Monday, August 29, 2011

Ron Paul: Bernanke Is Out of Options to Save Economy

Chairman Ben Bernanke is not calling for another fix to the economy by the Federal Reserve because he's already used up all the quivers in the Fed's bow, Rep. Ron Paul said Sunday.

Paul is a 2012 Republican presidential candidate and supports the U.S. returning to the gold standard to protect its currency and force a balanced budget. He has been highly critical of the Federal Reserve and its chairman over plans for "quantitative easing," a two-part program which flooded the market with dollars in an attempt to make money more available for borrowing and lending.

Paul argued that Bernanke's plan to buy bank assets and drop more than $2 trillion into the economy did not yield the results the chairman hoped, a conclusion that Paul says Bernanke implicitly acknowledged during a speech last week in which he offered no new bailout programs from the Fed.

"He really hasn't pulled back. Symbolically, he has and he is not having another QE3," Paul said. "But he has maintained a (view) to keep interest rates low until 2013. You can't keep interest rates low without monetizing debt because if somebody else doesn't buy it, he has to buy it. So he's continuously quantitatively easing."

Paul said that artificially holding down interest rates was instrumental in the housing bubble that burst in 2007 and sparked the economic meltdown from which the U.S. economy is still trying to recover.

He said if government -- and its central bank -- stopped trying to bail out its friends, then the economy would soon return to normal. more