David Frum's Critique Is Far From Sound

In his weekly CNN column, David Frum argues that "Ron Paul's money plan is far from golden," but makes a lot of mistakes in his analysis.

He uses the same tired, old, and refuted Keynesian argument that a free monetary system based on gold currency is too inflexible. He argues the Great Depression happened because the gold standard prevented the government from being able to expand the monetary supply to get us out of the economic recession.

His prescription for avoiding the Great Depression is the Keynesian idea that the Federal Reserve should print up money out of nothing to extend credit to the government (by purchasing Treasury bonds), and that the government could then ramp up spending to stimulate the economy. Frum argues that this could not occur in 1929 because of the gold standard, and the economic contraction slipped into a full-blown depression without government stimulus.

Frum believes, like the defunct Keynes, that a government-sponsored central banking system can ease busts by expanding the money supply, and then take the excess money back out during booms when the growing economy can safely absorb the monetary contraction. This necessarily assumes that you won't have high inflation during an economic recession.

Can We Trust Bernanke's Testimony?

(This article first appeared on Our America Initiative:)

Federal Reserve Chairman Ben Bernanke gave his semi-annual testimony to Congress on monetary policy Wednesday. While cautioning lawmakers that job numbers are still a concern, Bernanke indicated that because of measures taken by the government and the Fed, we are in the process of economic recovery. But can Americans trust Bernanke’s testimony?

Economic and monetary policy “luminaries” like Ben Bernanke, Alan Greenspan, Hank Paulson, and Tim Geithner- along with the rest of America- were blindsided by the financial meltdown, credit crunch, housing bust, and subsequent recession. These are all “really, really smart” guys who “know what they’re talking about” and understand all of the complicated intricacies of economics, which are all but ineffable to the layman. But they got it wrong just like everyone else.

The Rascal Is Back, But We're Gaining Momentum

Unfortunately, the head of the printing press was renominated. This means another four years of inflation, artificial interest rates, and bubbles. However, I and hopefully the rest of the anti-Fed movement should be ecstatic about how much criticism has been directed at the Fed recently. Bernanke's reconfirmation by a vote of 70 to 30 seems like a landslide, but it is in fact the most opposition to a Fed chairman ever. No matter how meaningless the Fed establishment will try to make this sound, it is in fact very significant. Our ideas are catching on and they are about the only bipartisan thing in Washington these days. We have to keep up the fight. It's a good one and it will be well worth all of our time. 

End the Fed!

Bernanke or Bust

That is, according to Treasury Secretary Timothy Geithner. After being warned about the country's demise if we didn't act and bailout the auto industry or the banks, I'm hard-pressed to feel sympathetic for Bernanke or fear for the market's impending doom. It may be true that if we get rid of Bernanke the economy might be negatively affected, but considering the high unemployment rate, massive defecit spending, and the artificially low interest rates perpetuated under Bernanke it begs the question:  Would it really be that much worse?

Start at about 3.20 into the video and listen to Geithner's nightmare.