Ron Paul to Ask Fed Why After Trillions in Free Money, Unemployment Is Still Sky High

Ron Paul to Ask Fed Why After Trillions in Free Money, Unemployment Is Still Sky High
by Tyler Durden
ZeroHedge

While everyone is relishing the Fed's third and only mandate these days, namely to send the Russell 2000 to 36,000 and cotton limit up to infinity and beyond, while everyone else is terrified to short stock in advance of what increasingly appears like near certain additional quantitative easing, congressman Ron Paul has announced that the first Monetary Policy subcommittee meeting will focus on one of those two now forgotten Fed mandates, that of creating jobs.

Of course, the answer to all of these problems is simple: no debt ceiling raise. If the Fed can't monetize any more debt and make the Primary Dealers ever richer (now that the PD ranks have just been expanded from 18 to 20 to include SocGen and derivative (!) trader MF Global, and its CEO Jon Corzine) from commissions on indirect debt monetization, its power is gone. But that will mean doing something far less theatrical than a few hearings, and far more responsible: such as preventing rampaging inflation across America (see cotton chart posted previously).

Paul Announces Subcommittee Hearing On The Federal Reserve's Impact on Unemployment

Domestic Monetary Policy and Technology Subcommittee Chairman Ron Paul announced today the Subcommittee will meet for a hearing to examine the impact of Federal Reserve policies on job creation and the unemployment rate. The hearing will be held on Wednesday, February 9th at 10 am in room 2128 Rayburn.

Subcommittee Chairman Paul said, "I'm very pleased to hold our first subcommittee hearing in the new Congress on a topic that could not be more critical, namely unemployment. Despite enormous amounts of monetary and credit expansion by the Federal Reserve in recent years, the nation's unemployment picture remains bleak. While many focus on the impact of fiscal policies on employment, the effect of monetary policy often goes unexamined. In my view we are now experiencing the bust that inevitably results from the misallocation of capital and human resources in a period of artificially cheap credit. It is important to understand the Federal Reserve's role in creating today's unemployment crisis, while also highlighting that high unemployment and low economic growth can persist even in the face of tremendous monetary inflation."

The Federal Reserve has taken unprecedented action to provide liquidity to financial markets and some U.S. corporations; however, unemployment remains above 9 percent. The hearing, entitled Can Monetary Policy Really Create Jobs?, will focus on the Fed's recent actions, the likelihood those actions will reduce unemployment, and the critical role of the private sector in job creation.

While the Obama administration and Democrats in Congress believe increased government spending will improve the nation's economy, Republicans on the Financial Services Committee know economic growth depends on providing the private sector, especially small businesses, with the certainty they need to create jobs. The Fed's policies, as well as the Obama administration's unsustainable debt and spending, continue to prevent small business owners from growing and hiring because of continued uncertainty over new taxes, higher interest rates, and the expanding role of government in the economy.

On November 3, 2010, the Federal Reserve announced that it planned to purchase $600 billion in long-term Treasuries (dubbed "QE2"). This is the second time since the 2008 financial crisis that the Federal Reserve has engaged in quantitative easing. The latest round of quantitative easing, along with the Fed's action to bailout financial companies, has added trillions of dollars to the government balance sheet.

Reprinted with permission from ZeroHedge.