Bernanke’s Publicity Stunt

Federal Reserve Chairman Ben Bernanke has taken his defense of the Federal Reserve System on the road.  In response to recent critics of the central bank, notably Republican presidential candidate Ron Paul, Bernanke is scheduled to deliver four classroom lectures at George Washington University.  In his first discourse, Bernanke was Bernanke, extolling the virtues of the Fed while criticizing calls to return the dollar to a gold standard.

One of Bernanke’s criticisms of a return to the gold standard is that it is not practical.  By that he means “it can be a waste of resources to secure all the gold needed to back currency, moving it from South Africa to the Federal Reserve Bank of New York’s basement”.  But, the benefit of using gold to back currency is precisely because it is scarce and difficult to dig up and transport. Otherwise, it would have little value and be about as valuable as paper money.

A more significant criticism lodged by Bernanke against the gold standard is that it doesn’t prevent “short-term volatility”.  According to the Fed chairman, “Since the gold standard determines the money supply, there’s not much scope for the central bank to use monetary policy to stabilize the economy”.  By short-term volatility, Bernanke must be referring to those periods in the 19^th Century when the Second Bank of the United States and the federal government from time to time allowed banks to suspend payment in species thus enabling widespread currency inflation and financial volatility.  The fact is that under a true gold standard short-term volatility would not exist.  Prices would be stable and the artificial booms and inevitable busts caused by Fed monetary price fixing would not happen.

But, to his credit, Bernanke did acknowledge that historically countries using the gold standard have experienced long periods of price stability.  In fact, in the United States from the mid-Nineteenth Century until 1940 prices in the United States actually fell on average from year to year – the main exceptions being during war years.

So while even Bernanke admits that the gold standard is an effective means to produce stable prices which after all benefit the poor, the elderly, and others on fixed budgets, why is he still so resistance to a return to the gold standard?  The key is in the answer he gave to one student’s question about why Fed critics are pushing hard to return to a gold standard. Bernanke indicated that they want to remove some “discretion” the Fed has over the economy.  It is this “discretion” that Bernanke and his monetary oligarchs used to dole out trillions of dollars in secret loans to their bank buddies who nearly brought the whole financial system to its knees.  Many of them got a piece of the action – Citigroup – $2.513 trillion, Morgan Stanley – $2.041 trillion, Merrill Lynch – $1.949 trillion, Bank of America – $1.344 trillion, Barclays PLC – $868 billion, Bear Sterns – $853 billion, Goldman Sachs – $814 billion, Royal Bank of Scotland – $541 billion, JP Morgan Chase – $391 billion, Deutsche Bank – $354 billion, UBS – $287 billion, Credit Suisse – $262 billion, Lehman Brothers – $183 billion, Bank of Scotland – $181 billion BNP Paribas – $175 billion, Wells Fargo – $159 billion, Dexia – $159 billion, Wachovia – $142 billion, Dresdner Bank – $135 billion, and Societe Generale – $124 billion.  You see with a gold standard these loans and other Fed schemes to benefit the bankers would not be possible.  Thus, when Bernanke criticizes the gold standard it is more than just professorial theorizing, it is a defense of the current corrupt banking cartel in America.

In the final analysis, Bernanke’s lecture series at G.W. is nothing more than a publicity stunt and not a very good one at that.  The Federal Reserve is an indefensible institution.  Compounding his problem are arguments he is attempting to make against the gold standard which served our country well for so long.  Anything he says cheats the students of valuable educational time.  Perhaps the powers that be at G.W. should invite Ron Paul to debate Bernanke.  Only then will the students get their money’s worth.

Article first published as Bernanke’s Publicity Stunt on Blogcritics.

 

Ron Paul’s Delegate Strategy May be Working

There is an interesting analysis article over at Real Clear Politics that lays out a scenario whereby the August Republican National Convention evolves into the worst nightmare imaginable for party officials – a brokered convention.  Based on how Republican candidates for president have done so far with different demographics and regions of the country, Sean Trende predicts how the race for the Republican nomination may play out and lays out a scenario where a brokered Republican convention could take place.

Now, it’s no secret that a brokered convention would be a catastrophe for Republican Party leaders use to grand coronations at their quadrennial national party events.  After all, anything could happen.  Chaos could rule or a dark horse candidate not officially sanctioned by the party oligarchs could emerge.  In either case their lack of control would disrupt the usual smooth proceedings meant to portray to the nation a party united, happy, and excited about its standard bearer.

Given his campaign’s strategy of focusing on caucuses and out hustling his rivals at local, county, and state conventions nationwide the main beneficiary of a brokered convention would be Texas Congressman Ron Paul.  The fact of the matter is that most Americans do not get involved in politics.  Many rightly view it as an ugly, corrupt business.  Others are too busy following American Idol, Dancing with the Stars, or the latest escapades of Lindsay Lohan.  While others would rather leave it to the professionals.  But, Ron Paul supporters are different.  They may not outnumber the supporters of other candidates, but they are hungrier and more dedicated to their principles.  They are much more willing to show up, outlast, and fight for delegate positions than the supporters of rival candidates.  These attributes seem to be paying dividends for the Paul campaign at least in the early stages of the delegate selection process.

In Iowa, Ron Paul supporters have become delegates for other candidates.  Under party rules, if the convention is brokered at some point those delegates could be eligible to throw their support behind Dr. Paul.

In Georgia, Paul forces took over or as local GOP officials called it “hijacked” the DeKalb County delegate-selection convention in eastern metropolitan Atlanta.  They also missed by a whisker doing the same thing in populous Cobb County.

And in Clark County, Nevada, home to Las Vegas, at the county GOP convention made up of over 2600 delegates, Paul supporters organized and triumphed by electing Paulites to all 14 seats on the ballot for county GOP executive committee board.  These 14 new members of the board will make up two-thirds of the ruling body.  Consequently, that county’s GOP platform now calls for holding elected officials to their oath to the Constitution, repeal of the 16^th Amendment, and a full audit of the Federal Reserve.

The process of selecting delegates in most states is in the early stages.  There will be multiple stories like the ones mentioned above.  Ultimately, there may be a brokered Republican convention in August.  Then again, there may not be.  Ron Paul may not get the GOP nomination for president in 2012, but whoever does will be leading a party much different from the one that exists today.  It will include delegates to the national convention, activists, and party officials who support a non-interventionist foreign policy, sound money, and civil liberties.  You talk about a nightmare for the party oligarchs!

The GOP is Imploding

The 2012 Republican presidential race has been, so far, one of the most intriguing contests in recent memory. It has consisted of multiple frontrunners, a sex scandal, one state and potentially a second state changing who it declared the winner of its caucus weeks after voting, the resignation of two state party chairman, and a candidate who is less interested in winning elections than he is in accumulating delegates to win the nomination. Put together, this has not been your typical Republican primary where a frontrunner is declared early and is swept through the primaries with little challenge all the way to their coronation moment at the party’s convention. Instead, this year we are witnessing the implosion of the Republican Party.

By implosion I am not saying the Republican Party is going to disintegrate into nothing. What I am saying is that by the time the party crowns its nominee this summer it may look a lot different than it does today.

As most Ron Paul supporters know, the Good Doctor kept much of his campaign apparatus in place from 2008. This included his allies in the various states being elected or appointed to party positions. This seems to have paid off since his former state campaign co-chair A.J. Spiker was just elected as the new chairman of the Iowa Republican Party in the aftermath of the previous chair’s demise for voting irregularities in this year’s Iowa Caucuses. Additionally, Nevada’s Republican state chair also resigned due to allegations of irregularities during that state’s caucus. It’s been reported that several Ron Paul backers are poised to step up to fill the void.

Then there is the turmoil surrounding Maine state chair, Charlie Webster. He is being censured by that state’s Republican Party and forced to recount votes from the caucuses statewide as well as include Washington County’s in the final vote tally. The new result could force the Maine GOP to change its declared winner of the caucus from Mitt Romney to Ron Paul. In all three instances, Ron Paul loyalists called out the Establishment and will potentially overthrow the old regime by supporters of sound money, a non-interventionist foreign policy, and support for civil liberties.

But, perhaps the biggest reason why the GOP is imploding is because it’s chosen one has faltered. 2012 was supposed to be Mitt Romney’s turn and he was expected to cruise to the nomination. The rules were even fixed in his favor. With strong support in the Florida, Nevada, and Arizona contests, they were moved up in the calendar to benefit Romney. Realizing he would win very few contests in the Bible Belt those contests were changed from winner take all to proportional allocation.

Yet Romney has struggled losing 6 of 9 contests and 4 in a row (yes, I am counting Maine because with potential widespread corruption he still could only out poll Ron Paul by 194 votes). Current polls in his boyhood state of Michigan have him trailing Rich Santorum. And let’s face it, there are still many southern primaries to come and your typical Evangelical voter is not going to vote for a Mormon. Things are looking grim for the Romney campaign.

As all 4 Republican candidates have vowed to stay in the race all the way to the convention, it is looking more and more like a brokered convention in Tampa. If none of the candidates has enough delegates to win the nomination, intense horse trading would ensue. However, I can’t see any of the current combatants for the nomination cutting a deal and dropping out. They all represent vastly different wings of the party and after spending so much time, energy, and money to win the thing through a grueling primary season it seems unlikely that enough could be given to make that happen.

At that point, other party candidates would be offered as a compromise. Delegate totals for each candidate would be diluted with the exception of Congressman Paul. Because of his strategy of winning delegates by out hustling his opponents and because his supporters would never switch allegiance he could become a kingmaker. He may not get the nomination himself, but the party would be changed. His delegates could influence the eventual nominee, change the platform, and return to their states and become the party’s leaders.

The consequences of such a scenario would lead to a future run by a Ron Paul heir. As the Barry Goldwater campaign paved the way for the Conservative “Revolution” of 1980, what could transpire this year could pave the way for a Libertarian Revolution in the future.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina