Ron Paul is interviewed on CNN American Morning and explains that “The best regulation is through the free market and to blame the free market for this calamity is an […] intellectual error that has to be changed.”
Source: CNN American Morning
Kirin Chetry: Timothy Geithner has his work cut out for him, certainly more than 70,000 job cuts yesterday alone. Today we’re already talking about companies like Corning announcing layoffs. So what can the president do about the deepening recession? Joining me now from Washington is Republican Congressman and former presidential candidate Ron Paul. Good morning Congressman, great to talk to you this morning. You know, some Libertarians called the first financial bailout the “PATRIOT Act of Finance”. Now we’re looking at a stimulus package that is going to be even bigger by all accounts. And a lot of economists seem to say that a massive spending package is needed to get the economy moving again. You’re against it, explain.
Ron Paul: Well, it’s because it’s the government that is spending. If the people were spending it that would be fine. But the government, they, the government never does anything productive. They have to take money from productive individuals and spend it in a non-productive way, so it’s just digging a bigger hole and a bigger debt and that is our problem. This stimulus package is going to cost each and every American $6,700 of more debt, so how can that be beneficial? If debt was the answer, we would have never had our problem because we’ve been doing, you know, a lot of deficit financing in the past eight years and it got us into the trouble. So all this plan of more government stimulus and more inflation, it’s absolutely the wrong way to go. We’re doing exactly what we did in the 1930s. So we are taking a recession and working very hard at trying to turn it into a depression.
Kirin Chetry: When we’re talking about 7.2% unemployment on the national average, 10% in some states that have been hit hard especially in the manufacturing sector, what is the answer then for so many people who are out of work?
Ron Paul: Well there is no easy answer, and those who propose more government, I’m sure they’re well motivated. But the answer is to get out of the way, to allow the liquidation of debt and to allow prices to come down. You want prices of houses to come down. You don’t want to stimulate housing building when we’ve overbuilt about a million houses. So you will want to allow the market to work, you want people to be able to save their money and liquidate all of the mistakes that have been made. Governments make mistakes when they keep interest rates artificially low and they spend too much money. And if you don’t erase those mistakes you’ll just get a bigger hole for ourselves.
Kirin Chetry: I see your point, but you’re basically telling people that you know what? The majority of Americans sort of have to suck it up, realize we’ve been living well beyond our means and go back to almost a 1960s standard of living. How is that really going be a realistic pitch?
Ron Paul: Well politically it isn’t realistic, and that’s why you can expect more inflation, more spending and more deficit because taking the hard medicine is not acceptable. But the tragedy is to continue to do what we’re doing isn’t going to solve the problem. It won’t create productive jobs, what it will do is make the problems worse and creates the depression. What we’re worried about right now, at least I am, is that it’s even worse than the 30s because we’re on the verge of destroying the dollar. So if you think the financial crisis is bad and the financial system isn’t working, wait until you find out when the dollar doesn’t work. And that’s what the markets are telling us right now. People are still hanging on to treasury bills, but that’s the last thing they’re hanging on to, and when they finally reject the dollar and go into assets of real value, you’re going to see a calamity because it’s going to be a lot worse than what we’re having today.
Kirin Chetry: This is something you’ve been talking about for, boy, since we’ve had you on the show, so more than a couple of years now. But you know a lot of people, you say the government needs to step out of the way, a lot of people say it was deregulation that got us into this mess in the first place, that’s why things collapse. The hands off approach didn’t seem to work, not only with the types of loans that we’re giving to people that couldn’t pay them back, regulation and oversight in places like Fannie and Freddie and on and on. So why is the hands off approach now going to make a difference?
Ron Paul: Because we never had a hands off approach, that’s the fallacy. As long as we believe that we will never correct our problem. If you blame capitalism and free markets and sound money for this then we can’t win the intellectual fight. Because take Enron, when that failed, what did we do? We filed immediately, the Conservative Republicans passed a Sarbanes-Oxley, more regulation which chased a lot of businesses out of this country. So we were doing all these piling on but we were already overregulated. Now if you want to get deregulate, I mean if you want to regulate, regulate government agencies, regulate the treasury, regulate the Federal Reserve. The Federal Reserve has no oversight. They are not even permitted to be audited by law. So that’s the kind of oversight that we leave. That’s where they have free reign. The Federal Reserve has committed trillions of dollars to individuals and corporations and banks that they don’t even have to tell us where it’s gone to. That’s the kind of regulation we need, regulation in the market is very very efficient. Companies that don’t do well fail and when prices have to come down, the consumer won’t buy things until they’re in the right prices. The best regulation is through the free market and to blame the free market for this calamity is an absolutely intellectual error that has to be changed.
Kirin Chetry: Alright, well it’s always refreshing to get your point of view. We spent so much time talking about the stimulus today, we didn’t get the chance to talk and I will direct people to your website because you also had a very interesting video that you released yesterday addressing how you think Barack Obama should take on foreign policy. So very interesting as well. Congressman Ron Paul it was great to talk to you. Thanks!
Ron Paul: Thank you.