Texas Gov. Rick Perry (R) appears to be taking a cue from Rep. Ron Paul (R-TX) and criticizing the Federal Reserve for doing what it was designed to do: creating currency.
At a recent fundraising event in Iowa, Perry was asked how he feels about the Fed and chairman Ben Bernanke. ‘If this guy prints more money between now and the election, I dunno what y’all would do with him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treasonous in my opinion.”
What he’s referring to is a Fed practice known as quantitative easing, where central banks inject additional currency into the economy in times of low activity by purchasing assets from other banks. The policy is meant to keep economic activity high when recession conditions might otherwise prevail, but it also increases the price of bank holdings.
Paleoconservatives like Ron Paul and, to a much smaller extent, Rick Perry, tend to view central banking as antithetical to the U.S. economy. That’s because in a bygone era dominated by very different economic rules, monetary value was much more closely aligned with the price of gold, so creating more currency had a deflationary effect on a currency’s overall value. That’s not the case today with most of the world’s currencies being fiat, where value is pegged to broader economic indicators like gross domestic product or the value of assets like public infrastructure and military hardware.
The real reason Perry dislikes quantitative easing: it tends to influence the economy positively in the short term, helping President Obama in the eyes of voters concerned about the economy, even though the president does not control policy at the Fed, which is a privately held, quasi-governmental organization.
Asked if he thought it was a policy that may boost Obama’s reelection chances, Perry replied, “If they print more money between now and this election, I would suggest that’s exactly what’s going on.”
This video is from YouTube, published Tuesday, Aug. 16, 2011, as snipped by Think Progress.