Friday, July 23, 2010

Saint Paul vs Uncle Ben

Congressman Paul gives an opening statement and questions Ben Bernanke

End the Fed
Federal Reserve Chairman Ben Bernanke reiterated Wednesday his belief that Congress should continue to prop up the sputtering economy, casting aside concerns that the federal budget deficit should trump the economy's need for additional stimulus.

In other words, Congress should spend now and worry about deficits later.

"At the current moment the large deficits, as unattractive as they are, are important for supporting economic activity," the nation's central banker told a Senate panel, citing "weak" private spending and a "great deal of excess capacity."

Bernanke added that he'd be "reluctant to withdraw that support too precipitously in the near term." His comments strongly echoed remarks he made in June.-Bernanke To Congress: The Economy Needs You To Keep Spending

From Schiff's Austrian-school-of-economics perspective, the U.S. economy is addicted to government stimulus and at risk of overdosing.

"The economy will never recover until the government stops sedating it with so-called stimulus," he says. "They're trying to sober up a drunk by giving him more alcohol - it won't work."

Schiff doesn't disagree with the widespread view that there will be economic upheaval if the Fed and Congress force the economy to go "cold turkey" rather than slowly weaning it off stimulus. But any short-term pain will be well worth the long-term gain, the money manager and Senate hopeful says.

"If you're overweight and you want to lose weight - diet and exercise are not a pleasant thing to do; but if you do it, you have positive long-term results," he says, the metaphors coming fast and furious. "If you're sick, sometimes you have to swallow bitter-tasting medicine. "-Peter Schiff's Policy Rx: Bernanke and Uncle Sam Should Do LESS, Not More

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