Ron Paul Questions Bernanke

Representative Ron Paul, the Texas Republican and persistent libertarian critic of the Fed -- he favors something like a return to the gold standard -- said the Fed continued to create "moral hazard" by allowing companies to take risks because they believe they will be bailed out if they fail.

" 'Too big to fail' creates a tremendous moral hazard," he said, "but of course the real moral hazard over the many decades has been the deception put into the markets by the Federal Reserve."

After Mr. Paul suggested that money used in the 1972 Watergate break-in came from the Federal Reserve, and that the Fed had loaned $5.5 billion to the regime of Saddam Hussein of Iraq, Mr. Bernanke replied, "The specific allegations you have made are absolutely bizarre. I have no knowledge of anything remotely like what you've described."

And when Mr. Paul asked whether the Fed would bail out the Greek government, Mr. Bernanke replied, "We have no plans whatsoever to be involved in any foreign bailouts or anything of that sort."

NYT article.

For more on the matter of FED shenanigans:

• NYT on the Fed and Sadam
• More Fed involvement