Dumb things said at the JEC meeting today

Earlier today, Federal Reserve Chairman Ben Bernanke appeared before Congress' Joint Economic Committee to present the Fed's economic forecast. As usual, he was the second smartest guy in the room.

Following are some of the dumber things uttered by elected officials on the subject of the credit crisis, the mortgage lending mess, and the economy in general.

Note that some of these items do not so much demonstrate a lack of intelligence, but rather, only appear to be dumb because they come years, in some cases many years, after an intelligent observer would have drawn a similar conclusion. See CSPAN for the video.

Sen. Charles Schumer, D-New York: "Even our bedrock assumptions are being put into doubt. As housing prices decline, there are real fears that we won’t be able to depend on consumers, the engine of our economy over the past few years, to keep spending."

Sen. Sam Brownback, R-Kansas: "And I do hope that the Fed is considering a further cut in rates, to help the economy, to help the American consumer which is 70 percent of the economy going into the important Christmas buying season. It seems to me that now is the time and, I know you're weighing this but, I would certainly put my two-cents worth in for a rate cut at this time."

Rep. Jim Saxton, R-New Jersey: "On the positive side, it's good news that core inflation and the numbers that we look at to study core inflation lead us to think that inflation, at least core inflation, seems to be pretty much in check."

Sen. John Sununu, R-New Hampshire: "Yesterday, the Dow dropped 360 points and a number of analysts in the financial press blamed a lot of that drop on the New York Attorney General and his press release that alleged, in his words, "systemic fraud and a pattern of collusion in the mortgage industry" and he made those allegations with specific reference to transactions between Fannie Mae, Freddie Mac, and Washington Mutual for which he issued subpoenas. My question to you is, in this environment, where we see big problems with credit in the mortgage industry, is this kind of a press release really helpful in solving the problems in front of us?"

Rep. Elijah Cummings, D-Maryland: "I want from you, every single thing that you can possibly do to help us help our constituents."

We interrupt this program to bring you about the only voice of reason in Washington...

Rep. Ron Paul, R-Texas: "The best way I could describe the problems that we face here in this country, as well as the problem the Federal Reserve faces, is that we are indeed between a rock and a hard place because we have a serious problem but we don't talk about how we got here. We talk about how we're going to "patch it up". The bubble has been burst - we saw what happened after the Nasdaq bubble burst and we don't ask how it was created and then we had a housing bubble and it's deflating and it's spreading.

Yet nobody says, "Where does it come from?" and what is the advice that you generally get? Inflate the currency. They don't say "inflate the currency", they don't say "debase the currency", they don't say "devalue the currency", they don't say "cheat the people who have saved", they say "lower the interest rates". But they never ask you and I never hear you say, "the only way I can lower interest rates is I have to create more money".
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Unless we get down to the bottom of it and define what inflation is and not look at only prices... this was taught by the free market economists all through the 20th century, they said, "Beware, they will increase the money supply but they will make you concentrate on prices and they will give you CPIs and PPIs and they'll fudge those figures and they'll talk about wage and price controls to solve our problems".

We ignore the fundamental flaw and that is that not only have we had a subprime market in housing, the whole economic system is subprime in that we have artificially low interest rates. And it wasn't under your tenure in office - it's been going on for ten years or longer and now we're bearing the fruits of that policy. A one percent interest rate and that's not a distortion? Instead of looking at consumer prices, that nobody in this country really believes, we need to talk about the distortion, the malinvestment, the misdirection, the bad information that is gotten from artificially low interest rates."

We now return to our regular programming...

Rep. Maurice Hinchey, D-New York: "I think that you've done just about all that you can do. There will probably be some pressure to lower interest rates again, but the fact is, if those interest rates continue to go down, then the inflation issue is going to continue to be jacked up. We're right now facing an inflationary situation that is increasing. Estimates are that it could go up as high as two percent over the course of the next year - maybe higher than that."