which encouraged banks to make irresponsible loans. The meddling in the activities of Fannie Mae and Freddie Mac, getting them to make irresponsible loans. A $1.5 trillion deficit. That creates bonds that investors hold internationally. It's as good as dollars. Wait a minute! If anybody's going to apologize, then it has to be the people who are totally out of control on Capitol Hill.
While Morici is right on the button on those points, what he fails -- perhaps neglect -- to mention is that it is all the fault of Congress, the banks (including Fannie Mae and Freddie Mac), the mortgage and financial lenders, and the Federal Reserve for having a hand in the wipe out and evisceration of the value of the dollar, producing the fall of the financial markets, and so on. The only point that Morici gets wrong is that the Fed buys the bonds to print those dollars (as he contends religiously). Actually, it prints money out of thin air with no intrinsic value backing those dollars whatsoever..
Ron gets it right completely. Morici is an idiot when he says that we shouldn't link our monetary system to gold because it "will always be rising over time." He's ridiculous when he fearfully opines, "Well, there's simply not enough gold in the world. If you want to have 1880s, 1890s deflation, that's a great way to have it happen." Morici, on the price of gold, further notes, "The price of gold will always be rising over time while it gyrates around the trend. It will be rising, it will be very difficult to manage the currency that way." Ron Paul talks over him, correctly noting:
The pri...the price of gold does not go up; the value of the dollar goes down. You gotta understand that point, or you will never solve our problems.
Well, said, Ron! Well said indeed!
[H/T to Lew for his blog posting on this.]
[Cross-posted to the Freeman Chronicles.]