In a seemingly unbridgeable clash of two widely divergent world views, Ron Paul talks with three experts on MSNBC’s Morning Joe, repeating his assertion that we’re on the wrong path and that printing more money will eventually destroy the dollar.
Source: Morning Joe
Host: Educate please this “panel of experts” here. And I say that with quotes around it. About, why this sort of throwing money at the issue bailing, bailing, bailing out, may be potentially reckless and damaging for the future of this nation’s economy.
Ron Paul: Well, in order to understand that, you have to understand how we got into this mess. We got into this mess by spending too much, borrowing too much and inflating too much. Government was too big and we had too many regulations. We had rejected the market economy for decades now. We had rejected the notion of sound money for decades. And we got into a mess this way. So what is the proposal? Spend more money, borrow more money, print more money, regulate more so. So, it makes no sense whatsoever. So we’re going to make the problems much worse. We’re doing exactly what we did in the 1930s. We are determined to take a serious recession and turn it into a depression if we don’t change our ways. When governments spend money, they spend it in a non-productive manner. And every penny the government spends, they have to take it out of a productive source of money. The money has to come from somewhere. Everybody talks about the money that’s going to be spent, and about how many wonderful things will happen, but they never say, where does that $825 billion dollars come from? That’s the question they have to ask and they have to find an answer to that to fully understand why what we’re doing is absolutely wrong.
Expert #1: Alright. Alright
Host: OK. OK.
Expert #1: Congressman, let me ask you. I understand where you’re coming from here, I think, sort of. You know, but the house is already on fire and I think no matter who…
Host: Yeah, I mean look at these headlines.
Expert #1: No matter how the fire begins. The house is on fire. The house is on fire. So let’s take one industry specifically. Let’s take the automotive industry in this country. Are you saying, spend no money on the automobile industry in this country that American automobile manufacturing, let it disappear?
Ron Paul: Well, I think you’re correct. The house is on fire and you think you’re putting water on it and I think you’re putting kerosene on it. And that’s the big argument. No, you take the car industry. Yes, I think we should put more money on the car industry, but it should come from private sources. It shouldn’t come from government because government will divvy out the money politically. But there are private sources of money, if there’s anything of value, it will be bought up. But you don’t, you can’t value anything when the government buys up assets that aren’t sellable. You buy up worthless assets, so there’s some worthless assets in these car companies, so if you want good money to go into car companies you have to allow real capital to flow into it. So yes, you do want that, you just don’t want the government to do it.
Expert #2: So what systemic changes, if you look at tax policy which alters flow of capital as you know well. If you look at whether it’s spending or any other aspect of the use of money, interest rates, monetary supplies, etc. What substantive change would you put in? Would you exploit this opportunity to change the system of capitalism in America for the better? How would you change it?
Ron Paul: Get rid of the income tax…
Expert #2: I agree with that.
Ron Paul: … get rid of corporate taxes and really lower taxes. But you have to lower spending. You can’t lower-
Expert #2: Would you add a consumption tax to make up for that? Would you put a consumption tax in?
Ron Paul: Oh no…
Expert #2: And how would you make up for the loss revenue on income. I agree with you on in cutting business tax. I just don’t know where to get the revenue elsewhere. And I would argue with consumption.
Ron Paul: I am not interested in getting the revenues, I want to cut spending. But the problem is, is nobody wants to cut the American empire. Even Obama’s administration wants to increase spending overseas, increase military spending. As long as you want to run the world empire, at a trillion dollars a year, believe me, you cannot solve this problem. And that is where the crux of the matter is. So yes, you got to cut spending along with cutting taxes. So, to say well let’s have a consumption tax, that’s just transferring the penalty to new victims. But you want to get taxes down, you want to get rid of regulations. You don’t want to do what we did after the Enron failure, pass Sarbanes-Oxley, you know by the Conservative Republicans. That’s the fault, that’s in the thinking that we need so much government.
Expert #3: Congressman, are you really saying that given the meltdown on Wall Street and some of the craziness that we saw at Citigroup, at Merrill and other places that there should be less regulation, not more in some cases?
Ron Paul: Yeah, we should have more on the Federal Reserve so that we know what they’re doing. They’re exempt from regulation as is treasury. We give treasury $350 billion and we don’t even know where they spend it. That’s the type of regulation you want.
Expert #3: What about on Wall Street, Congressman? What about on Wall Street. Do you not want to see on some of these derivative products? Do you not want to see there’ll be some kind of regulations in terms of what the banks can do?
Ron Paul: Sure. Sure. Anybody who commits fraud goes to jail just as they did in Enron. We did’t need Sarbanes-Oxley to prosecute everybody in Enron through the laws of fraud. If they commit fraud they go to prison. Just like Madoff, you know we had all those regulations, SEC and everything else, and he got by. It proves SEC didn’t work.
Guy2: But Congressman, it’s not just fraud in some cases. In some cases people had very little equity put down and were leveraging things up tremendously. Should there not be regulation about how much equity you effectively have to put in a deal or how much capital you have to have on your balance sheet?
Ron Paul: Yeah, sure. If you understand leveraging up equity and debt, you have to look in factionary reserve banking, that’s where you pyramid debt. So they’re doing exactly what the Federal Reserve does, is they create money out of thin air and they pyramid debt. That’s where the bubble comes from. That’s why you have to look at monetary policy. But you’re looking at the symptoms rather than the cause.
Expert #1: Congressman, hang with me for a couple of seconds here. I am extremely limited. And 90% of this conversation that you’ve been having with Dylan and Carlos has gone way above my head. But your basic theory, let’s get government out of nearly everything. Let’s swing back to what I do nearly every morning. I drive to work on roads filled with pot holes, beneath bridges that are crumbling. What’s the answer here? Do I go out and try and find six carpenters and some percolators and some masons to fix those roads and bridges? Government’s gotta do it. What’s the deal here? What is your point of view about stuff like that? Basic reconstruction of this country.
Ron Paul: Okay, I know I can’t have my perfect society quickly, but what I would do is quit bombing bridges in Iraq and then paying to rebuild them, and then wasting money on rebuilding over there. I would take that money, save it on the deficit, cut the deficit and spend some on our infrastructure. That’s what I would do, and we could do that. But as long as you do it through debt financing it’s impossible. Ideally, roads and bridges should have been taken care of by our states. It wasn’t designed in the constitution that the Federal government would take care of every bridge and every road. But that isn’t the worst type of spending. And I think in the end we certainly could. We could cut the spending overseas. But we’re going to bring ourselves to our knees, we’re going to have a dollar crisis, we’re doing exactly what Osama Bin Laden wanted to do. What he did to the Soviets. He’s bringing about financial chaos to this country. And we’ve got to realize the excessive spending that is a problem. It’s not that we need more government spending. That to me is foolish.
Expert #2: Congressman, I want to ask you the same question I have been asking myself. Everybody on this set, I asked Tucker, I asked Pamela, ask you. In reality, forget your perfect society, mine or anybody else’s. In reality, we’re gonna lose millions of jobs over the next year or two. In reality our banks have been mismanaged horribly as a result of both the bankers and the politicians in my opinion, and we’re now dealing with that. What would you do? In other words, saying what you don’t think should happen has a value to a point. But in reality today, what do you think the American politicians and bankers ought to be doing.
Ron Paul: I wouldn’t pretend that pouring kerosene on the fire is working…
Expert #2: You started with that word “wouldn’t”. I’m sorry to interrupt you but I wanted it to start with “I would”.
Ron Paul: Okay, what I would do is allow the liquidation of debt to occur. You want the people to spend more money and buying up assets. You want these assets priced in the marketplace so we know what their values are. That’s why that first package of the…
Expert #2: But no one in the market will do that. As you know. I want that too.
Ron Paul: Then there’s no value there. That’s a good information then there’s no value. So why should you dump that on the American taxpayers? That’s a strong message that if it’s worthless, you don’t dump it on the taxpayers. That’s why our slump is getting worse.
Expert #2: Agree. But how do you get this country healthily to your perfect society where there’s limited taxes and free markets and innovation reigns supreme. And me and Willy are on the beach, you know, getting drinks served to us from some robots. But that’s not where we are today. How do you get that? How do you deal with the reality of the problems of this country?
Ron Paul: Well, the reality is you have to liquidate debt and get rid of the malinvestment. If you don’t do that then you can’t do it. But what you’re doing now is you’re working on the destruction of the dollar. There’s a pretense that you’re going to improve things, but you’re really going to destroy the dollar in a financial crisis that we have today is going to be a dollar crisis.
Expert #2: I know the risks.
Expert #3: Congressman, quick question. Would you be willing to accept unemployment in the double digits, 14 to 15% for several years, if in your mind that’s what it took to fix our fiscal house?
Ron Paul: Well, it’s better than 20. But I wouldn’t be responsible. The people who created the bubble would be responsible. Go talk to Greenspan and ask him if he is accepting the responsibility for the 14%. So you can’t blame the people who are trying to correct the problem on the unemployment. You got to blame the people who created the bubble. The people who were delighted with all the billions of dollars they were making in the last decade.
Host: I’m just watching for ways to accept that.
Expert #2: My frustration is. I agree with a lot of what he says, but the frustrating part of this is to try to figure out the constructive way forward. Identifying the problems we could, but how?
Host: The conversation keeps going to everybody throughout the show it keeps going backwards.
Expert #1: To Obama’s credit he’s trying to move forward and it’s going to be an interesting conversation.
Host: Congressman Ron Paul, thank you.