Ron Paul: Crisis not caused by Free Markets

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
Date: 1/27/2009


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.


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  • longshotlouie

    What is unsatisfactory with present-day academic conditions — not only in this country but in most foreign nations — is not the fact that many teachers are blindly committed to Veblenian, Marxian, and Keynesian fallacies, and try to convince their students that no tenable objections can be raised against what they call progressive policies; the mischief is rather to be seen in the fact that the statements of these teachers are not challenged by any criticism in the academic sphere. The pseudoliberals monopolize the teaching jobs at many universities. Only those who agree with them are appointed as teachers and instructors of the social sciences, and only textbooks supporting their ideas are used. The essential question is not how to get rid of inept teachers and poor textbooks. It is how to give the students an opportunity to hear something about the ideas of economists rejecting the tenets of the interventionists, inflationists, socialists, and communists.

  • longshotlouie

    …. “Do You Austrians Have a Better Idea?” ….

    As a matter of fact, we do

  • Terry

    Dr. Paul, I’m sure that Obama may nominate you
    for a cabinet position then you will have to
    “obey Obama’s Team”

  • Josh Perrin

    thank you RON PAUL I wish I could have voted for you in Pennsylvania. Instead I went for Nader. I have voted in 4 elections since 96 when I was first eligible. Not once has the guy I wanted been elected. I am just not as brainwashed as other people to go with the flow. I heard at some point that Obama may be nominating you for a cabinet position. If so good luck to you and your endeavors. I can’t watch the News they feed us on TV it makes me sick so maybe this was just a rumor.

  • Josh Perrin


    The “REAL” Economic Stimulus package

    Note First and Foremost > “I am not promoting the usage of Marijuana” here.

    This could solve our Economic Crisis and provide new jobs in many different industries not to mention be that “Alternative Fuel Source” to eliminate dependency on Environmentally dangerous Fossil Fuels. Go Obama, do the right thing, don’t support Arab countries by buying there Oil. Notice that gas prices have gone up since Bush was sent out with his walking papers. No skin off his back he has billions of dollars tied up in foreign, NOT TEXAS Oil so he wins either way. Please read these excerpts about Hemp and why it was “Really” banned and made illegal to grow. This “wonder crop” has been used by all sorts of cultures, countries and tribes throughout all of Earth’s History.

    REFUSING TO GROW HEMP in America during the 17th, 18th and 19th Centuries WAS AGAINST THE LAW!

    Oldest known records of hemp farming go back 8000 years in Persia. Hemp industrialization began 5000 years ago in Central Asia and North Africa, in ancient Persia, China and Egypt.

    The first Bibles, maps, charts, Betsy Ross’s flag, the first drafts of the Declaration of Independence and the Constitution were made from hemp; U.S. Government Archives.

    George Washington, Thomas Jefferson and other founding fathers GREW HEMP; Washington and Jefferson Diaries. Jefferson smuggled hemp seeds from China to France then to America.

    Government studies report that 1 acre of hemp equals 4.1 acres of trees. Plans were in the works to implement such programs; Department of Agriculture.

    Henry Ford’s first Model-T was built to run on hemp gasoline and the CAR ITSELF WAS CONTRUCTED FROM HEMP! On his large estate, Ford was photographed among his hemp fields. The car, ‘grown from the soil,’ had hemp plastic panels whose impact strength was 10 times stronger than steel; Popular Mechanics, 1941.

    Rembrandts, Gainsborough’s, Van Gogh’s as well as most early canvas paintings were principally painted on hemp linen.

    Quality paints and varnishes were made from hemp seed oil until 1937. 58,000 tons of hemp seeds were used in America for paint products in 1935; Sherman Williams Paint Co. testimony before Congress against the 1937 Marijuana Tax Act.

    For more info and to read the full article go to >>>

    Hemp called ‘Billion Dollar Crop.’ It was the first time a cash crop had a business potential to exceed a billion dollars; Popular Mechanics, Feb., 1938.

    In the 1930s, innovations in farm machinery would have caused an industrial revolution when applied to hemp. This single resource could have created millions of new jobs generating thousands of quality products. Hemp, if not made illegal, would have brought America out of the Great Depression.

    William Randolph Hearst (Citizen Kane) and the Hearst Paper Manufacturing Division of Kimberly Clark owned vast acreage of timberlands. The Hearst Company supplied most paper products. Patty Hearst’s grandfather, a destroyer of nature for his own personal profit, stood to lose billions because of hemp.

    If you Got this far then you care enough about our environment and economy. Feel free to pass along to those that might also like to learn more about this information.

  • Steve T

    It’s actually Kirin Chetry, not Soledad O’Brian, conducting the interview

    • admin

      Thank you.

  • Sue

    Dr. Paul,

    Over the past few weeks I have been doing a lot of research on the Federal Reserve, the Bilderbergs, the collapse of the dollar, the NAU and the NWO. You are the ONLY person in congress fighting for our liberty. As my eyes have been opened the past few weeks, I feel like I can now see. The news looks different, the speeches sound different. I get it. I am devestated to learn what the mission of the GOP and the Demoncrats really is..a New World Order and a one world government. Thank you from the bottom of my heart for fighting for us. Please don’t stop. We need you.