Ron Paul to Bernanke: ‘Define the Dollar’

By Michael Crittenden

What happens when you throw Congress’s top Federal Reserve critic in a room with the central bank’s chairman? Apparently even the definition of the dollar is open for question.

Rep. Ron Paul (R., Texas) questions Federal Reserve Chairman Ben Bernanke Tuesday on Capitol Hill. (Photo by Jonathan Ernst/Getty Images)

Long-time Fed basher Rep. Ron Paul (R., Texas), who wrote a book titled “End The Fed,” squared off Wednesday with Fed Chairman Ben Bernanke at a hearing on Capitol Hill and wasted little time going after the central bank.

“The real cause of price inflation, which is a deadly threat to us right now, is the Federal Reserve system and our monetary policy,” Mr. Paul said.

It was Mr. Bernanke’s first appearance before the House Financial Services Committee since Republicans took control of the House in January, and the first since Mr. Paul took over as chairman of the subcommittee overseeing monetary policy issues. Mr. Paul used the opportunity to accuse the Fed of abetting the government’s growing debt.

“There’s a moral hazard involved here,” Mr. Paul said. “The Fed really facilitates this spending and until we realize this … I think the Fed is involved with our deficit and encourages it.”

Despite his various criticisms, however, Mr. Paul had one question for Mr. Bernanke: “What is your definition of the dollar?”

The Fed chairman, who has spent significant time on the receiving end of congressional
scorn over the last few years, didn’t blink, framing his answer in terms of everyday consumers.

“It’s the buying power of the dollar which is what is important,” Mr. Bernanke said, noting that “consumers don’t want to buy gold; they want to buy food and clothes and gasoline.”

Odd questions are par for the course when the Fed chairman heads to Capitol
Hill. During an appearance Tuesday before the Senate Banking Committee, he was asked about currency conditions during the administration of President Andrew Jackson, the nation’s seventh president.

“So this was before the Civil War, this was during the period where individual
banks issued currency. We didn’t have a national currency,” Mr. Bernanke said.