In Tuesday’s interview on Bloomberg TV, Ron Paul says that the free market, not the Federal Reserve, should determine interest rates. There is no need for a Chief Central Economic Planner that creates money out of thin air, causes financial bubbles and leads us into crises like the one we’re having right now.
Channel: Bloomberg TV
TV Anchor: Congressman Ron Paul, a Republican from Texas and a member of the House Financial Services Committee. Congressman, thanks for being with us.
Ron Paul: Thank you.
TV Anchor: So, why do you think we don’t need the Fed anymore?
Ron Paul: Well, look at the mess they have caused. They haven’t done anything right in their entire existence. They inherited the dollar in 1913, and now it’s worth 3 cents, and they’ve created a lot of recessions and a lot of depressions and they finance big government. So I see no purpose for the Federal Reserve other than the mischief they charge.
And it’s impossible for them to do what they think they’re supposed to do. They’re supposed to set the interest rates. Well, how do they know what the interest rates should be? And that’s why we have problems. So I would say that the people in the Congress have given them a job that is totally impossible. But instead of even limiting what they want to do, they expand their role. The Fed wants to be the chief central economic planner. It used to be said…. go ahead.
TV Anchor: What I was going to say is, you know, Representative Paul, what’s the alternative? What’s another proposal?
Ron Paul: Well, the alternative would be free markets and saving money rather than printing money, because capital comes from savings, it doesn’t come from the printing press. There was a time in history when you didn’t have central banks, but for central banks to create money out of thin air and not protect the value of the currency is completely absurd. It creates financial bubbles and it creates the crises of the type we are having right now.
TV Anchor: Well, would you say that there are a lot of folks responsible for the crisis, including a lot of folks down on Wall Street, a lot of regulators? There are a lot of people who had their hands in that pot.
Ron Paul: Well, yes. That’s what they usually want to do. [The government] wants the Federal Reserve to do all these things and they say, “Well, if we don’t have regulations then we will compensate for all the mistakes the Fed makes”. But that’s impossible. It’s not the lack of regulation of the government, it’s the lack of the regulation that comes about in a free market. If a company gets out of whack and does things wrong, they’re supposed to go bankrupt. But, instead, our companies can do so many atrocious things and the Fed comes in and says, “Well, we have to bail everybody out”.
So it does the opposite of what the market demands. The market demands liquidation of debt, getting rid of the mal-investment, get back the prices to normal levels and get the people saving money once again.
TV Anchor: But, Representative Paul, if we get rid of the Fed, who is going to manage monitory policy?
Ron Paul: Well, the market. I mean, what happened before 1913, you didn’t have to have a Fed. The government was too involved even before then, but you don’t have to have a manager. Why should you accept a notion that monetary policies have to be managed? That means you manage one-half of every transaction. That’s half way to socialism right there. Now they’re taking another step forward by nationalizing the industry that have got into so much trouble because of the Federal Reserve. And if you believe in freedom and sound money, then you don’t endorse the idea of central planning through central banks.
TV Anchor: Alright, the president says that only the government can help the economy get back on track in a crisis of this magnitude. I’m assuming you don’t think that’s right then. That we should just let capitalism play out here.
Ron Paul: Well, you want to do something. You can’t just let it continue the way it’s being done. So what you want to do is to cut spending because too much spending, too much borrowing, too much inflation got us into this trouble. So, you want the government to lower taxes, lower spending and let the prices get back to normal. You don’t want to stimulate housing when the prices of houses are too high and you have 19 million empty houses. So we’re still down here in Washington stimulating housing. That doesn’t make any sense.
TV Anchor: Congressman Paul, I know you need to get to a vote. Just quickly about those AIG bonuses… do you think the government should pursue legal action to get this money back… and just quickly.
Ron Paul: Well, the legal action should be against these people who vote for this. Why should we ever give this money away? I mean this is absurd. They said, “We’re protecting contracts”, but I’m trying to protect the contract with the taxpayers. You can’t assume this is a legitimate contract when they pay out these bonuses, because the money was stolen from the American people. That’s what we have to stop.
TV Anchor: So if it needs legal action you said we should do it? Just quickly.
Ron Paul: Well, what we should do is get every penny back as soon as possible, so yes, if it takes legal action to get money back from these companies that blew it, then yes they should.
But the biggest problem was this philosophy that said we should have given it to them in the first place. It’s practically impossible to get the money back now, I mean, the money is blown and it’s hidden, it will never happen, but we have to wake up the American people and say “This type of intervention should not come about. We shouldn’t be involved in this kind of stuff”.
TV Anchor: Alright, we know you need to get off to vote, so we’ll let you off. Congressman Ron Paul, great to get some time with you.
Ron Paul: Thank you.
TV Anchor: Thank you.