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article imageRon Paul accuses Ben Bernanke of misleading public over inflation

By Andrew Moran     May 23, 2013 in Politics
Springfield - After Federal Reserve Chairman Ben Bernanke delivered his testimony to the Congressional Joint Economic Committee on Wednesday, retired Texas Republican Congressman Ron Paul issued a statement accusing Bernanke of misleading Americans over inflation.
Stock markets across the globe dropped because investors felt the Fed would be cutting back its quantitative easing program, an initiative of purchasing $85 billion a month in mortgage-backed securities and Treasury bonds. Although Bernanke said it would be discussed in future meetings if the economic data improves, the central bank head confirmed that he would be ready to increase the rate if the reports do not show an improvement in the United States economy.
Minutes released from the Federal Open Market Committee (FOMC) meeting show that there is some growing opposition to keeping QE indefinitely and that it should be reduced. Just last month, Richmond Federal Reserve President Jeffrey Lacker told CNBC that he would end QE immediately.
The possibility of expanding QE and increasing the Fed’s balance sheet is what is troubling many of the Fed critics, including longtime critic of the Fed Ron Paul, who released a statement shortly after the hearing and Q&A session came to end. In his remarks, the libertarian-leaning bestselling author of “End the Fed” listed the various negative economic points that contradict the talking points of Bernanke and the Fed.
“Just yesterday, it was reported that the median home price in Houston is at an all-time high, having risen 14.5 percent in the last year alone,” said the three-time presidential candidate. “Americans are struggling with soaring food and energy prices that the federal government conveniently chooses to ignore in its measure of inflation in order to hide the true effects of its policies from the American people.”
Alluding to Austrian Economics, Paul explained that the real definition of inflation is the increase in the money supply, which then leaders to the rise in prices. He argued that the bond-buying measures taken might help government and “cronies in the banking sector,” it is hurting the rest of the country.
“Make no mistake, despite Chairman Bernanke’s claims; the Federal Reserve’s unprecedented monetary expansion has created a significant amount of pent-up inflation that, when released, will cause prices to rise even higher and the average American’s standard of living to decline,” concluded Paul. “Until our leaders understand that we cannot print our way to prosperity, the American people will continue to suffer the disastrous effects of higher prices, higher unemployment, and lower standards of living and qualities of life for years to come.”
Aside from QE, Bernanke has confirmed he will keep near-zero interest rates as long as the unemployment rate remains above 6.5 percent. However, it would depend on how the U.S. would get to the jobless figure, such as if the number lowers due to workers exiting the labor market. This means interest rates could appear be here for the long-term.
More about Ron paul, Ben bernanke, Inflation, Federal reserve, Quantitative easing
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