Initially, I did not plan to address this issue but someone on Twitter confronted me about my disbelief in Presidential Candidate and current Texas Governor Rick Perry making such a statement as a part of his Presidential campaign’s platform. It was obvious that he believed Gov. Perry’s allegation that Ben Bernanke was creating treason by printing more money. Granted I am not defending our Federal Reserve printing more money for reasons we won’t go into in this article but to make the allegation that this act is treason shows me that Gov. Perry is resorting to the traditional political tactics of using fiery rhetoric to incite voters.
To be honest with you, I know there’s a lot of talk and what have you about if this guy prints more money between now and the election, I don’t know what you all would do to him in Iowa, but we would treat him pretty ugly down in Texas,’’ Perry said in Iowa. “I mean, printing more money to play politics at this particular time in American history is almost treacherous – or treason, in my opinion. (Rick Perry)
So let us clarify a few things…
First, according to thefreedictionary.com, treason is defined as a violation of allegiance toward one’s country or sovereign, especially the betrayal of one’s country by waging war against it or by consciously and purposely acting to aid its enemies. The secondary definition, cites treason as a betrayal of trust or confidence.
Secondly, according to wikipedia, within almost all modern nations, special institutions (such as the Federal Reserve System in the United States, the Bank of England, the European Central Bank, the People’s Bank of China, and the Bank of Japan) exist which have the task of executing the monetary policy and often acting independently of the executive. In general, these institutions are called central banks and often have other responsibilities such as supervising the smooth operation of the financial system. There are several monetary policy tools available to a central bank to expand the money supply of a country: decreasing interest rates by fiat; increasing the monetary base; and decreasing reserve requirements. All have the effect of expanding the money supply.
The primary tool of monetary policy is open market operations. This entails managing the quantity of money in circulation through the buying and selling of various financial assets, such as treasury bills, government bonds, or foreign currencies. Purchases of these assets result in currency entering market circulation (while sales of these assets remove money from circulation).
Let us give Gov. Perry the benefit of the doubt and assume that he meant treason as illustrated in the alternative definition and simply meant that Bernanke was betraying the trust and confidence of the American people by adding more currency to our money supply thus devaluing existing currency, which my Twitter commenter stated was “very bad”. However, I feel confident that Gov. Perry knew that a word like treason would infer certain emotions within patriotic Americans and those who don’t understand how, when and why our government decides to print money would make certain assumptions about the credibility of our government and current administration.
Ask yourself… why would Rick Perry insunuate that the Chairman of our Federal Reserve has violated his allegiance to the United States by enacting a common monetary policy? Was the use of “treason” appropriate in this instance?