Friday, February 29, 2008

Ron Paul, Ben Bernanke, and the US Dollar

did anyone catch the exchange yesterday between ron paul and ben bernanke? it was a classic summary of the failed bush administration's "economic policy":

ron paul: "ben, what do you have to say about the weak US dollar?"

ben: "the federal reserve doesn't comment on the dollar, that is the treasury department's job."

ron paul: "what is your job?"

ben: "as you are aware, the federal reserve is responsible for maintaining economic growth and price stability(inflation)."

ron paul: "please explain to me how you can be responsible for inflation if you are not responsible for maintaining US dollar strength? isn't it US dollar weakness that has led to the current inflationary spiral? for instance, oil is way up in price, but in terms of the price of gold, oil is basically flat. it is in US dollar terms that the price of oil is sky-rocketing. isn't the problem here the weak US dollar?"

at this point, after being caught dead in his circular logic, bernanke hemmed and hawed and looked at paul with that detestable smirk he so often regards paul with. funny though how paul was cool and calm (for once) and bernanke was the one with sweat on his round (and red) bald head.

as with peak oil, the first step in fixing a problem is to acknowledge the problem. bernanke refuses to do this because he is under marching orders to bail out the wall streeters and bush administration by cranking up the printing presses (again). of course this will be at the expense of the ever shrinking middle class as they pay more for food, fuel, and in the near future everything else as the US dollar continues to tank. thank god bush has less than a year left...will we survive it? i am not even sure obama and a friendly congress can fix the mess we are in now. it is a deep, deep hole and when bernanke cuts rates again next month, it will be a couple feet deeper....

meanwhile, it was a great weak for investing if one was betting on a weaker dollar (duh) and for strength in dollar based commodities. you better make all the US dollars you can now, because they are worth less and less everyday.

speaking of the US dollar, which of course was hammered after bernanke's testimony and hit new lows, i have added some links to my blogsite in the upper right hand corner. here you can easily monitor the price of oil, gold, and the US dollar index. these are the three components that will drive the US economy (and your investment returns, or lack of them) in the years to come. good luck!

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