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Posted at 4:34 PM ET, 12/ 9/2010

Ron Paul to chair monetary policy subcommittee overseeing Fed

By Felicia Sonmez

Texas Republican Rep. Ron Paul is poised to chair the House Domestic Monetary Policy Subcommittee, putting the gavel of the panel overseeing the Federal Reserve into the hands of one of the central bank's most outspoken critics.

Rep. Spencer Bachus (R-Ala.), the incoming chairman of the House Financial Services Committee, announced Thursday that Paul will head the subcommittee when Republicans assume the majority in the 112th Congress.

"This is the leadership team that crafted the first comprehensive financial reform bill to put an end to the bailouts, wind down the taxpayer funding of Fannie Mae and Freddie Mac, and enforce a strong audit of the Federal Reserve," Bachus said in a statement, adding that the committee's "first priority is to end the taxpayer funded bailout of Fannie and Freddie."

On Wednesday, a group of about 30 tea party-aligned groups wrote a letter urging Bachus and House Speaker-designate John Boehner (R-Ohio) to support Paul's bid for subcommittee chairman. The letter was in response to reports that GOP leaders were mulling ways to block Paul from becoming chairman over concerns that his views are too radical.

In the letter, the groups warned that the "implied message" of blocking Paul would be "one of indifference towards the concerns of those who helped put the Republican Party back in the majority."

Paul has been a harsh critic of the Federal Reserve and has pushed for measures that would audit the central bank or abolish it altogether. The subcommittee also has jurisdiction over "precious metals," and Paul has advocated a return to the gold standard.

By Felicia Sonmez  | December 9, 2010; 4:34 PM ET
Categories:  44 The Obama Presidency  
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Comments

"In two years we will all be sick of the thugs that got voted into office."
-SWAMPYPD

You hit the nail on the head there! It's crazy the short term memory we all have. 2002 was a mandate for the repubs right? The dems were pretty much dead. Then they effed it up, and by 2006 they were on their way out. After the destruction of the repubs in 2008, that party was pretty much dead... Then the dems continue to eff everything up. Two short years later, look where we are, we have forgotten how bad the repubs really were. You are right, just wait a couple years as the repubs (most likely) continue to do what the dems are continuing to do.

The only thing that has changed in the past 12 years is the label on the masters delivering the tyranny. The policies are the EXACT same.

Obamacare is modeled after Romneycare

Bush appoints Bernanke, Obama reconfirms (which means keynsian economic policy continues - bailouts/stimuli/inflationary policies)

Bush starts Wars, Obama expands them

Obama decides its ok to assasinate US citizens without due process, Bush... is probably jealous he didn't think of that.

Torture...

Patriot Act...

The list goes on and on and on and on... and on

This quote from fabian socialist Carroll Quigley seems to appropriately describe what we are witnessing:

“The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extreme shifts in policy…. Either party in office becomes in time corrupt, tired, unenterprising, and vigorless. Then it should be possible to replace it, every four years if necessary, by the other party, which will be none of these things but will still pursue, with new vigor, approximately the same basic policies.”
–Carroll Quigley, from Tragedy and Hope


Posted by: JonnyMuffin | December 13, 2010 3:39 PM | Report abuse

Dear timekeepsonslippin: Re: Friedman/Greenspan being monetarists, 2 things;
1. Go back to Friedman's writings from the 50's & 60's where he states his views on a 'consistent increase' in the money supply to avoid the peaks & troughs of the Fed's policy on money supply.
2. Ludwig VonMises is the father of the "Austrian school" and Friedman widely quotes VonMises and the other Austrians. So I believe that F&G were monetarists who read these Austrians, believed their ideas, and expounded & practiced them.
Have you ever read anything by the Austrians and Friedman?

Posted by: docyogurt | December 10, 2010 1:26 PM | Report abuse

Get ready all seniors as the repubs are about ready to try and get rid of social security and medicare. The dems put these programs in place and the repub presidents was able to steal all of the money for their rich friends and now they say we are a libality even though we paid in for years and when we die the government keeps the money and many like my father died before they got the first check. In two years we will all be sick of the thugs that got voted into office.

Posted by: SWAMPYPD | December 10, 2010 12:30 PM | Report abuse

People who advocate diminishing or ending the Federal Reserve's role and importance in providing a stable economy are ill-informed, reactionary, and belong to the class of whack jobs who claim to have had personal experience with aliens, wear tin-foil hats, and beleive the government is controlling the population through contrails.

Posted by: goatville9 | December 10, 2010 10:56 AM | Report abuse

Good--Our broken corrupt system might actually start to work again.

I am not a big fan of Ron Paul but everyone has to admit that he does work hard to fix our broken system.

Posted by: PennyWisetheClown | December 10, 2010 6:08 AM | Report abuse

It pays to shop around for a mortgage refinance. Mortgage rates have gone down like anything. My brother in law just got a 30-year fixed loan at 3.76% He told me search online for "123 Mortgage Refinance" for the lowest rate.

Posted by: patgarza | December 10, 2010 4:52 AM | Report abuse

Congressman Ron Paul
U.S. House of Representatives
July 16, 2002

“Mr. Speaker, I rise to introduce the Free Housing Market Enhancement Act. This legislation restores a free market in housing by repealing special privileges for housing-related government sponsored enterprises (GSEs). These entities are the Federal National Mortgage Association (Fannie), the Federal Home Loan Mortgage Corporation (Freddie), and the National Home Loan Bank Board (HLBB). According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone.

One of the major government privileges granted these GSEs is a line of credit to the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out these GSEs in times of economic difficulty helps them attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a massive unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase the debt of housing-related GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

continued...

Posted by: JonnyMuffin | December 10, 2010 3:04 AM | Report abuse

...continued

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

However, despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Speaker, it is time for Congress to act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors misled by foolish government interference in the market. I therefore hope my colleagues will stand up for American taxpayers and investors by cosponsoring the Free Housing Market Enhancement Act.”

Ron Paul
US House of Representatives
June 16, 2002

Posted by: JonnyMuffin | December 10, 2010 3:02 AM | Report abuse

@droberts57
you said "Those who think we don’t need a Fed are merely saying we don’t need money." do you really believe this? Are you under the impression that we didn't have money before 1913? This statement is so ridiculous I can't stop laughing. No Fed=No Money, if you seriously believe this, we probably can't even have a discussion on it.

@docyogert
Bernanke is a student of Keynsian Economics. Since you like the MD analogy, it is the economic equivalent of a witch doctor. Bernanke's PHD is about as useful in the economic world as a whatever the highest level of education in witch doctory is in the Medical field.
I would say, with out a doubt, yes Dr Paul knows more about economics than Helicopter Ben. Dr Paul predicted the housing bubble on the house floor in 2002. Read for yourself, he pretty much nails it:
http://www.ronpaul.com/2008-09-26/ron-paul-on-the-housing-bubble-july-2002/

BTW Ben, in 2007, still didn't see it coming and that is the proof I will give for RP's superiority of economic knowledge.

Posted by: JonnyMuffin | December 10, 2010 2:55 AM | Report abuse

It is no wonder Thomas Jefferson warned about a national, privately owned bank and andrew Jackson referred to them as "a brood of vipers". This privately owned cartel has finally pulled a Michael milliken on all of America and is scuttling this nation and making us a national junk bond. What an evil, insidious, traitorous group of plundering plutocrats. at least for a while the Fed acted like a farmer or steward , husbanding their livestock for a profit. Now we are merely being scuttled and robbed

Posted by: ServantusDei | December 9, 2010 11:45 PM | Report abuse

About Ron Paul...

Bring em on let's stop the nonsense of bailing out fraudulent bad management. That is not the job of legislators or taxpayers!!!

Posted by: rheckler2002 | December 9, 2010 11:12 PM | Report abuse


The Fed Chairman must be acrobatic, ambidextrous and schizophrenic, if he is going to be successful. Trying to reconcile stable prices, predictable markets, long term growth and prosperity, and the appropriate money supply with persistent and perpetual short term Keynesian notions of full employment based on unlimited deficit spending, raging inflation and ever expanding government is not a task that any sane person would accept.

Getting rid of the mandate for full employment makes sense and is long overdue but it isn’t going to happen if all the Class Warriors have a say.

We have a Fed Chairman and the FOMC appointed to 14 year staggered terms by the President and ratified by the Senate, for the same reasons we have lifetime appointments to the Supreme Court, so it won’t be easy for the ignorant, short-sighted and selfish voters and their idiot representatives to completely destroy us.

Those who think we don’t need a Fed are merely saying we don’t need money. The truth is that we don’t need money or the Fed but the result will be a barter economy less advanced that that prevailing in North America in the 8th century, and while the Marxist and some ultra-conservatives may agree on this outcome, most of us will not.

The only people who will benefit from a return to the gold standard are those who own gold mines and the miners’ union.

The only true thing one can say about economists is: If you lay all of the economists in the world end-to-end, they would not reach a conclusion.

Posted by: droberts57 | December 9, 2010 10:04 PM | Report abuse


The Fed Chairman must be acrobatic, ambidextrous and schizophrenic, if he is going to be successful. Trying to reconcile stable prices, predictable markets, long term growth and prosperity, and the appropriate money supply with persistent and perpetual short term Keynesian notions of full employment based on unlimited deficit spending, raging inflation and ever expanding government is not a task that any sane person would accept.

Getting rid of the mandate for full employment makes sense and is long overdue but it isn’t going to happen if all the Class Warriors have a say.

We have a Fed Chairman and the FOMC appointed to 14 year staggered terms by the President and ratified by the Senate, for the same reasons we have lifetime appointments to the Supreme Court, so it won’t be easy for the ignorant, short-sighted and selfish voters and their idiot representatives to completely destroy us.

Those who think we don’t need a Fed are merely saying we don’t need money. The truth is that we don’t need money or the Fed but the result will be a barter economy less advanced that that prevailing in North America in the 8th century, and while the Marxist and some ultra-conservatives may agree on this outcome, most of us will not.

The only people who will benefit from a return to the gold standard are those who own gold mines and the miners’ union.

The only true thing one can say about economists is: If you lay all of the economists in the world end-to-end, they would not reach a conclusion.

Posted by: droberts57 | December 9, 2010 10:03 PM | Report abuse

The problem with libertarians is that they don't give weight to equality. Liberty and equality are diametric opposites, but constitute the balancing that is the USA. They forget that in their haste to be dogmatic.

Posted by: michael4 | December 9, 2010 9:11 PM | Report abuse

docyogurt, you demonstrate a clear lack of understanding of Ron Paul's views if you lump him in with the "Greenspan/Friedman" monetarists. Dr. Paul is a proponent of the Austrian school of economics, whose views stand in stark contrast to those of both Keynesians and Monetarists. Ron Paul consistently criticized Greenspan's policies which, contrary to popular belief, do no remotely resemble "free unregulated financial markets." By definition, a market cannot be free if it has a central authority wielding monopoly control over the money supply (i.e. the Fed).

Among Congressman Paul's main criticisms were several occasions on which he lambasted Greenspan (and later Bernanke) for keeping interest artificially low, thereby inflating the stock market (and later housing market) bubble. In fact, he specifically predicted that the housing market would crash in as early as 2002. There are a large number of youtube videos that document this.

It amazes me how little the average person cares about monetary policy and how much trust is placed in the hands of the Fed chariman, when his policies have a such a profound effect on everyone's economic well being. We should all be thankful that we have someone in Washington willing to question the motives and consequences of what is, perhaps, the most powerful institution in the world.

"Give me control of a nations money supply, and I care not who makes the laws." - Mayer A. Rothschild.

Posted by: timekeepsonslippin | December 9, 2010 9:03 PM | Report abuse

Ron Paul is a strict Constitutionalist and an honest and decent man. It looks as if this is too much for our liberal "friends" to digest. He will be looking out for the rights of all Americans, even yours.

Posted by: barrysal | December 9, 2010 9:03 PM | Report abuse

According to the movie INSIDE JOB...looks like cocaine played a big part in bank's policies. And like parents in denial about their kids...noone saw it nor would they know what to look for. Its like the whole of the congress and senate have/had become enablers for the fat, greedy, cocaine addicted cats.

Posted by: cozzete | December 9, 2010 8:52 PM | Report abuse

With candid comments like this from the Deputy Governor of the Bank of England, the United Kingdom's central bank, I find it very difficult to believe that central bankers provide any value to the economy:

http://viableopposition.blogspot.com/2010/11/mr-bean-strikes-again-more-candor-from_01.html

If central bankers couldn't even predict what could have been the second Great Depression, what is the point of having self-serving central banks?

Posted by: Baywoodfarm | December 9, 2010 7:43 PM | Report abuse

At least the Republicans didn’t make Ron Paul head of whatever subcommittee is in charge of mental health. In any case, for the next two years we’ll have to hear from chairman Paul how the Federal Reserve is at fault for everything from the Spanish Influenza pandemic of 1918 to tooth decay and why we should return to the Gold Standard despite most of America’s gold having long left its ownership in favor of foreign hands. Welcome to Alice’s Tea Party, no pun intended.

Posted by: NoelOContendere | December 9, 2010 6:28 PM | Report abuse

There you go--Mr. Ron Paul, the physician, knows monetary policy better than Mr. Bernanke with his PhD in economics and his vast 30+ years of experience in finance. Especially Mr. Bernanke's study of the Great Depression. But we only had a great recession. I know--next time I'm sick, I'm going to complete this switch of expertise and go to Dr. Bernanke for my medical problems. When are the Greenspan/Friedman monetarists going to admit that their mantra of "free unregulated financial markets" was one of the bigger causes for this recession?

Posted by: docyogurt | December 9, 2010 6:22 PM | Report abuse

The Fed Reserve is no friend to middle class.. look how it controls interest rates and quantity of dollars to keep us poor.

Save $10,000 and buy savings bond paying 7% interest compounded annually. After 10 years, its worth $19,671.51 with capital gains taxes on $9,671.51, in Nebraska with 7% capital gains plus 15% federal, total tax is $2,127.73 leaving a net gain of $7,543.78 in currency.

Assume inflation (amount of money the federal reserve was creating for the bankers) @ 5% over those 10 years. The amount of currency necessary to buy the same goods (as 10 years ago when you made your investment) would be $16,288.95 in currency.

That reduces your actual gain in buying power to $3,382.57 in today's currency. If we subtract the capital gains taxes paid from the actual gain in buying power, your gain was only $1,254.83 and your actual capital gains tax rate was more then 60% on actual gains.

Meanwhile, the banks are receiving federal reserve notes BEFORE the inflation rolls down hill to the pool of existing currency. Is it any wonder the divide between mega-rich and the average person is growing

Posted by: mominomaha | December 9, 2010 6:13 PM | Report abuse

This is grrrreat news! Political Corruption will feel the noose tightening.

Posted by: inmanorj | December 9, 2010 5:55 PM | Report abuse

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