Ron Paul vs. The Fed: The First Small Victory

In the gargantuan arm wrestling contest that has been going on between Ron Paul and the Fed, it looks like the Congressman, and with him the public, has had its hand to within a millimeter of the hot coals of inflation, with the Fed ready to cry victory. But suddenly we notice that hand has raised up and rebounded, albeit not by much. But it is the first victory for Ron Paul and the public of savers in America in a very long time.

For that victory consists in the Fed having had to raise the discount rate for the first time in three years, and by doing so, they are showing that they can no longer play the “milk the savers for all they are worth” game the Fed and the big banks have been playing for the last few years. They finally realize that it is the disposable incomes of the retired generation that create so much of the discretionary spending that kept the economy humming, and now the Fed has cut the rates to the absurd under 1% level, they now perceive that they have, in one sense, gained a Pyrrhic Victory, because in cutting rates that low, they have cut the throats of the retired savers by massacring their interest incomes, and those savers were one of the key engines of the economy. They also know that the anger of those savers is one of the key elements of the Ron Paul swathe of the Tea Party Movement, and they dread an election where anti-inflationists and transparencyists would be swept into office en masse, as will occur next November.

But Ron Paul’s constant hammering away at the Fed, and the rising voices of support, like Senators DeMint and Bunning, have finally brought such pressure to bear on the Fed that they have been forced to take a move, however minuscule, that is counter-inflationary in order to calm the roiled waters of the markets.

Just as the Fed was about to slam Dr. Paul’s hand onto the coals and give him and his supporters a good singeing, the doctor and his supporters have started to pull the fat out of the fire.

One small step backward for the Fed, one giant leap forward for Ron Paul and the savers of America.

The struggle continues.

Hoooooooooooooooooooooooowwwwwwwwwww! — Silverwolf

[Via http://lobobreed.wordpress.com]