After announcing that he will retire from Congress, Ron Paul interviewed Ben Bernanke today. The article linked makes it sound like Paul was rude and constantly interrupting. If you watch the video, he is polite as usual. He was just trying to make sure he didn’t run out of time.
Congressman Paul was a little more aggressive than typical. If this is the new Ron Paul, not caring about re-election to Congress, then I think it is a good thing. I actually hope he is more aggressive in the presidential debates. He is never rude, so we don’t have to worry about that. But I think he should challenge the other candidates more at every chance he gets. In particular, I think he should ask how the other candidates intend to balance the federal budget. Ask for specifics.
In this exchange with Bernanke, he asks him if gold is money. Bernanke responds “no”. He says it is a precious metal. I have mixed feelings about this. In some ways, Bernanke is right on this. Gold isn’t money in a sense. If you go to Walmart or a gas station and try to pay the cashier in gold, they will look at you as if you are nuts. The important thing though is that gold has all of the good qualities that make up money. The only reason that gold isn’t used as money in today’s society is because of the government and the Federal Reserve. If the government hadn’t monopolized money, then gold (and maybe silver) would most likely be money as determined by the free market.
The best question that Congressman Paul asks is his last one. Paul first asks him why central banks hold gold. Bernanke responded that it is a form of reserves. Then Paul asked him, “why don’t they hold diamonds?” Bernanke responded that “it’s tradition”.
The reason that it is tradition is because when central banks started holding gold as reserves, gold was actually money. The reason that gold was money was because it had been determined by the free market. The market decided thousands of years ago that gold had good qualities to make it useful as a form of money.
Bernanke is feeling the heat like never before. Ron Paul is getting at him. Blogs and other sites on the internet are having a field day with him. He cannot get away with what past Fed chairmen have gotten away with. To top it off, Bernanke has flooded trillions of new dollars into the economy. They are sitting at the banks as excess reserves and waiting to unleash massive price inflation. Bernanke is trapped between a destroyed dollar and depression. His Keynesian policies have failed miserably.
The next year and a half should be a joy to watch. The economy will only get worse and Bernanke will continue to feel the heat. With Ron Paul announcing his retirement from Congress, I do not expect him to leave quietly. He is going to have several more chances to take his shots at Bernanke and his Keynesian policies of digital money printing.