Moves by the Federal Reserve and its chairman Ben Bernanke for a second round of quantitative easing, otherwise known as QE2, have many warning [1] the long-term viability of the U.S. dollar is in jeopardy. But according to the Fed’s view – it’s necessary to stave off even further financial calamity.
However, The New York Times Paul Krugman argues that the Fed isn’t doing enough. He wrote in the Nov. 8 issue of the Times [2] that current policy is “watered down” and “almost guaranteed to fail,” suggesting political pushback was keeping the Federal Reserve from really breaking down and opening up the monetary floodgates.
However, in an appearance on CNBC’s Nov. 8 “Squawk Box,” Rep. Ron Paul, R-Texas, rebutted Krugman’s alleged expertise on this matter. He had some very stern words about Krugman and how economic metrics and history show massive Fed intervention doesn’t work.
“He's exactly the opposite of a free market economist and sound money,” Paul said. “I wouldn't have very much in agreement. I would think by now he would have been totally discredited. And it's tragic. I pray every night that his views will be, you know, just disappear, because what he wants to do is more of the bad stuff. So I think – I think that – I mean, he gets a lot of credibility. He is leading the charge – the intellectual charge for total destruction of the money and the dollar. So I just don't see how he has any credibility whatsoever because if $3 trillion is not going to do the trick, he wants $6 trillion. I mean, 12-year-olds who know a little bit about arithmetic and the game of Monopoly know that can't possibly work.”
Paul later said he wasn’t being literal when he said he actually prayed about these matters, but he did argue his philosophy was gaining steam, but as of now, the view of Krugman is prevailing.
“No, hardly do I pray that way,” Paul said. “It's a cliché to say that, ‘No, I don't want his views to prevail and they almost are. We're living with them. I mean, Paul Krugman is leading the charge, though. So if you like his views actually you're winning, I'm losing. We're gaining – we're gaining in numbers. A lot more people are looking at what we're talking about. A lot more people are saving in gold despite the fact we don't have competing currencies. You know, everybody can go on a gold reserve standard and do better than on a dollar reserve standard. Let me tell you that.”