Alexis Glick: Texas Republican Congressman Ron Paul. Congressman, thank you so much for taking the time to join us. You had an opportunity to hear what the president had to say. Do you agree or disagree with the choices being made this morning?
Ron Paul: Well, I can’t agree with socialism, I mean this is just more government. The idea that we can create wealth out of a printing press just doesn’t make any sense to me. I think what we have here is a fleet of helicopters, and Ben Bernanke said that he could always reinject credit into the market. But we’re broke, we don’t have real wealth and this is all new credit and we’re gonna guarantee everything… everything! Bad loans, good loans, whatever, it can’t work.
What if this nothing more than pushing on a string. Sure, there’s a lot of credit, but what if borrowers don’t want to borrow, and what if lenders are still skiddish. This is what the case has been, they haven’t been wanting to even some of these big banks aren’t all that anxious to be socialized. So, it is a mess.
I just can’t believe for a minute that just creating credit out of thin air will solve the problem. This to me is a dollar crisis and what we’re doing here is guaranteeing the devaluation of the dollar.
Alexis Glick: I was just gonna say that because you know, Congressman, you and I have talked about this on many occasions what has been happening to the dollar, particularly over the past couple of years and the fact that you’re unhappy that consistently we appear to not truly be supporting a strong US dollar.
Let me ask you this: If in fact we are in the midst of a global recession and that the US is at the forefront of turning things around, and we do see the European Union cut rates aggressively, is there a chance that sort of de-facto the dollar becomes stronger because we’re at the forefront of this, as opposed to us doing something that would truly restore confidence in the US dollar?
Ron Paul: Well, they’re looking at the wrong thing. If you look at the dollar in relationship to other weak currencies they’re all fiat currencies, so Europe is socialized and they run that debt.
How can you say the dollar is strong because temporarily it goes up against the euro or whatever? What you have to look at is the purchasing power of the dollar. You have to look at the checkbook of every American consumer and whether they have any money left over. The value of the dollar goes down, the cost of living goes up, the standard of living goes down, taxes go up, the government keeps borrowing and keeps taxing.
You can’t save the dollar by printing more dollars. You can’t save this financial system because the problem is based on the fact that we have been inflating and distorting the economy for so many years.
Alexis Glick: So Congressman, how do we turn this around? It appears to me though that we had frankly no choice in the matter. We saw what the European Union was doing and if we didn’t do something similar, some would have suggested that all of our bandaid approaches that we put into place over the past six months would have had irreparable damage here in the United States. How do we change it?
Ron Paul: Well, you change it by allowing us to return to the marketplace. We shouldn’t have the government dictating everything and all the guarantees and the loans and the inflation. You have to allow the liquidation of debt, you have to allow the market to set the prices. And what we’re trying to do now is fix prices, keep prices of houses up, and financial instruments up artificially, you know, getting illiquid assets, that means they’re worthless and the taxpayer has to buy these. This won’t solve the problem.
In a way Japan did this. Remember how long they kept their assets on the books at false values, and we’re doing the same thing again. It just delays the process.
You can’t get out of it without some pain. The question is, are you gonna have a short painful period of a year, or are you gonna prolong the agony and turn us into a depression.
The NIKKEI was at peak in 1989 and is still probably 20% of what it [was then] and this is what we’re doing. We are guaranteeing that this process will last for a long, long time because we don’t have sound money, we don’t have sound economic principles.
You can’t save free markets by socialism. I don’t know where this idea ever came from. You save free markets by promoting free markets and sound money and balanced budgets.
The whole reason why nobody wants to address the real problem of this is we’re spending a trillion dollars a year overseas running an empire and it’s coming to an end. This country is bankrupt and we won’t admit it. Eventually though the dollar will go bust and we will bring our troops home and we will live within our means but we ought to do it sensibly rather than waiting for the collapse of the dollar and this is what we’re doing.
We’re on the verge of destroying our dollar and then, you think we have problems now, problems then will be a lot worse. It will look like the Weimar Republic or a third world nation, and a lot of people know that and they’re scared to death, but we don’t need to be making the problem worse by just propping up everything with more government programs and more inflation and more helicopters, it won’t work.