"Republicans stashed him in this job because they don't want him making more important decisions," said Megan McArdle, a prominent libertarian blogger and economics editor of the Atlantic. "He cares passionately about monetary policy, which most Republicans don't care about. But when you look at his speeches, he doesn't understand anything about monetary policy. He might actually understand it less than the average member of Congress. My personal opinion is that he wastes all of his time on the House Financial Services Committee ranting crazily."
Paul-phobia is almost as old as Paul-mania, especially among libertarians. The anti-Paul case consists of one simple argument—he sounds crazy—and one complex argument, which is that he's distracted libertarians and Tea Partiers by focusing their ire on the easily demonized Fed. Both of those factors were epitomized in February 2010, when he confronted Ben Bernanke with the allegation that the Fed "facilitated a $5.5 billion loan to Saddam Hussein and he then bought weapons from our military industrial complex" in the 1980s. Paul would later explain what he meant, but Bernanke used the moment to dress him down.
"Well, Congressman," said Bernanke, "these specific allegations you've made I think are absolutely bizarre, and I have absolutely no knowledge of anything remotely like what you just described." That incident and incidents like it make the Paul skeptics cringe about what he'll do next.
"I don't think he's often the best messenger for the things he believes in," said Mark Calabria, director of financial regulation studies at the Cato Institute and a six-year veteran of the Senate Banking Committee. "I give the guy credit for bringing the Fed under the spotlight, but the real credit probably goes to the Fed for making enough mistakes to make us interested in them. Does Paul approach this in a way that helps his own cause? That's not a guarantee, necessarily. He needs to avoid going down the path to conspiracy theories and keep the focus on economics."
Paul's cheering section has gotten used to that, and they're past it now. In 2007 and 2008, the world of libertarian economists and pundits were pretty evenly divided over whether his presidential campaign and its obsession with the Federal Reserve were doing good for the movement. Paul's supporters mocked his opponents as the "Kochtopus," the small-minded and well-funded elitists looking down on the movement's best spokesman from perches at Cato, the Mercatus Center, and Reason magazine. (I'm a contributing editor of Reason.) But the criticism is more muted now. There's more excitement about what Paul will pull off now that he finally has a gavel.
"Paul's commentary on, and cross-examination of, the Federal Reserve has only seemed less crazy with the passage of time," said Matt Welch, editor-in-chief of Reason. "It sounded crazy when he kept pestering Bernanke or whoever about whether the Fed was involved in various overseas bailouts. But then the Fed was involved in various overseas bailouts! By trying quixotically to End the Fed, he will succeed in doing more to audit the Fed, because there is a growing interest/concern in the post-TARP world about the unprecedented and not-very-well-controlled power that the institution has to do whatever it wants."
Granted, anything that precipitates a McMegan vs the Reasonoids fight with Cato in the middle is always worth paying attention to. But Ron Paul's going to let his ego get the better of him, and I just hope a camera is on the guy when he goes into rant mode.
Again, much of my problem with Ron Paul isn't the 30% of the time he makes sense, it's the 70% of the time he's borderline racist nutbar insane. But hey, that's who the Republicans want in charge of Fed oversight? Should make for some good TV.
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