“This may be his last committee meeting with the chairman of the Federal Reserve,” Chairman Spencer Bachus (R-Ala.) began. “And his leadership on the committee, especially during these hearings when we’ve had the Federal Reserve chairman appear before us, have certainly made the hearings more interesting and provided several memorable YouTube moments.”
Many on the dais laughed, and even Bernanke smiled at the memory. There was, for example, a clip from February in which Paul informed Bernanke that “the record of what you’ve done in the last six years is destroy the value of real money, of paper money.” Paul instead touted the value of an illegal “parallel” currency and invoked the late Austrian economist Friedrich August von Hayek.
“Good to see you again, Congressman Paul,” Bernanke replied.
Then there was the hearing last July, when Paul hectored the Fed chairman for claiming that gold wasn’t a form of money.
On Wednesday, about 80 men in their 20s — Ron Paul acolytes — lined up outside the hearing room for a chance to see more of the same. But Paul faded away with surprising deference.
“I have over the years obviously been critical of what goes on on monetary policy, but it hasn’t been so much the chairman of the Federal Reserve — whether it was Paul Volcker or Alan Greenspan or the current chairman,” he explained. “I think they have a job that they can’t do because it’s an unmanageable job.”
The one substantial challenge to Bernanke — Paul’s “audit the Fed” bill, which the House is expected to approve next week before it dies in the Senate — was easily dispatched by the Fed chairman, who warned against injecting congressional politics into the staid field of monetary policy. Even Bachus distanced himself from the Paul bill, pointedly noting that it “did not come before the Financial Services Committee, which surprised me.”
Paul didn’t really argue with Bernanke; he used his time to deliver mini-lectures. In his first five-minute question period, he outspoke Bernanke eight words to one. Paul then got a second question period, yielded to him by Rep. Walter Jones (R-N.C.) in a development the chairman drolly described as “pleasantly unexpected.” The Paul to Bernanke word ratio this time was 12 to 1.
Bernanke, arms folded in front of him, declined to be provoked. “There’s no constitutional reason why Congress couldn’t just take over monetary policy,” he said. “But I’m advising you that it wouldn’t be very good from an economic policy point of view.”
Other than making this inarguable assertion — why would it be a good idea to give Congress another duty that it can mishandle? — the Fed chairman listened patiently to Paul, who took off his reading glasses, waved an arm in the air and recited from his greatest hits: Crisis! Printing money! Flawed system! Big government! He led Bernanke on a tour from the Bretton Woods agreement of 1945 to the latest developments in M1 and M2 money supply.
But ultimately, the congressman accepted that he would leave town with the Fed still alive and well. “We never change policy. We never challenge anything. We just keep doing the same thing,” he lamented. “Congress keeps spending the money. Welfare expands exponentially. Wars never end.”
At this point, the committee chairman cut him off. Paul’s time had expired.