Last week, I wrote a column about what I think is one of the more intriguing storylines for the new Congress: the possibility that Rep. Ron Paul (R-Texas)--strident libertarian, devotee of Austrian economics, author of End the Fed--might finally assume the chairmanship of the House subcommittee that oversees the Fed. Twice before he's been denied this spot because the GOP leadership worried he was too much of a rabble-rouser and too independent-minded to control. But given the broad animus toward the Fed--a new Bloomberg poll shows that half of all Americans want it reined in or abolished--especially among the ascendant Tea Party wing of the Republican caucus, denying Paul for a third time would have provoked an uproar.
Well, word has just come down from the Financial Service Committee that Paul got the job.
What will he do with it? And what might this mean for the Fed? I talked to Paul about this last week, and he made two things abundantly clear. One, which was the subject of my column, was that he might use his chairmanship to advance the broader Republican effort to attack the Fed's latest round of quantitative easing--with bond yield soaring, that could further hamper recovery efforts.
But what Paul seemed even more eager to tackle was investigating the "business cycle" and questioning the fundamental need for the central bank (actually, it's not a question for Paul--he'd like to get rid of it). That is to say, he plans to use his subcommittee to bring an Austrian perspective to national affairs. If you want learn a bit more about Paul (who's a fascinating character), Austrian economics, and how this could have a significant effect on the economy and the country, I covered all of it in this profile of Paul in last month's Atlantic. I think today's news about Paul's elevation adds further support to the thesis of the piece, that Paul's ideas are becoming more influential among Republicans, whether or not they credit him (most don't).
I have my doubts about how successful Paul will be in using his chairmanship to win people over to the ideas of Ludwig von Mises and his fellow Austrians, although I pray that somebody on the committee invites Paul Krugman to testify (the theatrics would be incredible!). But there can be no doubt that the broader effect of Paul's chairmanship will be to bring additional pressure against the Fed and further stoke the considerable national anger at the central bank.
Ben Bernanke, take two aspirin and prepare to testify!