Ron Paul “Schools” Bernanke

Photos

Ron Paul “Schools” Bernanke

see larger image

uploaded by BigT

This guy is a walking and talking moron. Here’s just another example of his ignorance from a YouTube video titled “Ron Paul Schools Ben Bernanke Again.”

Some Paulite posted this thinking that this was some rare species of
brilliance coming from a Congressional member. Far from it. Even though
I may not personally agree with what the current Fed Chairman is doing
I don’t entertain the thought of overpowering him intellectual in a
dual of economic thought. But Ron Paul, being the arrogant Congressman
that he is (is there really any other type of Congressman?) tried to
pull the rug out from under Bernanke with a whopper: [paraphrased by
me] “We don’t know what caused the tech bubble and we don’t know what
caused the housing bubble.”

Really? I thought the tech bubble was caused by overly optimistic
valuations of high technology companies. That’s odd, I thought that
everyone else pretty much accepted that as well. And the housing bubble
was caused by land grab precipitated by subprime loans. The devaluation
of the dollar, which Mr. Paul is obviously fixated on, didn’t have much
to do with either of these economic events. Even with the dollar losing
its buying power that buying power is being lost in regards to imported
goods.

And when he talks about the CPI being meaningless and the money supply increasing significantly I had to stifle laughter. The CPI is a fairly basic measurement that even most Third World countries can get relatively correct.

Coverage

* The CPI represents changes in prices of all goods and services
purchased for consumption by urban households. User fees (such as water
and sewer service) and sales and excise taxes paid by the consumer are
also included. Income taxes and investment items (like stocks, bonds,
and life insurance) are not included.
* The CPI-U includes
expenditures by urban wage earners and clerical workers, professional,
managerial, and technical workers, the self-employed, short-term
workers, the unemployed, retirees and others not in the labor force.
The CPI-W includes only expenditures by those in hourly wage earning or
clerical jobs.



Sources of data

* Prices for the goods and services used to calculate the CPI are
collected in 87 urban areas throughout the country and from about
23,000 retail and service establishments. Data on rents are collected
from about 50,000 landlords or tenants.

* The weight for an item is derived from reported expenditures on that item as estimated by the Consumer Expenditure Survey.

As you can see it is also a fairly extensive measurement as well.
But not extensive enough for Ron Paul! No, there has got to be an
economic bogyman around the corner, somewhere. To the economically
uninformed there are many of these mysterious causes of perceived
economic ruin. Today it is the interest rate going too low, tomorrow it
will be China doing something mischievous, and then the next day it
might be the price of oil gushing. But it’s always something with
people like Ron Paul.

The problem with all of these worries about inflation is that
inflation is needed for a strong economy. In fact, the last time we had
sustained deflation was during the 1930s, a time no one wants to go
back to (see chart below). And compared to most other times during the
last century inflation is well in check in America. Inflation is not
the problem in America, Mr. Paul.

Just a note of caution here; don’t fall prey to economic radicals.
Running an economy, especially the American economy, is an extremely
complex job that can’t be easily explained by one input. Politicians
like Ron Paul just don’t understand this. We are not in the 70s where
we had stagflation. We don’t need a Paul Volker to come in and restore
economic sanity. As you can tell from the graph below there is not a
correlation between a high interest rate and a booming economy.

In fact, there isn’t much of a correlation at all. The 70s had the
highest rates with a dying economy. The 90s had a relatively low rate
with a booming economy. And the current rate we’re at is at a
comfortably average number. Basically, if we elect Ron Paul get ready
for a resurgent Misery Index because we will need one to tell us how
bad off our economy is. BigT