November 19th, 2010 11:10 EST
Ron Paul says Federal Reserve has Got to Go?
Change is about to come to monetary policy on Capitol Hill, but it might not be the type of change President Obama or Federal Reserve Chairman Ben Bernanke have in mind.
Rep. Ron Paul, R-Texas, a strong critic of fiat monetary policies, is scheduled as the ranking member to become in January the chairman of the House Financial Services Subcommittee on Domestic Monetary Policy and Technology, commonly known as the "House monetary subcommittee."
Known for his outspoken criticism of the Federal Reserve and for his determination to return the U.S. dollar to some form of a gold standard, Paul, as chair of the House monetary subcommittee, will have a position of authority from which to hold a serious and robust public debate about decades of government monetary and fiscal policy.
In an exclusive interview, WND asked Paul what he plans to do once he becomes chairman of the panel.
"First and foremost, I want the subcommittee to actually begin talking about monetary policy," Paul said. "The Federal Reserve has insisted that Congress has no role in monetary policy. But that`s not what the Constitution says."
Article 1, Section 8 of the Constitution assigns to Congress the right to coin money; the Federal Reserve Act of 1913 created the Federal Reserve. There is no mention of a U.S. central bank in the Constitution.
In Congress, Paul has been in the lead, sounding the alarm as federal budget deficits under President Obama have escalated in fiscal year 2010 to $1.3 trillion, while the national debt has mounted to nearly $14 trillion, a sum that nearly equals the nation`s gross domestic product.
"The Fed operates in secret," Paul said. "What the subcommittee needs is to act like a monetary policy committee. What we need is an honest debate in which subcommittee can bring to the American public views the Fed may never consider."
Paul`s assumption of the chair of the House monetary subcommittee will bring an emphasis on issues that have coalesced in the tea party movement - smaller federal government, balanced federal budgets and the return to a market economy.
He said he wants to invite prominent economists of the Austrian School to testify before the subcommittee.
The Austrian School, including prominent European economists Ludwig von Mises and Nobel laureate Friedrich Hayek, emphasizes the importance of monetary policy and the regulation of the money supply to the management of the economy the creation of business cycles.
"I will invite the Democrats to bring all the Keynesian economists they want," he said. "The American people need to hear both sides."
Following the work of British economist John Maynard Keynes, Democratic politicians since the 1930s have emphasized fiscal policy over monetary policy for the management of the debt, leading to the reliance of deficit spending even to the encouragement of a modest amount of inflation to avoid recessions.
Obama administration economists such as Larry Summers, director of the White House National Economic Council, and supporters such as Nobel prize winning economist Paul Krugman, have been frustrated that the billions of dollars spent in bailouts and stimulus spending have failed to create jobs in a quantity sufficient to move unemployment below the current 9.6 percent level for October.
A strong critic of the Federal Reserve, Paul told WND he intends to hold hearings on the current phase of what is known as "Quantitative Easing 2," or "QE2" for short - the decision made by the Federal Reserve to spend $600 billion between now and June 2011 to resume buying debt issued by the U.S. Treasury.
In the first round of QE that ended in March, the Fed bought nearly $1.7 trillion in U.S. government debt, the majority of which was Freddie and Fanny-issued paper, with only about $300 billion of the $1.7 trillion going into Treasuries.
Under the Obama administration, Federal Reserve Chairman Ben Bernanke has doubled the Fed holdings of Treasury debt, going from $400 billion in 2009 to over $800 billion today.
A long-time advocate of returning to the gold standard, Paul plans to birddog QE2, a policy he sees as equivalent to the Fed printing fiat money out of thin air.
"Remarkably, Bernanke has announced the Fed wants to create inflation in order to create jobs," Paul observed skeptically. "We are debasing our currency, and all we will end up proving, once again, is that paper money has never worked through monetary history."
As head of the monetary subcommittee, Paul will have a chance to pursue another long-standing dream, to get a thorough public audit of the traditionally secretive Federal Reserve.
"If the Fed does not respond to subcommittee requests for access to internal memos and other documentation of decision making, we have subpoena power," he noted. "Still, I plan to start by making requests, then will see what happens."
Paul insisted that reform of U.S. monetary policy is necessary.
"Globalists are already talking about the need for a new Bretton Woods conference and are ready to unroll an alternative to the dollar in international trade through the Special Drawing Rights at the International Monetary Fund," he said. "We need reform of U.S. monetary policy and we need it now."
The IMF initially created Special Drawing Rights, otherwise known as SDRs, in 1969, to support the Bretton Woods fixed exchange rate system.
Today, SDRs operate as international reserve assets that are calculated by the IMF in a basket of major currencies allocated to the IMF`s 185 member nation-states in relation to the capital. The SDR`s are largely in gold or widely accepted foreign currencies that the members have on deposit with the IMF.
The G20 summit meeting in London in April 2009 took an important step to create a new one-world currency through the International Monetary Fund that is designed to replace the dollar as the world`s foreign exchange reserve currency of choice.
Point 19 of the final communiqu from the G20 summit attended by President Obama in London on April 2, 2009, specified, "We have agreed to support a general SDR which will inject $250 billion into the world economy and increase global liquidity." It was the first step toward implement China`s proposal that SDRs at the IMF should be created as a foreign exchange currency to replace the dollar.
Strong support for the idea of a one-world currency has come from Canadian economist and Nobel-prize winner Professor Robert Mundell, an influential proponent who is credited with having formulated the intellectual basis for creating the euro.
Mundell, currently an adviser to China, was the originator of the suggestion that the IMF should utilize SDRs to replace the dollar as a new world standard for holding foreign exchange reserves in international trade transactions.
Link to Article: http://www.wnd.com/index.php?fa=PAGE.view&pageId=230065
By Jerome R. Corsi
(c) 2010 WND.com
ABOUT THE AUTHOR: Jerome R. Corsi received a Ph.D. from Harvard University in political science in 1972. He is the author of the #1 New York Times bestselling books THE OBAMA NATION: LEFTIST POLITICS AND THE CULT OF PERSONALITY and the co-author of UNFIT FOR COMMAND: SWIFT BOAT VETERANS SPEAK OUT AGAINST JOHN KERRY. He is also the author of AMERICA FOR SALE, THE LATE GREAT U.S.A., and WHY ISRAEL CAN`T WAIT. Currently, Dr. Corsi is a Senior Managing Director in the Financial Services Group at Gilford Securities as well as a senior staff writer for WorldNetDaily.com.