Ron Paul on Fox Business

Channel: Fox Business
Date: 3/25/2009


Male News Anchor: Congressman Ron Paul was in a vote, and he’s out now and we got a chance to talk to him because a lot of people have been waiting to see what he has to say.

Female News Anchor: We just asked Congressman Blackburn… there’s so many of you, it just seems like they’re all over from different states… Congressman Paul, one of the questions was, if it is not Timothy Geithner, who would it be? Reed, one of our viewers, says what about Ron Paul taking the position of treasury secretary. What do you think? You’re up to that?

Ron Paul: No, not really. Not under these circumstances, because the system is flawed. That’s why the individual can be the target and we can talk about Geithner. But you get Geithner out and you get somebody else in, he too has to accept the same rules and conditions. The Congress gives him money and he gets to spend it.

It’s the system that needs to be challenged, but I sort of like the argument that people want to challenge Geithner, because it sort of undermines his credibility, because I don’t think these programs should exists.

Male News Anchor: Right.

Ron Paul: So we don’t want him to be successful in socializing the nation.

Male News Anchor: Alright, we have a few minutes here to talk this through, I hope. So one of the things we have today, Congressman, is a poll question to our audience and they’ve been voting on it in real-time throughout the show. And the question was this: What do you consider to be the primary catalyst of the recession? We gave people a number of choices and feel free to add one yourself. The choices were, the housing bubble, sub-prime loan mortgages (that’s got a slight lead right now at 43%), lack of consumer savings, government spending, Wall Street as a whole, or they’re all equally responsible, which happens to be in second place. What would you say?

Ron Paul: I didn’t hear you say debt, it’s debt. Excessive debt by individuals, corporations and government because of the illusions developed with an inflationary climate which is created by the Federal Reserve. We do a lot of things, we borrow too much money and finally debt overwhelms, and it overwhelms the consumer, the businessman and the system and things come to a halt because it was an illusion to think that we were actually working hard and saving money, which we were not.

Female News Anchor: Well, let me stop you right there, because I was actually reading Glenn Beck’s magazine “Fusion” where you have an article about how the Fed caused the current crisis. So, are you saying that it’s Ben Bernanke and team, not necessarily Tim Geithner? Is it the Central Bank that you are referring to as potentially the heart of what is causing this crisis?

Male News Anchor: Or Alan Greenspan’s team, for that matter.

Ron Paul: Yeah, that’s the right comment. It’s the Central Bank, and Bernanke has compounded the problems because he hasn’t accepted a new concept of monetary policy. And Greenspan was a major player in this and was responsible for a lot.

But it’s the system, it actually started to develop in 1971 when the last linkage to gold was removed and since then the Federal Reserve has been given a license to inflate. And also, they have had the privilege of doing it without any transparency. They are not obligated to tell us a thing.

So, we talk about how we are going to figure out who got the bonuses, but at the same time the Fed extends loans and guarantees to all their friends in the business and banking community, as well as other Central Banks. They are the most powerful branch of government, more powerful than the other three branches.

Male News Anchor: Well, here’s the thing… There’s a fundamental difference in the way you approach this and the way the members of the administration would approach it. Like when Tim Geithner was asked many, many of these same questions earlier today, and one of his first responses, I think, telling them that. And he came out today and said, Congressman, that history has shown us that more government actions, not less, in a time of economic crisis is what you need. In other words, crises have become worse (whether it’s the Great Depression or other crises in other countries over the time) when the government doesn’t act enough. That’s the fundamental view he holds and that’s what he’s operating on. I mean, he said as much today. What’s wrong with that, from your point of view?

Ron Paul: Well, it’s just wrong because, you know, Bernanke is a historian and is supposed to understand the Great Depression, but I think he understands it in exactly the opposite way, because Austrian free market economists see that they did way too much. It started under Hoover and Roosevelt continued it.

If you compare it to the depression of 1921, which was a consequence of the inflation from World War I, you would say, “Well, why did it only last a year?” We don’t even remember the depression of 1921.

Male News Anchor: All of those arguments came when we were already in a steep decline, right? I mean, a lot of people would say that not enough was done in the Hoover administration when some of the big banks were allowed to fail. And that’s the Bernanke argument, that, “Hey, listen, we shouldn’t have allowed these banks to fail in the early 1930s”. Do you say that’s wrong?

Ron Paul: Oh, absolutely. Because it was the inflation by the Federal Reserve in the 1920s that created the bubble. So he says the solution to the inflation of the 1920s was to re-inflate again, and his argument is, “Well, the Fed just didn’t inflate enough”. Well, right now he is working very, very hard to inflate. But there’s a certain point when it becomes like pushing on a string… nothing happens, the people aren’t ready, they want to hold back because the consumer is too much in debt. People need to quit spending, they need to work hard, pay down their debt. We need to reduce their taxes and reduce their regulations.

After World War II we finally got out of the depression, because we lowered spending by two-thirds and lowered taxes by one-third. That’s the kind of policy we need. We should suspend the income tax right now.

Female News Anchor: Congressman, just let me stop you there for a second because as we’re looking back on history a couple of our viewers want to look forward, and I do as well.

Jack was asking, “Okay, this is your point of view, how do you fix it moving forward”. Is it impossible in the system that you are criticizing right now?

Ron Paul: No, it’s very possible to do. Do what I just suggested: cut spending and cut taxes and pay down debt. And you have a bad year. There is no magic to the pain and suffering that was brought on by the Fed over these many decades. Sure, everybody loves the boom, everybody hates the bust. And there was too much spending, too much borrowing and too much money creation. So we’re trying to solve the problem by doing exactly the same thing, and it doesn’t work. It gets you out of a mild recession, and it blows the bubble bigger, but finally when the big bubble bursts you have to retract, you have to have a new system and right now there’s not enough confidence in the dollar reserve standard. That’s what we’ve been working with.

Female News Anchor: So you don’t believe that… you said again that there really is no magic bullet here. If everyone kind of shored up their balance sheets, whether it’s consumers or banks, then we’d have one bad year but then we would recover.

But what has been sold to the American public by Washington and by the media, and we can take responsibility of that as well, is that it won’t just be one bad year. We’re going to be in a depression that we have never seen before. So do you fundamentally disagree with that prediction?

Ron Paul: I sure do, because most of the comments that we do hear and most of the understanding here in Washington have all been from individuals who have studied Keynesian economics, and this is what they teach. They don’t teach Austrian free market, sound money economics. And that’s the reason we are destined to prolong the agony. I mean, we’ve been in this now… I guess now we’re working on our second year and there’s been no improvement with trillions of dollars of credit and spending and nothing is happening, except the economy gets weaker. So, people ought to wake up and start looking at the Austrian school of economic thought of free markets, it’s what makes America great.

Male News Anchor: There are a lot of people who, Congressman, do agree with you. We were getting the messages on our board throughout the interview reading, “I’m with the Congressman”, “I’m with Ron on this one”. You obviously have this big following certainly on the Internet, as we remember from when you ran for president.

Now, one more historical question from me would be this: You brought up the Austrian school of economics and they say it is this laissez-faire, free market thinking on the economic spectrum, certainly different from Keynesian economics, as you say. What’s an example in history in which that approach has worked to get us out of or to deal with a crisis. Not a slow down, not slower economic growth, but an economic crisis? When has the Austrian School practically worked?

Ron Paul: Well, I would say 1921, which I have already mentioned, because it was mostly hands-off and we got over it rather quickly. But I would say the last part of the 19th century was pretty good with tremendous economic growth, and prices gradually went down a little bit. But we’re taught in school now that “dropping prices means deflation, it’s very dangerous”. No, on sound money, free market economics because of productivity, your dollar becomes more valuable and you become richer. Today we are determined to make your dollar weaker, because that’s the only way they can pay off government debt, that is to deflate [inflate], depreciate the currency. Because we never can literally pay it in a normal sense, we have to liquidate the debt through the depreciation of the dollar. That’s why Bernanke is praying for inflation, which means he is praying to destroy the wealth of savers. We want people to save their money, they want to have their money so when there is a problem and when house prices go down even more as they should, then they can buy up the assets. But we’re interfering with all those decisions.

The good parts of, say, General Motors… we haven’t had a bankruptcy and buy up the good parts… we are patching up together as a company that hasn’t been functioning very well. Same way with the banks and AIG, we don’t allow the correction to occur, and the sooner we do that the sooner this thing will end.

Female News Anchor: You know, Congressman, it’s interesting… I just asked the question to our viewers, “Should Ron Paul run for president again?” and we have a couple of peopling weighing in and saying “Yes, absolutely”. And one of the things that always comes from your interview that surprises me is just how logical you are when you say, “Stop feeding debt, stop being so in debt that you can’t function. Just save.” It seems so logical. Do you that down in Washington it’s just too logical for people to understand?

Ron Paul: Well, I imagine that’s why I don’t fit in too well here in Washington. You know, they haven’t exactly held in high esteem people who were logical and made sense because it interferes with power.

Female News Anchor: So, how can you effect change?

Ron Paul: Well, I try to effect it by doing what I have been doing for 30 years by talking about it and voting a precise way to set a record and try to set a standard. And I thought that is exactly where it would end and not too many people would notice and I hope, maybe, some day they would. In the last year or so since I was in that presidential race I found out that there were more people out there than I ever dreamed of. Young people are very, very interested in sound, free market economics and they are studying it now, they are looking at it. They are going to the Mises Institute and they’re getting the books and the literature, because they cannot find these answers in a public school because the government pays for the public school, so they have to teach government control and they won’t teach real, true free market economics.

Male News Anchor: Last question, Congressman, would be this… I mean, for all the talk about what should be done versus what is being done… there is a political reality that you are well aware of and what’s happening in Washington, and how is this going to play out? It’s probably going to be much different from the way you’d like to see it play out. With that in mind, what do you think the country is going to look like a year from now? I mean, how worried are you about the future? In other words, how bad could this get?

Ron Paul: Well, my biggest worry is loss of liberty. When you have economic chaos, they resort to taking away more liberty. Just as they do when there is a hot military war going on, the people suffer from loss of liberty. So, we are going to have less liberties in one year and the country is going to be much poorer and there will be a higher unemployment rate, and then you’re going to have price inflation. You’re going to see the devaluation the dollar, where it will translate into higher prices. So it doesn’t look good as long as we continue to do what we’re doing.

But, I’m optimistic that if we did the right things, which we’re capable of, if we get enough support, then we can solve this problem rather quickly. And it’s not all that complicated. Once again, it’s pretty logical. Why don’t we just obey the constitution? And then we would find all our answers there, because it’s the disobeying of the constitution… I mean there is no authority for the Central Bank in the constitution. Why don’t we open the books for the Federal Reserve? I have a bill to look at the Federal Reserve. Why don’t we expose this fourth branch of government? Those kinds of things would bring solutions rather quickly.

Male News Anchor: Congressman, thanks a lot. I hope you do come on this show again, because this is a good chance to talk things through in depth. Thanks a lot for coming on.

Ron Paul: Thank you.

Male News Anchor: Congressman Ron Paul from Texas. Now, the great thing whether you disagree or agree or anything with Congressman Paul is, unlike some of his colleagues, he’s thought about…


  • Gavin Veasey

    It’s a simple solution. I wish more would take it up.