Bernanke on 60 Minutes: The Ron Paul Impact?

Anyone who follows the Fed close enough to read between the lines of Fed chairman Ben Bernanke's appearance on CBS' 60 Minutes would call for an immediate audit of the Fed. Their hiding something.


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Bernanke is known as the most publicity shy of all the most recent Fed chairman, but he does the unprecedented and does a 60 Minutes interview. I have only one reaction to this: Why?

Here's what I think is going on. The public is catching on to the role the Fed is playing in propping up the elite of Wall Street. The Fed does polls just like the politicians do, every time news comes out about another $100 billion going here or there, the public knows the Fed has something to do with it.

From a world where most only had a hazy understanding of the Fed, with no real opinion about it, the world has changed to where most have a view that the Fed is a tool of the evil manipulators (which they are).

There's two reasons for this change in view. The economic crisis has put more focus on the Fed, but I think Congressman Ron Paul's presidential run has been a part of it. Every time he was in the Republican debates and raised a question about the Fed, things started to sink in.

Ron Paul followers really get it. I was at a speech Paul gave during the CPAC conference and the chants of "End the Fed" were very loud and very clear. Outside the hardcore, which I guess are now considered potential terrorists, the average guy knows something is up.

In addition, Paul has drafted a bill, The Federal Reserve Transparency Act of 2009 (HR 1207) ,that calls for an audit of the Fed.

Notice how Bernanke in the 60 Minutes interview mentions how transparent the Fed is becoming. That's a direct shot at Paul. Bernanke wants to decide how transparent they are going to get. He doesn't want an audit. What are they hiding?

The interview to a large degree is Bernanke attempting to counter the "End the Fed" movement by putting a happy face on the Fed. If you can call Bernanke's face a happy one.

As for the specifics of the interview, Bernanke's comment that the Fed couldn't save Lehman Brothers, the way they saved AIG, or pumped money into Bear Stearns, is a flat out lie. Fed people, who work in the departments that know what is going on, tell me that most at the Fed, a few notches under Bernanke, were scratching their heads on the way Bernanke and Paulson handled Lehman. Not that any of these banks should be saved, but the treatment of Lehman versus others shows you that this was a pretty sinister and evil game. Paulson wanted Lehman taken down.

As for Bernanke's comment that the current crisis could end before the end of '09. I'm with him on that. But it is only going to end because he is printing money at double digit rates, which will result in even more serious problems for the economy.

He claimed in the interview that he is going to be able to flip the switch and drain money from the system, I want to see him pull that off. He will drain reserves as the money multiplier climbs, but if he tries to shrink the money supply itself, we will be headed for a double dip crisis. My bet is that he is not going to do that, so its major inflation just over the horizon.