Robert Wenzel Interviews Ron Paul, Roger Lowenstein is Wrong on the Fed, and Iran Claims bin Laden Killed Because of Ties to U.S. Intelligence

Robert Wenzel has provided a transcript of his interview with Ron Paul on EPJ today.  Here is my favorite snippet:

I asked Dr.Paul what books on economics he has read. He told me he has read all the Austrians, Ludwig von Mises, Murray Rothbard, Friedrich Hayek and Henry Hazlitt. He also told me he has a copy of The General Theory by John Maynard Keynes. He said he still uses the book as a reference to check a quote when he is preparing a speech.

He then said that he tells people that the real problem isn't Bernanke or President Obama, but John Maynard Keynes. "It's the thinking of Keynes that is causing the real problems," he said.

We started talking money again and I mentioned that the nickel had almost 7 cents of metal in it. He quickly replied, "The nickel will disappear from circulation real soon."

And also this:

He also told me that he may propose a bill that calls for the prevention of the Federal Reserve from buying Treasury securities and other assets. This could be his best idea ever. It would, of course, halt the Federal Reserve's ability to print money and, thus, halt the price inflation that is caused by Fed increases in the money supply. It would also prevent the Fed from shoveling money to Goldman Sachs, JPMorgan and the like.

I would be surprised if he got more than 15 supporters for a bill such as this.  Who would support a bill that would literally cut off the funding source for all those pork barrel projects, welfare programs, and endless military intervention that practically guarantee reelection?  The interview is highly recommended.  

Speaking of the Fed, Roger Lowenstein has a rather uninformed article in the New York Times today highlighting why the Fed should not be abolished.  As per usual, Lowenstein makes the same debunked claims that every Fed proponent makes to validate the Central Bank's existence.

Established in 1913, the Fed was to be a banker to the nation’s banks, controlling the money supply and, thus, the value of the currency. Without a Fed, someone else would have to handle these (and other) tasks of central banking.

Aww the old tried-and-untrue argument that a government sanctioned institution must have a monopoly over our currency.  Lowenstein clearly doesn't understand that money originated through people's natural desire to trade with each other and demand for a common use item to facilitate later transactions.  Looks like someone needs a refresher with Rothbard's What Has Government Done to Our Money?

Here is another misplaced worry:

In its founding days, the United States defined the dollar by an explicit weight of gold or silver. During the first half of the 19th century, state-chartered banks issued notes, preferably backed by metal, that circulated much as dollar bills do today. But since these banks were private, and differed widely in their standards, their notes were accorded different values. In effect, the country had lots of “monies.”

Lowenstein makes it clear that he is worried about the prospect of multiple "monies" in circulation.  He clearly doesn't understand Gresham's law. Another fallacy:

David Moss, a Harvard Business School professor, asserts that the United States experienced more banking panics in the years without a central bank than any other industrial nation, often when people feared for the quality of paper; specifically, it experienced them in 1837, 1839, 1857, 1873 and 1907.

What Lowenstein conveniently forgets to mention is that these "panics" were short lived (1-2 years, 1873 lasted about 5) but there have been about 20 recessions since the Fed was created in 1913 (this includes the Great Depression and current downturn).  So much for causing stability.  Oh, and I won't forget to mention that those financial panics in the 19th century were caused by fractional reserve banking, not a strict adherence to a 100% gold standard.  This is the most telling of Lowenstein's article:

The gold standard, in effect, replaces the Fed chief with the collective wisdom (or luck) of the mining industry. Rather than entrust the money supply to a guru or a professor, money is limited by the quantity of bullion.

The tone of Lowenstein's article makes it sound like he trusts academics to control the money supply rather than the fixed amount of a commodity.  God forbid people determine what they will use as money and not academics.  There are a number of other errors in Lowenstein's article, but I chose to pick out the three biggest.

Though Lowenstein criticizes Bernanke's policies, he makes no mention of the recent inflation.  He should have checked this out:

This sums it up pretty well, courtesy of Mish:

So after 10 years and nearly $1 trillion, we finally got our man Osama bin Laden.  If this isn't a sign of massive government inefficiency, I don't know what is.  At least we finally got him though.  Here is a real life depiction of how it went down (warning: crude images).

Two controversies have popped up with bin Laden's death though.  First is from Iran:

TEHRAN (FNA)- The US has killed the Al-Qaeda leader, Osama Bin Laden, in a bid to prevent any possible leakage of intelligence and information about the US-Al-Qaeda joint terrorist operations, a senior Iranian legislator underscored on Monday.   

"The West was fully satisfied with bin Laden's performance during the past years and today… it was obliged to kill him to prevent possible leakage of the priceless intelligence that he had," member of the parliament's National Security and Foreign Policy Commission Javad Jahangirzadeh told FNA on Monday.

Maybe plausible, but then again it's Iran.  And now it will never be confirmed whether or not it was Osama who was really killed:

AP reports that Osama bin Laden's body was buried at sea. The United States government says it has done so to observe Islamic law.

It most likely was bin Laden who was killed.  I mean, we could have declared him dead years ago and done the same exact thing.  For those who are interested, here is a picture of the bin Laden's hideout:

Sure beats a cave.  So does that mean the drone strikes in Pakistan will stop?

Update- Flash crash on Gold on NYSE today: