Why the Bank of Canada is losing money

Counter-intuitive as it seems, the Bank of Canada is losing money due to rising interest rates, and may need a government bailout to cover its 2022 losses. 

The feds are about to bail out the Bank of Canada | The Hub - Jules Boudreau:

October 19, 2022 - "Between April 2020 and December 2021, the Bank of Canada added $360 billion of bonds to its balance sheet as part of its quantitative easing (QE) program. It mostly bought Canadian government bonds, but also provincial bonds and mortgage-backed securities. Outside of the first few months of the crisis, when it helped prevent Canadian financial markets from seizing up, QE probably had a negligible effect on the Canadian economy. Swapping one type of government debt (government bonds) for another (bank reserves) did not cause the current surge in inflation. But it did have a major impact on the state of government finances going forward. 

"We will have a preview of this 'QE bomb' on public finances when the Bank reveals it generated a negative net income in 2022 and Ottawa is forced to bail it out. The Bank should be transparent about the upcoming shortfall and add safeguards around the use of quantitative easing policies going forward.

"Prior to 2020, every year the Bank of Canada sent around $1 billion to the government of Canada in remittances. Those steady remittances were 'seigniorage' profits: because the Bank has a monopoly on currency issuance, it can produce bank notes at close-to-zero cost, sell the notes to banks, and use the proceeds to buy bonds. The business of trading bank notes, on which the Bank pays no interest, for interest-bearing bonds allowed the Bank to self-finance its operations..... It would then send the surplus to the government. Seigniorage is the federal government’s golden goose: the feds receive a steady billion annually in exchange for granting the Bank the privilege of issuing currency.

"But in 2020, the Bank ditched its ingenious zero-reserves 'corridor' monetary system, in which commercial banks send funds to each other to manage their liquidity needs, for a 'floor' system, in which commercial banks hold reserves at the central bank. Think of reserves as central bank money, on which the Bank pays interest. The implementation of this new system, combined with pandemic QE, means that bank notes — the golden goose — today only make up 28 percent of the Bank’s liabilities, down from 78 percent in 2019 (chart 1). Bank notes are now eclipsed on the Bank of Canada’s balance sheet by interest-bearing reserves and reverse repos. When the Bank hikes its policy rate, it increases the interest payments it makes to banks and other financial institutions. 

Chart 1. Graphic credit: Janice Nelson

"With one hand, the Bank receives interest from its bond holdings. With the other, it sends interest payments to banks. The problem is that government bonds offer a fixed interest rate, while the interest paid by the Bank on reserves scales with the Bank’s policy rate. And with Canadian rates surging, the Bank’s interest expense is about to exceed its interest revenue (chart 2)....

Chart 2. Graphic credit: Janice Nelson

"Because the Bank does not have sufficient capital to cover the losses, the government will have to bail it out with a loan or transfer. Based on market expectations for Bank of Canada rates, I estimate the shortfall to be $1 billion in 2022, $4 billion in 2023, and $2 billion in 2024. Instead of receiving $3 billion over three years from its golden goose, the federal government will have to cover a shortfall of $7 billion, the equivalent of two percent of annual government revenues.... The Bank of Canada is clearly aware of the issue. It just stopped paying interest on government deposits at the Bank, an accounting trick to reduce the end-of-year shortfall....

"When the government sells a bond to finance its spending, it chooses the optimal maturity of the bond to issue. If it wants to 'lock in' an interest rate to protect itself from future changes in borrowing costs, it will issue a long-term bond, for example, a 30-year bond. But what happens to the government’s balance sheet if the Bank of Canada purchases the 30-year bond? That long-term bond is replaced by an ultra short-term bond: bank reserves, on which the Bank — and by extension the government — pays the overnight rate....The data shows that the impact on consolidated government debt profile is immense. When we factor in the Bank of Canada’s holdings of Government of Canada bonds, the average weighted maturity of the government’s debt drops from 6.7 years to 4.7 years, rendering government borrowing costs about 30 percent more vulnerable to a rise in interest rates.... 

"Should the unelected Bank of Canada have such an impact on the government’s debt profile? Especially since, outside of periods of acute liquidity shocks like April 2020, QE’s effects on the economy are debatable. Hindsight is 20/20, and we can’t blame the Bank for emptying the cupboard in unprecedented times. But going forward, the Bank should install safeguards around the use of its balance sheet to gobble up government debt. The Bank of Canada should also commit to eventually returning to its previous corridor system to reduce its footprint in the government bond market."

Jules Boudreau is an economist in the Multi-Asset Strategies Team at Mackenzie Investments, a Canadian asset manager.

Read more: https://thehub.ca/2022-10-19/jules-boudreau-the-federal-government-is-about-to-bail-out-the-bank-of-canada/

Jorgensen on lockdowns, crypto, and the Fed

2020 Libertarian Presidential Candidate Jo Jorgensen Talks Bitcoin, Endless Wars, Covid-19 Response | News.Bitcoin.com - Jamie Redman:

June 9, 2020 - "On June 8, news.Bitcoin.com ... discussed a number of issues with the Libertarian 2020 presidential candidate Joanne Jorgensen, otherwise known as 'Jo.' The Libertarian nominee is a well known political activist and academic researcher during the last few decades.... 

"BC: What are your thoughts on how the US government handled the coronavirus outbreak —  specifically the business shutdowns and lockdown orders?...
JJ: It was tragic, they put us all under house arrest and tens of millions of people lost their jobs. Many of those jobs are not coming back. One of my grandfathers immigrated from Sweden and his family came to America for freedom. You know the land of the free and home of the brave. And while we are all under lockdown, the old country that he left they were all out walking about, going to school, going to restaurants, and having a general freedom that you would expect Americans to have.

"BC: Since the coronavirus and even months prior, the US Federal Reserve has created trillions of dollars and it has been distributed to private dealers and interests. What are your thoughts on the Fed and how would you address this private bank as President?
JJ: First all the Federal Reserve should have never been created to begin with. Unfortunately, they are teaching history a little wrong in the textbooks these days. Because a lot of people say that if it wasn’t for the Fed stepping in, the Great Depression would have been so much worse. But actually the Federal Reserve caused the problems....

"[T]he first thing I would do if I was President of the United States would be to audit the Federal Reserve.... Eventually, I’d like to see the Fed abolished. Because through the Federal Reserve we get money created out of thin air, which is basically the equivalent of counterfeit money....

"BC: A great number of Libertarians like money such as gold and silver. However, in recent years many free-market advocates support bitcoin. What is your stance on Bitcoin and the cryptocurrency economy?
JJ: A message from the Libertarian Party platform says: 'We favor free-market banking with unrestricted competition among banks and depository institutions of all types — Individuals engaged in voluntary exchange should be free to use as money any mutually agreeable commodity or item. We support a halt to inflationary monetary policies and unconstitutional legal tender laws.'

"So a number of people say that they want to back USD with gold. That would be a step in the right direction, but that is not enough. We have competition in cars, competition with computers, and competitive grocery stores. Why not have competition with money? So the people have access to something that is more planned and a monetary system they can better predict. Right now what we have is money that’s created under the whims of Congress and the Federal Reserve Chair.

"I would act in support of a free market in currencies. Some people say that the constitution authorizes the federal government to create currency, just like it authorizes the creation of the post office. But in neither case, does the constitution give the federal government a monopoly on currency or the delivery of mail. Businesses should be able to trade and accept whatever they want and that would mean bitcoin and all the other cryptocurrencies....

"I would enact Ron Paul’s Free Competition in Currency Act. This would repeal legal tender laws and taxes on coins and monetary metals. And it would repeal the prohibition on coining money. Also, I would repeal the Bank Secrecy Act, Know-Your-Customer (KYC), and other laws that violate our right to financial privacy. Many people go to bitcoin because they do want privacy so I would work to repeal those unjust laws.

"I would also appoint commissioners to the CFTC and the SEC who would then seek to deregulate Bitcoin and other crypto-assets. I would appoint leaders at the Treasury Department, who would be told to leave bitcoin and crypto operations alone. Lastly, I would pardon Ross Ulbricht, the individual who operated the Silk Road (SR) marketplace. Ulbricht is serving more than one life sentence in prison for nonviolent offenses, partly because some of the SR members were selling drugs for bitcoin."

Read more: https://news.bitcoin.com/2020-libertarian-presidential-candidate-jo-jorgensen-talks-bitcoin-endless-wars-covid-19-response/

US House committee passes Audit the Fed bill

House panel passes bill to audit the Fed - MarketWatch - Greg Robb:

March 28, 2017 - "A House panel on Tuesday approved legislation that would let a government watchdog audit the Federal Reserve’s monetary policy decisions, a move bitterly opposed by the central bank.

"The House Committee on oversight and government reform passed the measure by voice vote after roughly 30 minutes of debate.

"The bill was the brainchild of Ron Paul, the former House Republican and libertarian presidential candidate and sharp critic of the U.S. monetary policy. Versions of the bill have twice passed the House by wide margins but then stalled due to lack of support from Democrats in the Senate and the Obama administration.

"Analysts said the measure has a better chance to become law now that Republicans control both houses of Congress and the White House. Paul’s son, Rand, the Republican senator from Kentucky, has introduced a similar measure in the Senate.

"Democrats in the committee were firmly against the bill.... Republicans said the measure was needed to rein in the Fed.

"'It is ironic that the arsonists that caused the financial collapse are now being given credit...for putting out the fire. Almost every macroeconomist concedes in retrospect that [the Fed’s] extended period of easy money led to the financial crisis,' said Rep. Thomas Massie, a Republican from Kentucky."

Read more: http://www.marketwatch.com/story/house-panel-passes-bill-to-audit-the-fed-2017-03-28
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Ron Paul campaigning for Fed oversight board

Ron Paul Wants a Spot on Federal Reserve Board of Governors:

December 19, 2016 - "Ron Paul's group, Campaign for Liberty, is trying to get him a spot on the U.S. Federal Reserve's Board of Governors, a senior politics editor with the Huffington Post reports.

Sam Stein ‏@samsteinhp

Ron Paul’s group, Campaign for Liberty, is pushing to get Ron Paul nominated to the U.S. Federal Reserve's Board of Governors.

10:45 AM - 18 Dec 201

"Paul, a former GOP member of Congress from Texas, earlier this week criticized the Federal Reserve, saying it was manipulating the economy.

"'We do not work on a free-market principle, we do not have sound money, it's all manipulated,' he told Maria Bartiromo on Fox Business Network.

"'Prices are going to go up and the money's going to be so bent according to political reasons and not because of business decisions, so we want the government out of it. We want people to save money, create capital, but capital cannot come from the Federal Reserve working with a computer; that's the fallacy and that's why zero rates of interest didn't work because they weren't realistic.'

"The Board of Governors oversees the work of the Federal Reserve Banks and plays a major role in crafting U.S. monetary policy. There are seven members, all appointed by the president of the United States.

"Paul established Campaign for Liberty, his nonprofit political organization, during his presidential run in 2008 with the purpose of spreading his idea that the government should be limited in its role."

Read more: http://www.newsmax.com/Politics/ron-paul-federal-reserve-board-of-governors-campaign-for-liberty/2016/12/18/id/764560/
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How the Fed Is increasing economic inequality

Rand Paul Is Right: The Fed Is Increasing Inequality With Its Low Rates - Forbes - Jeffrey Dorfman: 

October 29, 2015 - "Last night’s Republican debate was supposed to be about economic policy, but instead it was, once again, more about moderators asking gotcha questions.... There was, however, a great moment of economic clarity, thanks to Rand Paul, on the surprisingly overlooked role the Fed has played in increasing economic inequality.

"Virtually all economists agree that the Fed’s low interest rates have been responsible for inflating stock market values. By reducing the returns to savings accounts, certificates of deposit and bonds, the Fed has intentionally driven ordinary investors to increase their investment allocation to the stock market, thereby boosting stock returns. Because people with more wealth tend to own more stock, those higher stock prices have led the rich to gain much more than the poor and middle class.

"Low interest rates have meant low borrowing costs for large corporations with direct access to capital markets. This low-cost borrowing has boosted corporate profits which also flow mostly to the wealthy.

"Poorer individuals, with smaller savings and few other assets, tend to be heavier users of credit cards for borrowing.... Unfortunately, while the Fed has pushed down interest rates for big corporations, average credit card interest rates have only dropped about 1.5 percentage points (from about 14.5 to 13%).... Wealthier individuals, with more savings and other assets, rarely need to carry a credit card balance, but they do borrow (tax-deductible) funds in the form of mortgage debt, often in large amounts. Thanks partly to the Fed’s many moves to lower interest rates, mortgage rates have fallen about 2.5 percentage points (roughly from 6.5 to 4% for 30 year fixed rate mortgages).... For example, somebody with a $400,000 mortgage could save ... $600 to $800 per month, way more than the $20 per month the poor are saving on credit card debt.

"Finally, the low interest rates set by the Fed combined with the additional labor costs thanks to the Obama Administration (Obamacare and its associated taxes) are changing the relative prices of labor and capital.... This also increases economic inequality because the poor and middle class earn most (or all) of their money from labor income, while the rich collect a significant share of their income in various forms of returns to capital.... Purposely tilting the economy in favor of capital and against labor is pretty close to taking from the poor and giving to the rich, the exact reverse of normal government attempts to redistribute income.

"[While] the left is consumed with economic inequality, nary a voice on the left is complaining about the Fed’s role in making it worse. Rand Paul is correct that the Fed is causing a widening of economic inequality....If you want less economic inequality, we should begin by stopping policies that make it worse."

Read more: http://www.forbes.com/sites/jeffreydorfman/2015/10/29/rand-paul-is-right-the-fed-is-increasing-inequality/
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Rand Paul & Ted Cruz slam Federal Reserve

In GOP Debate, Ted Cruz and Rand Paul Tear at Fundamentals of the Fed - Michael S. Derby, Wall Street Journal:

October 29, 2015 - "Two Republican presidential candidates blasted the Federal Reserve on a fundamental level in a debate Wednesday night, airing their criticisms of the central bank before a prime-time television audience.

"Sen. Ted Cruz of Texas and Sen. Rand Paul of Kentucky criticized the Fed’s impact on the economy and called for new operating regimes that would limit the central bank’s influence....

"Mr. Cruz lambasted what he saw as a 'star chamber' of central bankers implementing radical policies with little democratic accountability. He was particularly concerned with the now-ended campaigns of long-term bond purchases the Fed employed to provide stimulus.

"Mr. Cruz also said the Fed has an inflation problem on its hands. 'If you look at a single mom buying groceries, she sees hamburger prices have gone up nearly 40%. She sees her cost of electricity going up. She sees her health insurance going up. And loose money is one of the major problems,' he said. 'I think the Fed should get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold,' Mr. Cruz said.

"Mr. Cruz is correct that, since 2008, the Fed has had an aggressive monetary-policy stance, with short-term rates at near-zero levels, amid several rounds of large-scale bond purchases, as well as other tools to provide stimulus....

"Mr. Paul said in the debate that 'the Fed has been a great problem in our society' and that its policies have helped fuel economic inequality. He also made a plug for legislation that would audit the monetary-policy-making functions of the Fed, something central bankers and many economists believe would politicize rate policy and make it less effective.

"Mr. Paul also wants to fundamentally end how the central bank influences the economy. 'What you need to do is free up interest rates. Interest rates are the price of money, and we shouldn’t have price controls on the price of money,' the legislator said in the debate."

Read more: http://www.wsj.com/articles/in-gop-debate-ted-cruz-and-rand-paul-tear-at-fundamentals-of-the-fed-1446144549
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Cato Institute challenging Federal Reserve

Libertarian Think Tank is Spoiling for a Fight with the Fed - Real Time Economics - Wall Street Journal - Ben Leubsdorf:

October 20, 2014 - "The Cato Institute has some bones to pick with the Federal Reserve.

"The Washington libertarian think tank this week will launch a new Center for Monetary and Financial Alternatives. Its goal: challenge the central bank’s policies and explore alternative ways to manage the U.S. money supply, including but not limited to a return to the gold standard.

"'I think we can do better than the Federal Reserve,' said George Selgin, the center’s director and a former economics professor at the University of Georgia. 'We should be exploring how to do better. We should be exploring alternatives that could do better, instead of dismissing that entire inquiry as something that should be only of interest to people on the fringe.'

"The new center is the latest manifestation of growing public and academic attention on the Fed and central banking after the 2008 financial crisis.... The Fed’s extraordinary actions in recent years – helping rescue large financial firms, pinning interest rates at zero for nearly six years and counting, three rounds of bond-buying aimed at stimulating economic recovery – remain controversial.

"Critics have variously accused the Fed of bailing out fat-cat Wall Street bankers, harming Americans who rely on interest from their savings, distorting the flows of the free market, failing to generate sustainable economic growth and flirting with out-of-control inflation and a debased currency. Defenders say the Fed’s policies prevented the crisis from escalating into a financial catastrophe, helped stabilize the financial system and helped nurture a fitful recovery, and they note inflation remains low and the dollar strong.

Read more: http://blogs.wsj.com/economics/2014/10/20/libertarian-think-tank-is-spoiling-for-a-fight-with-the-fed/
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Ron Paul: Yellen is dangerous for the economy

Ron Paul: Yellen Dangerous For The Economy - Forbes - (Kitco News):

November 26, 2013 - "The Federal Reserve will not be able to revive the economy under the leadership of Janet Yellen, said Dr. Ron Paul.

"The former U.S. congressman, and former Republican presidential candidate spoke with Kitco News during the Metals & Minerals Conference in San Francisco and said he does not expect Yellen to change the monetary policy that is currently in place. In fact he expects that she could be even more aggressive than current chairman Ben Bernanke.

"'She is a very aggressive inflator. She really believes in quantitative easing and that is the only thing they know,' Paul said. 'I think she is very dangerous. I think she will be dangerous to the U.S. dollar.'

"On Thursday the U.S. Senate Banking Committee approved the nomination of Janet Yellen as the next chief of the central bank; it was approved by a vote of 14 to eight. Her nomination will now be sent to the full Senate for a final vote, which according to some media reports will take place in December.

Read more: http://www.forbes.com/sites/kitconews/2013/11/26/ron-paul-yellen-is-dangerous-for-the-economy/
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Fed audit reveals $16 trillion in secret bailouts

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts:

September 1, 2012 - "The first ever GAO (Government Accountability Office) audit of the Federal Reserve was carried out in the past few months due to the Ron Paul, Alan Grayson Amendment to the Dodd-Frank bill, which passed last year. Jim DeMint, a Republican Senator, and Bernie Sanders, an independent Senator, led the charge for a Federal Reserve audit in the Senate, but watered down the original language of the house bill (HR1207), so that a complete audit would not be carried out.

"Nevertheless, the results of the first audit in the Federal Reserve’s nearly 100 year history were posted on Senator Sanders’s webpage earlier this morning.

"What was revealed in the audit was startling:

"$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.....

"To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion..... Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world."

Read more: http://www.sott.net/articles/show/250592-Audit-of-the-Federal-Reserve-Reveals-16-Trillion-in-Secret-Bailouts
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Romney calls for Fed audit as party mulls platform plank

Romney Calls for Fed Audit as Party Mulls Platform Plank - Bloomberg - Lisa Lerer and Julie Hirschfeld Davis:

August 20, 2012 - "'The Federal Reserve should be accountable,' Romney told thousands of voters at a campaign rally today in Goffstown, New Hampshire. 'We should see what they’re doing.'

"Under pressure from anti-tax Tea Party activists and other small government advocates, Republicans are considering including a plank in their platform calling for a full audit of the central bank -- a prospect that concerns many party leaders and their financial supporters. Romney’s remarks could put pressure on the Republican Platform Committee -- which is currently meeting in Tampa, the convention site -- to adopt the proposal.

"On the platform committee’s website, proposals to audit the Federal Reserve are among the most popular. Representative Ron Paul of Texas, a longtime Fed critic who made opposition to it a major theme of his failed bid for the Republican presidential nomination, has said that if Romney’s backers resist the effort, it could result in a political battle at the convention.

"Romney has chosen his words on the issue carefully, stopping short of siding with Paul even as he seeks support from him and his supporters."

Read more: http://www.bloomberg.com/news/2012-08-20/romney-calls-for-fed-audit-as-party-mulls-platform-plank.html
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House passes Ron Paul-backed bill giving Congress greater scrutiny over Federal Reserve

House passes Ron Paul-backed bill giving Congress greater scrutiny over Federal Reserve - The Washington Post - Associated Press:

July 25, 2012 - "The House voted Wednesday to give Congress greater scrutiny over the monetary policy decisions of the Federal Reserve, approving legislation sponsored by longtime Fed nemesis Rep. Ron Paul.

"The 76-year-old Texas Republican, who is retiring at end of this session, has made a career of trying to do away with the Fed, which he blames for the growth of government and the rising federal deficit. Failing to accomplish that, he has pushed to make the independent central bank’s operations more transparent....

"The legislation, which passed 327-98, would require the Government Accountability Office, the investigative arm of Congress, to carry out comprehensive audits of the Fed’s Board of Governors and 12 regional banks.

"The Fed is subject to annual financial statement audits and the Dodd-Frank Act passed after the 2008 Wall Street meltdown does have provisions, backed by Paul, for auditing certain Fed activities. But the new legislation goes further in requiring inspections of the bank’s monetary policy decision-making, including its agreements with foreign central banks and Foreign Open Market Committee directives."

Read more: http://www.washingtonpost.com/business/house-passes-ron-paul-backed-bill-giving-congress-greater-scrutiny-over-federal-reserve/2012/07/25/gJQA2b5T9W_story.html
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Ron Paul`s `audit the Fed` bill coming up Tuesday - Mineweb.com

Ron Paul`s `audit the Fed` bill coming up Tuesday - POLITICAL ECONOMY - Mineweb.com Tim Ahmann & Donna Smith:

July 21, 2012 - "The House of Representatives is expected to vote on Tuesday on a bill that would allow for a congressional audit of Federal Reserve monetary policy decisions.... The legislation proposed by Republican Representative Ron Paul, a long-time critic of the U.S. central bank and author of the book "End the Fed," has already gathered 274 co-sponsors, virtually guaranteeing passage.

"The Republican-led House will consider the bill under a fast-track procedure that requires a two-thirds majority, but nearly two-thirds of the House has already signed onto the bill.... Paul's son, Republican Senator Rand Paul, has introduced a companion bill in the Democrat-controlled Senate, but chances of success are remote given a less critical view of the central bank in that chamber."

Read more: http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=155542&sn=Detail&pid=102055
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Ron Paul's 'Audit The Fed' bill clears House committee

Ron Paul's 'Audit The Fed' Bill Passes House Oversight Committee - Business Insider - Grace Wyler:

June 27, 2012 - "Ron Paul is finally gaining support for his beloved Audit The Fed bill.
The bill, H.R. 459, passed the House Oversight Committee this morning on a voivote, with no vocal opposition.... Here's Paul's statement on the vote:

"'I am very happy that the House Committee on Oversight and Government Reform today passed H.R. 459. The bill passed unanimously by voice vote, with all of its strong audit provisions intact. It is time for the Federal Reserve to face a thorough audit of its monetary policy and lending operations. The Fed’s purchases of dubious assets from favored Wall Street institutions; its lending of hundreds of billions of dollars to foreign governments and central banks; and the prospect of further quantitative easing and European bailouts underscore the critical need for transparency. I am deeply appreciative of the overwhelming support this legislation has received from my colleagues in the House, especially today from the Oversight Committee. I look forward to seeing my Audit the Fed legislation passed by a bipartisan majority of Congress next month.'"

Read more: http://www.businessinsider.com/ron-paul-audit-the-fed-federal-reserve-bill-passes-house-oversight-committee-2012-6#ixzz1z2C8pbTn
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Ron Paul Tells Bernanke He Killed The Dollar, Silver Coin In Hand - Forbes

Ron Paul Tells Bernanke He Killed The Dollar, Silver Coin In Hand - Forbes - Agustinho Fontevecchia:

Feb. 29, 2012 - "Fed Chairman Ben Bernanke had an interesting morning over on Capitol Hill.... Bernanke ... was put on the spot by Ron Paul who pulled out a silver eagle and accused him of debasing the currency and destroying America’s wealth.

"Ron Paul first asked Bernanke if he did his own grocery shopping, to which the Fed Chairman responded with a 'yes.' Paul immediately cut him off and said 'no one believes the 2% inflation rate,' claiming it was actually closer to 9%. 'Someone is stealing wealth,' said Ron Paul, in full campaign mode.

He then pulled out a silver eagle, a silver coin that has nominal face value of one dollar that is legal tender. Ron Paul told Bernanke that in 2006, as he took the top spot at the Federal Reserve, an ounce of silver bought about 4 gallons of gas. Today, said Paul, it buys about 11."

Read more: http://www.forbes.com/sites/afontevecchia/2012/02/29/ron-paul-tells-bernanke-he-killed-the-dollar-silver-coin-in-hand/
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Rand Paul blames banking collapse on Fed

Rand Paul: Banking Collapse Was Caused By Too Much Regulation | TPMDC - Jon Terbush:

March 8, 2011 - "On the Daily Show Monday night, Sen. Rand Paul (R-KY) blamed ... the banking collapse [on] too much meddling by the Federal Reserve.... By arbitrarily setting interest rates rather than letting those rates be determined by the free market, the Fed created an unsustainable financial structure, Paul said.

"'I don't say that's a failure of capitalism,' Paul said. 'That's a failure of a central bank getting involved and messing up capitalism'....

"[Host John] Stewart started the interview off by praising Paul for being the 'walkiest of the talkers' for his willingness to call for spending cuts across the board, including cuts to entitlement programs and defense spending. But when the talk turned to federal regulation of business, Stewart was unconvinced by Paul's argument on how limited the government's reach should be."

http://tpmdc.talkingpointsmemo.com/2011/03/rand-paul-banking-collapse-was-caused-by-too-much-regulation.php