* Fed critic Paul renews push to eliminate central bank
* Paul says inflation hits lower-income groups hardest
* Experts before Paul panel urge return to gold standard
WASHINGTON, March 17 Representative Ron Paul, a
persistent critic of the Federal Reserve, on Thursday renewed
his uphill fight to abolish the U.S. central bank, warning it
is on track to create an inflation that will hit lower-income
Americans especially hard.
The Texas lawmaker has long championed dismantling the Fed,
but at a hearing on Thursday slammed its $600 billion bond
buying program, which he said was creating inflation and
undercutting the dollar. This week he introduced legislation
abolishing the Fed.
"Frugality is virtuous only when it results from free
choice, not when it is forced upon the citizenry by the Fed's
ruinous monetary policy," Paul said at a hearing of a House of
Representatives subcommittee that he chairs.
With Congress split between a Democrat-controlled Senate and
a Republican-led House, and with a Democrat in the White House,
Paul's legislative push to eliminate the central bank is
unlikely to gain traction.
Razing the Fed is not a cause embraced by most Democrats,
who are focused on putting into effect consumer protections
mandated by recently passed financial reform legislation and
who have been more sympathetic to the central bank's efforts to
lower the unemployment rate.
Even so, Paul's questioning of the Fed has gained resonance
with political conservatives who see the central bank's
aggressive efforts to boost growth as big government
While some credit the central bank with preventing the deep
2007-2009 financial crisis from triggering a full-blown
depression, others believe the Fed went too far in bailing out
the financial sector.
Congress considered curbing Fed regulatory powers in
legislation passed last year but backed away, ultimately
delegating more authority to the central bank to police the
Paul's criticism of the Fed and its bond buying program has
struck a chord with Republicans, particularly Tea Party
Other GOP lawmakers have introduced a measure that would
strip the Fed of its full employment mandate and require it to
concentrate exclusively on inflation.
Rising energy and commodity prices have stirred inflation
worries around the world and criticism that the Fed's vast
expansion of bank reserves to buy Treasuries has stoked price
Paul argued at the hearing that inflation hits low- and
middle-income wage earners harder than affluent people.
"If you destroy a currency you will destroy the middle
class," said Paul, whose long-standing antipathy to the Fed had
found little support until the recent crisis.
No Democrats attended the hearing, at which three witnesses
criticized the Fed and Fed policy, and some called for a return
to the gold standard, a foundation for the currency that Paul
has long endorsed.
"A dollar that is as good as gold is the way out," said
Lewis Lehrman, a historian and investor.
The office of the ranking Democrat on the subcommittee,
William Lacy Clay, was unable to immediately explain why he did
The Fed argues its bond buying is necessary to support a
weak recovery and is justified under its congressional mandate
to promote full employment. Policymakers said in a recent
statement they are watching inflation closely, but contend that
inflation has been at historically low levels until recently
and that they have the tools to control price rises.
(Reporting by Mark Felsenthal; Editing by Andrea Ricci)