See their exchange on YouTube. Rep. Paul's statement on what landed us in the current turmoil is pretty darn good.

Chairman Bernanke's reply (begins at 4:59 of the clip) is notable in several respects.

(1) He agrees that the price-fixing of the New Deal's NRA and AAA harmed economic recovery, and states that a consensus of economic historians thinks likewise. Good to hear!

(2) He denies that the Paulson plan involves similar price-fixing. He claims that the feds will use "market-based" methods to determine the prices of the distressed assets they buy. But how can this be consistent with his thinking that the market for these assets is currently on the fritz? He mentions auctions as one market-based method, but (again) doesn't explain how he imagines having an auction with only one buyer. Does Bernanke favor a real market approach, or a market-socialist approach a la Oskar Lange? As Felix Salmon rightly asks: instead of pondering auction design, how about considering a real market?

(3) He perpetuates the myths that Hoover's Treasury Secretary Andrew Mellon was a liquidationist, and that the Fed in 1929-32 was following Mellon's supposed advice.