Interview by: Yahoo! Finance’s Tech Ticker
Date: July 15, 2009
Aaron Task: While the politicians here in Washington and the pundits across the country are debating the state of the economy and whether or not we need a second stimulus, Texas Congressman Ron Paul is taking a contrarian view, as he often does, about what the government should and shouldn’t be doing for Americans.
If you had won the presidency, and obviously you ran for the presidency, what would you be doing differently than what President Obama has done, specifically with regard to how he’s handled the economic crisis?
Ron Paul: I would have done a lot less.
Aaron Task: A lot less?
Ron Paul: I would have allowed the bankruptcies to occur. We allow Lehman to go bankrupt so it helps Goldman Sachs. And then we bail out AIG that bails out Goldman Sachs. The people that were overextended shouldn’t be bailed out, debt should be liquidated. The sooner the debt is liquidated the better, the faster the prices come down. To really understand the issue you need to understand 1921. The recession, depression that came after World War I one year along because we didn’t believe in all this intervention. Hoover messed things up and Roosevelt compounded it because they believed the government had to prop up prices, especially price of labor. It didn’t work.
Aaron Task: If you had been President again, what role would you give the Federal government to help the estimated 16 million uninsured Americans and the millions of American families who are at risk of losing their homes right now?
Ron Paul: Well, first you have to stop the inflation and you have to deregulate, then you give tax credits to the people who take care of themselves or to the doctors who provide the care. And in a transition, and I talked about this in the campaign, in a transition because we have so many people so dependent on government, say the elderly. You know, my ideal society isn’t going to arrive in a week or two. We’re in a four year presidency.
So my argument is that you can do that; you can take care of people but never with a deficit, never by expanding the spending. It would be by cutting spending and I would cut money oversees. I’d cut hundreds and hundreds of billions of dollars of this maintaining our empire around the world. Bring that money home, take care of the people who are dependent and then work for the day where we can trust freedom once again and understand how free markets actually operate.
Aaron Task: In the past you’ve lobbied that the U.S. should be out of the U.N. entirely and we should disengage. People look at that and say you want us to disengage from the world. Isn’t the U.S. a force of good in the world?
Ron Paul: No, I think it’s the opposite. I want to really been engaged. These people who talk about free trade and engagement around the world have given us sanctions against Cuba for 40 years. So, I’m the one that wants to trade and travel and deal with Cuba. And same way with Iran. I want to be engaged. I would say move the navy away from there and talk to them and say, “Look, let’s start off with a soccer game or something.”
Aaron Task: Right.
Republican: Let’s break the ice, let’s talk to people. Let’s not threaten. What we have in foreign policy is we have two polices. One: we threaten and if they do our bidding we give them a lot of money. If they don’t we bomb them. And I say just talk to them and don’t threaten them and this whole idea that North Korea is a threat to the United States or the Iranians are going to drop a bomb is sort of like the argument that we had to go into Iraq because Saddam Hussein was going to bomb Washington DC. I mean it’s nothing more than war propaganda to build up the military industrial complex.
Aaron Task: Alright, turning back to the economy, what is your sense of the state of the U.S. economy right now? How optimistic or pessimistic are you?
Ron Paul: Very pessimistic. I think we might be through a third of it and nobody knows how long it will last. Correction is good. We want to correct problems. But they won’t allow that correction. The more we do to interfere with the correction the longer it will last. The Depression actually ended after World War 2. The war did not end the Depression. I remember the war and we lived in very depressed conditions… wage and price controls and people didn’t have automobiles. It was very depressing. It took that long to liquidate all the debt and bad investment. Finally then the people came back and they got jobs and they weren’t in debt and we went back to work again. The one good thing that is happening right now is that people are starting to save money. The government is frantic, they say, “You don’t want to save money, we want you to borrow more money and buy stuff.”
Aaron Task: Right, government says we want you to spend.
Republican: The government wants you to borrow more money and buy stuff. Well no, they don’t need to buy stuff, they need to save money and pay down debt and then we’ll go back to work. And the faster that happens the better it is for us.
Aaron Task: Right, so obviously hindsight is 20-20. But who do you blame, if anybody, for the housing bubble, the boom and bust we just went through? Is it more the Fed, is it Wall Street, is it the American home owners who bought more houses than they could afford, or your Democratic colleague Barney Frank who a lot of people say it was people like him who pushed low-income housing and people couldn’t afford it.
Ron Paul: One person.
Aaron Task: One person?
Ron Paul: Keynes. Keynes did it because he came into vogue into the 1920s and the 1930s and believe believed it and they’ve been living by this and Nixon put the rubber stamp on for all Republicans, “We’re all Keynesians now, we all have been, we believe in deficit financing, printing press money,” and that created the bubble. So it’s an intellectual fight. Keynes has lost this and people are starting to recognize that the system doesn’t work. So now the underground thought process right now… the thinking goes now on the Internet and elsewhere is Austrian economics. They have the answers to our problems.
Aaron Task: Right, but it seems that Keynes is making a comeback, at least here in Washington DC more recently.
Ron Paul: That’s the last hurrah, it’s not working, that’s like saying, “Well we’ve had these two stimulus packages, that’s all Keynes. We need one more.” People are laughing at that.
Aaron Task: What is your sense of the political appetite right now for another stimulus package? Do you think we’re going to see the Democrats try?
Ron Paul: Yea, they will and it might get passed and it might be passed and they’ll probably wait till next month when the economy has a few more bad statistics and unemployment’s 11%, and they will frantically pass more money and continue to do the things that created the problem in the first place.