The truth about Herman Cain and Audit the Fed

As I was perusing the web this morning reading recaps of last night’s Republican debate, I noticed a reoccuring theme. Apparently, Ron Paul directed his question to Herman Cain (each candidate was allowed to ask a question of another) about his issues with an audit of the Federal Reserve. Ed Morrissey briefly recounts the exchange:

Paul scored big on Cain’s Greenspan comments, and also had some good points about overregulation and how both parties have contributed to it.  No real crazy moments, but he did get a hard rebuke from Cain after misquoting him and ended up looking contrite.

For reference, here is the exchange between Ron Paul and Herman Cain from last night’s economic debate at Dartmouth College:

REP. PAUL: Since the Federal Reserve is the engine of inflation, creates the business cycle, produces our recessions and our depressions, the Federal Reserve obviously is a very important issue. And fortunately tonight, we have a former director of the Federal Reserve at Kansas City, so I have a question for Mr. Cain.

Mr. Cain, in the past, you’ve been rather critical of any of us who would want to audit the Fed.

You said — you’ve used pretty strong terms, that we were ignorant and that we didn’t know what we were doing, and therefore there is no need for a(n) audit anyway because if you had one you’re not going to find out everything because everybody knows everything about the Fed.  But now that we have found — and we’ve gotten an audit, we have found out an awful lot on how special businesses get, you know, bailed out — Wall Street, the banks and special companies, foreign governments. And — and you said that — you advised those of us who are concerned and you belittled.  You say, call up the Federal Reserve and just ask ‘em —

MR. ROSE:  Question?

REP. PAUL:  — to get the PR person.  So do you still stick by this, that this is a — this is frivolous?  Or do you think it’s very important?  Sixty-four percent of the American people want a full audit of the Fed on a regular basis.

MR. ROSE:  Mr. Cain?

MR. CAIN:  First of all, you have misquoted me.  I did not call you or any of your people “ignorant.”  I don’t know where that came from.

All right?  Now, so you got to be careful of the stuff that you get off the Internet because that’s just not something that I have said.  (Laughter.)

Secondly, when I served on the board of the Federal Reserve in the 1990s, we didn’t do any of the things that this Federal Reserve is doing.  I don’t agree with the actions of this Federal Reserve.  I don’t agree with the actions that have been undertaken by Ben Bernanke.  We didn’t have a $14 trillion national debt to prop up with some of the actions that they are taking.

And I have also said, to be precise, I do not object to the Federal Reserve being audited.  I simply said if someone wants to initiate that option, go right ahead.  It doesn’t bother me.  So you — I’ve been misrepresented in that regard.  I don’t have a problem with the Federal Reserve being audited.  It’s simply not my top priority.  My top priority is 9-9-9.  (Laughter.)  Jobs, jobs, jobs! (Applause.)

Well, there’s a problem with this. Herman Cain wasn’t misquoted. While filling in for Neal Boortz back in Decembert 2010, Cain was very dismissive of calls to audit the Federal Reserve (you can hear it in his voice) and did in fact say that people were calling for such a statutory measure “don’t know enough about [the central bank]” (emphasis mine):

[T]he Federal Reserve already has so many audits, it’s ridiculous. I don’t know why people think we’re gonna learn this great amount of information by auditing the Federal Reserve. Now, I no longer serve on the board of the Federal Reserve. I’m not being defensive of the Federal Reserve; in fact, some of the policies and some of the actions of the Federal Reserve, I don’t agree with because the attitude and the non-politization in the 90’s when I served is totally different than what’s going on today. But that’s another matter.

But people who say, “we outta audit the Federal Reserve because we don’t know enough about it.” Well, here’s the advice I’ve given to people who ared worried about an audit of the Federal Reserve; call ‘em up, and ask ‘em if you can stop by and have one of their PR people or one of their Public Relations people explain to you how the Federal Reserve operates.

I think a lot people are calling for this audit fo the Federal Reserve because they don’t know enough about it. There’s no secrets going on in the Federal Reserve, to my knowledge. And I tell people, we’ve got 12 Federal Reserve banks, find out which district you’re in, call ‘em up and go from there.

We don’t need to waste money with another commission, or an audit that’s not necessary, because, folks, we’ve gotta lot of other problems we need to worry about.

Cain, a master of rhetoric, may come across more convincing than Paul, who just isn’t that great of a debater. But on substance, Paul wins. Cain’s point is that he didn’t call those the Audit the Fed crowd “ignorant.” But as you can see, he said, “they don’t know enough about [the Fed].” That’s what we call semantics. Cain may not have used that exact word, but it’s hard to argue that he essentially called them ignorant.

Additionally, Cain is also off on another point. As you can see, he clearly said that an audit of the Federal Reserve was “not necessary.” Cain changed his opinion on this not long after making his original comments, but he has shifted back and forth over the last several months.

I’m not a Ron Paul partisan. I’m not voting for him. There are things that the guy supports that I don’t necessarily agree with and I’m frequently disappointed with how he handles himself in debates.

However, I do appreciate what he brings to the table in terms of economic policy and understand of our financial system. And to be honest, I’d trust him more than Cain on these issues. Why? Because if you listened to Cain you would’ve believed that the housing bubble didn’t exist and that the economy was just peachy. In fact, a month before Congress passed TARP, which Cain supported because “[o]wning a part of the major banks in America is not a bad thing,” he argued that the economy was actually growing.

With a record like that, why would you believe a word of what Cain says?

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