In one of the most indescribable moments in Congressional history, Ben Bernanke and Ron Paul looked deep into each other's eyes and a black hole was formed somewhere in the universe. I'm pretty sure that about 45% of the time Congress is in session is spent listening to Ron Paul rant about the Fed but this rant was special because Ben Bernanke was right there to respond.
Here is a video link to the confrontation. It begins with Ron Paul giving a barely coherent speech about the Fed. He makes several obvious points about inflation and a lack of transparency. He tries to respond to criticisms of his bill that would allow Congress to audit the Fed in what vaguely resembles a series of statements. He then accuses the Fed of making loans to Saddam Hussein during the 80's. He also claims that the Watergate scandal was conducted with money from the Fed.
Ben Bernanke's reaction is priceless: “These specific allegations you've made I think are absolutely bizarre." Is there a better word than “bizarre” to describe Paul's allegations? Bernanke tells Paul that full transcripts of all Fed meetings are released after 5 years and that the Fed is actually reasonably transparent.
Paul then tries to make a point about a lack of transparency by saying that the Fed could be conducting a bailout of Greece, as we speak, and nobody would know. Ron Paul then directly asks if Bernanke has spoken to European officials about buying Greek debt and Bernanke says he hasn't. Then Paul asks if the Fed could buy Greek debt if they wanted to. Then, in my favorite moment of this whole exchange, at 4:53, Ben Bernanke looks over his shoulder to the person behind him as if to say, “Is this guy actually insane?!?! Does he even have a real point to make?!?!” Bernanke being the politician that he is, offers his denials over any claim that he is going to buy Greek debt and the conversation is essentially over.
Then in another classic Congressional moment, (Classic Congressional Moments vol. 1 to be released on DVD next fall) Barney Frank says sarcastically that the committee will conduct a full examination of the Fed's supposed involvement with Saddam and Watergate.
Now here's my take, Ron Paul is a doctor. He went to medical school and is surely an intelligent man. I have nothing bad to say about him personally but he is by no means an economist. His philosophy is simplistic and reactionary. Accusing the Fed of funding Saddam is totally believable if you're cynical and even if it's false, those same cynics will cry out, “Dr. Paul is a hero for saying the truth man.” But what good does it do? Paul wastes the committee's time promoting his own simplistic message, making wild accusations and asking irreverent questions and is called a hero on the Internet.
The great thing about the moment Ben Bernanke looked over his shoulder was that it really said everything. It was the emperor's new cloths to Bernanke. Dr. Paul has a huge amount of support around the country. He's set fund raising records. He's gotten bills passed through congress and he's done it without being coherent or offering a serious message. What is this man's appeal; what am I missing here?
