Future Treasury Secretary Timothy Geithner failed his way to the top and is part of the problem, says Ron Paul.
Channel: Bloomberg Television
Reporter: Now in less than half an hour the confirmation hearing for Timothy Geithner, the President Obama’s choice for secretary of treasury, will begin at the Senate. To give us a preview, Congressman Ron Paul, Republican representative from Texas, joins us from Washington DC. Congressman Paul is a ranking member of the House Financial Services Committee. Congressman, thank you so much for joining us. Let me first get your take, it seems like the Republicans are going to put on the kid gloves here for Timothy Geithner.
Ron Paul: Yeah, it sure looks like it that he’ll get confirmed. I imagine they’ll ask him a couple of questions to make it look like they are really scrutinizing him, but it looks like he’ll get confirmed.
Reporter: Now we know that your take on the entire treasury department is not so positive, but what is your take on Geithner if someone’s going to lead the treasury department as the leader?
Ron Paul: Well, he’s bright. He’s a technician, he knows the system, he’s part of the establishment, but it’s the system that is so rotten and he can’t bail it out. Management, it’s not a lack of management, it’s the lack of a system that works, and so I don’t think he can be successful and besides, he’s part of the problem. He was basically in charge of the first part of the TARP funds. So, somebody takes 350 billion dollars, they mess it up so we promote him. And he’s generally has been able to do that over his career. I mean, things don’t go well, he usually gets promoted, and it looks like that’s going to happen again.
Reporter: Is this, I mean, we’re looking for a platform of change from President Obama. Does this give you a little bit less hope than maybe you would’ve had?
Ron Paul: Yeah, I had very little hope but if you can get less hope I would say so. I mean whether it’s foreign policy, or monetary policy, fiscal policy, regulatory policy, it’s all the same. There are no changes because basically, the leadership, philosophically speaking and politically speaking, of the Democrats and the Republicans are interventionist. Whether it’s intervention overseas or military, or in the financial segment, and they both endorse the monetary system. They don’t really challenge the Federal Reserve. But what has to be challenged is this principal of fractional reserve banking where debt is pyramided. That’s the problem and it has to be unwound and a new system has to be devised. This system has ended just as Bretton Woods ended in 1971. The post Bretton Woods system has ended too; that’s why the financial system doesn’t work. So if we pretend that all we have to do is create money and credit out of thin air, which is part of the Geithner’s theory, it won’t work. All you can end up with is the destruction of the dollar, so look for the dollar crisis, it has to come. You just can’t create trillions of dollars out of thin air for every bailout and expect the dollar to maintain its value.
Reporter: Congressman Paul, what would you like to see, I mean if we wanted to change the status quo? What kind of change would you like to make?
Ron Paul: Well you would have to address the subject to the Federal Reserve. I mean, really the Federal Reserve doesn’t deserve to exist, but if you couldn’t get rid of it which is the likely scenario, we should limit the power of the Federal Reserve. They should have surveillance. We should have all the information we want from the Federal Reserve. They should be audited. They should be susceptible to all the inquiries of the Congress. And eventually, as soon as possible though, the privilege of creating money out of thin air through monetized debt has to end. This whole idea that you can do central economic planning by manipulating interest rate is a fallacy. We have depended on this for too long. We believe the Federal Reserve, by creating credit and giving us artificially low interest rates is the road to great wealth – but it isn’t. It’s the road to a disaster.
Reporter: Congressman, only about 10 seconds left. Let me just ask you, do you have, is there any optimism for more transparency under this administration?
Ron Paul: Slightly. Because I talked a lot with Chairman Frank and he and I share the view that there should be more surveillance and we are going to have a hearing in February on this subject. So, in the Senate and the Congresses that yes, they want more surveillance. But when push comes to shove, I’m afraid the establishment will win the fight.
Reporter: Alright, Congressman Ron Paul, Republican representative from Texas. Thank you for joining us.