Ron Paul: At The Fed, The New Boss Is The Same As The Old Boss


The news that Janet Yellen was nominated to become the next Chairman of the Board of Governors of the Federal Reserve System was greeted with joy by financial markets and the financial press. Wall Street saw Yellen’s nomination as a harbinger of continued easy money. Contrast this with the hand-wringing that took place when Larry Summers’ name was still in the running. Pundits worried that Summers would be too cautious, too hawkish on inflation, or too close to big banks.

The reality is that there wouldn’t have been a dime’s worth of difference between Yellen’s and Summers’ monetary policy. No matter who is at the top, the conduct of monetary policy will be largely unchanged: large-scale money printing to bail out big banks. There may be some fiddling around the edges, but any monetary policy changes will be in style only, not in substance.

Yellen, like Bernanke, Summers, and everyone else within the Fed’s orbit, believes in Keynesian economics. To economists of Yellen’s persuasion, the solution to recession is to stimulate spending by creating more money. Wall Street need not worry about tapering of the Fed’s massive program of quantitative easing under Yellen’s reign. If anything, the Fed’s trillion dollars of yearly money creation may even increase.

What is obvious to most people not captured by the system is that the Fed’s loose monetary policy was the root cause of the current financial crisis. Just like the Great Depression, the stagflation of the 1970s, and every other recession of the past century, the current crisis resulted from the creation of money and credit by the Federal Reserve, which led to unsustainable economic booms.

Rather than allowing the malinvestments and bad debts caused by its money creation to liquidate, the Fed continually tries to prop them up. It pumps more and more money into the system, piling debt on top of debt on top of debt. Yellen will continue along those lines, and she might even end up being Ben Bernanke on steroids.

To Yellen, the booms and bust of the business cycle are random, unforeseen events that take place just because. The possibility that the Fed itself could be responsible for the booms and busts of the business cycle would never enter her head. Nor would such thoughts cross the minds of the hundreds of economists employed by the Fed. They will continue to think the same way they have for decades, interpreting economic data and market performance through the same distorted Keynesian lens, and advocating for the same flawed policies over and over.

As a result, the American people will continue to suffer decreases in the purchasing power of the dollar and a diminished standard of living. The phony recovery we find ourselves in is only due to the Fed’s easy money policies. But the Fed cannot continue to purchase trillions of dollars of assets forever. Quantitative easing must end sometime, and at that point the economy will face the prospect of rising interest rates, mountains of bad debt and malinvested resources, and a Federal Reserve which holds several trillion dollars of worthless bonds.

The future of the US economy with Chairman Yellen at the helm is grim indeed, which provides all the more reason to end our system of central economic planning by getting rid of the Federal Reserve entirely. Ripping off the bandage may hurt some in the short run, but in the long term everyone will be better off. Anyway, most of this pain will be borne by the politicians, big banks, and other special interests who profit from the current system. Ending this current system of crony capitalism and moving to sound money and free markets is the only way to return to economic prosperity and a vibrant middle class.

Personal Liberty

Ron Paul

Former Representative Ron Paul has maintained a steadfast consistency in speaking out against executive power, taxation and war. Unlike many of his Republican peers, as a Congressman, he voted against the Patriot Act and against the Iraq war. He has voted against farm subsidies and regulating the Internet, which is in line with his interest in reducing government spending and the role of the Federal government. Paul has also expressed his opposition to the war on drugs, saying that the government's efforts have actually been a war on doctors. These and other controversial opinions have often caused tension with his Republican counterparts. Paul is the author of many books, including End The Fed, Liberty Defined and Revolution: A Manifesto. Along with a lengthy political career as a Congressman and Presidential candidate, Paul has also worked as a respected obstetrician in his home State of Texas. Since his retirement from Congress in 2013, Paul has stayed busy encouraging Americans to fight for liberty by founding the Ron Paul Institute for Peace and Prosperity and his own news channel.

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  • JimH

    I see The Who was wrong. We did get fooled again.
    Meet the new boss, same as the old boss.

  • patsch13

    I just don’t think it fair that the President hires women to do his
    heavy lifting. Janet, Hillary, and now (another) Janet. Since they’ve
    all been sooooo successful, I think Barry just wants to have the women
    in his cabinet fail–in a good way. His way. The way America pays the biggest price for botched and incompetent leadership.

  • lokiswife

    The mainstream media was calling Yellen a dove. They got the wrong bird, she is a dodo bird…Ben Bernanke in heels and a bra…

  • peter

    Nothing has changed. We still have the same problems and no solutions. Those who believe that this woman will set the ship right are delusional and the worst is that she couldn’t care less. She is now the boss, which is all she wanted and whatever she does is irrelevant. She will prevail and get her bonuses etc.etc. and everyone else can go do whatever they want. Never seen her smile so much. Her and Hilary are like a couple of laughing hyenas, laughing all the way to the bank of course, hand in hand with the Messiah. The joke is on us of course.

  • 1baronrichsnot1

    Ron paul is right as usual, the Feds central bank was created by the biggest communist that was elected up to BHO, Woodrow Wilson, an abomination to america yet today! It is designed to ruin america, and has subtlely done so over the years! Just a large step in ruining the free market system. It is perpetuated by communists and supported by financial markets, some get rich, some get ruined economically and enslaved by this system. It has ruined our currency, impoverished more people than it has helped! Ole yeller is an expected appointment by this administration, because she will do the most damage! Ole yeller died of rabies in the movie, I predict she is mad now, and will get progressively worse every day if she is confirmed!