Tea Party memo: How to probe Bernanke

A leading Tea Party group is recommending lawmakers adopt a “tag team” approach when questioning Federal Reserve Chairman Ben Bernanke, so he can not evade their questions with an excess of economic jargon.

In a confidential memo, sent to legislative directors on Capitol Hill, leading Tea Party group FreedomWorks paints Bernanke as an evasive figure who will “run out the clock” on probing questions with “vague declarations and empty assurances.” A copy of the memo was obtained by The Hill.

{mosads}”Mr. Bernanke can be seemingly forthcoming without actually responding
to the specific question,” the memo states. “He will offer
concisely-worded explanations with pained earnestness, finally
resorting to repeated declarations that the Federal Open Market
Committee will be ‘extremely vigilant’ and ‘very careful’ in gauging
when to withdraw excess monetary stimulus.”

“Efforts to elicit more concrete responses on such matters as the
Fed’s continued willingness to monetize hundreds of billions of
Treasury debt and other federal agency obligations will be calmly
sidestepped with reassurances that the FOMC remains ‘committed’ to
preventing the buildup of excessive inflationary pressure,” the memo
continues.

The document was sent to lawmakers on Feb. 24, before the Fed chairman was slated to make the congressional rounds for his semiannual monetary policy report. Bernanke appeared before the Senate Banking Committee Tuesday, and will repeat his performance in front of the House Financial Services Committee Wednesday.

The bulk of the memo consists of suggested questions for lawmakers, authored by Dr. Judy Shelton, the senior fellow and director of monetary policy at FreedomWorks. The group recommends lawmakers team up against Bernanke, preventing him from escaping answering questions by exhausting a single member’s time for questions.

The document includes several questions seemingly designed to test Bernanke, such as one asking how many ounces of gold the United States government owns. Shelton states in the memo that such information should be “fundamental knowledge for our nation’s top central banker.”

Another suggestion would have a lawmaker hold up a $100 bill and ask Bernanke what it would be worth in a decade if the economy experience two percent inflation each year. The answer is $82, the group said.

Another question would require Bernanke to state whether being the issuer of the world’s most prominent reserve currency is a privilege or a burden, which Shelton says could lead to a “thoughtful and revealing discussion….Mr. Bernanke’s response will rivet the attention of financial journalists and warrant global interest.”

The memo and Bernanke’s appearances on Capitol Hill come as the Fed has come under increasingly heavy political fire for its recent policy moves. Congressional Republicans have blasted the Fed for pursuing policies that they contend will lead to inflation, most notably the central bank’s second “quantitative easing” effort.

That initiative, dubbed “QE2” has the Fed buying back $600 billion of Treasury bonds by the end of July. Fed officials contend the move will help spur private lending, but conservatives warn the move will be ineffective and devalue the dollar.

While Republican criticism of the Fed has grown, the Tea Party movement has also gained a larger voice when it comes to Fed criticism. Rep. Ron Paul (R-Texas), the longtime Fed critic and Tea Party favorite, recently was named chairman of the Financial Services Committee’s subcommittee on the Fed, and he has promised to use the position to delve deeply into what he deems the Fed’s destructive policies.

A spokesman for FreedomWorks could not be immediately reached for comment.