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Monday, August 02, 2010

Economy is even worse than it appears due to corrupt Fed cooking the books, but incompetent Bernanke wants even more power

Bernanke: Fed Could ‘Step Into New Areas’

(The New American) -- by Alex Newman --

Federal Reserve boss Ben Bernanke told Congress this week that despite not having any imminent plans to further “support” the economy, the central bank was “considering all options” to fight unemployment and could “step into new areas” because the alleged recovery remains “unusually uncertain."...

Despite the circumstances, however, Bernanke tried to paint a reasonably rosy picture of the economic situation. The alleged “recovery” is proceeding at a “moderate” pace, he claimed, saying the Fed predicted annual growth of around three percent this year. He also said inflation was below “target” levels.

But Republican Congressman Ron Paul, who correctly predicted all of what has happened during the economic crisis while Bernanke was claiming everything was fine, recently explained that the situation was far worse than the Fed and the government were letting on. Unemployment is actually closer to 22 percent and inflation is around six percent, he said, citing free-market economists tracking the measure.

"There's a lot of deception, and the people sense this,” he said during a July 14 Congressional meeting of the Joint Economic Committee, criticizing the use of borrowed and newly printed money to create a false appearance of economic growth.

He explained that the supposed growth in America’s Gross Domestic Product was due to flawed calculation methodology. “You know, if we spend a billion dollars on a missile and we blow it up, that counts as an increase in the GDP,” he explained. “It didn’t give us a house, it didn’t give us healthcare or education — so there’s a big difference.” Including government spending as a measure of GDP has been controversial among some economists, since the state doesn’t actually produce any wealth.

“If you measure the GDP that goes up because of borrowing, inflating, and spending — and look at that with a better perspective — I would say that maybe the real GDP isn’t going up, and maybe that’s why we’re not having real growth,” Paul explained. He also criticized the prevailing mythology that government is somehow exempt from economic laws.

Bernanke has been proven unbelievably wrong — over and over again. Austrian-school economists, like Ron Paul, have been proven right. The Fed’s threats to step into “new areas” and consider new “tools” should be considered a grave concern, since every area the central bank steps into ends up a disaster (except for insiders). The more it expands its operations, the worse off the country and the economy will be.

The banking cartel has painted itself into a corner. Its statements about using even more of the same type of policies that brought the American economy to its knees must be rejected. No amount of Fed “tools” will fix the problem its “tools” created in the first place. The real solution is to abolish the cartel, repeal legal tender laws, and introduce sound money. And with the next crisis possibly just around the corner, the time for a new monetary system is way overdue...MORE...LINK

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