Ron Paul on MSNBC: End the Fed!

In today’s appearance on MSNBC’s Morning Joe, Ron Paul discusses the failures of Keynesian economics, the true cause of the financial crisis, and the need to end the Fed.

Show: Morning Joe
Channel: MSNBC
Date: 9/15/2009

Transcript

Mika Brzezinski: And here with us now, the co-founder and editor-in-chief of the Huffington Post, Arianna Huffington joins us. And with us from Washington, Republican representative from Texas and member of the financial services and joint economic committees, Congressman Ron Paul. Congressman, thanks very much for joining us. Your thoughts on the President’s speech and hope that we actually are going to turn our economic problems around?

Ron Paul: Well, at least he was a little bit cautious. He wasn’t bragging that it was turned around and he shouldn’t be because we have a long way to go. He suggests that the answer will be easy credit to make sure people get some low-interest loans. Without really looking at it, he should realize that we got into this mess because we had easy credit and artificially low-interest loans, and we pushed this on the people, caused all the malinvestment and a bubble to form so you can hardly solve the problem of a bursting bubble with trying to re-inflate and create a new bubble. We’ve gotten away with it now for several decades but it’s not going to happen this time.

Mika Brzezinski: Okay, but how do we not re-create a new bubble, how do we not find ourselves in — can you hear him?

Joe Scarborough: Let’s just stop right here. I actually lifted a speech that you made in the banking committee on September 10th, 2003. I remember that date because your words were so dramatic. Ron, while everybody else was saying, “Oh, if we don’t help people out through these loans with Fannie and Freddie then we’re just horrible people, we hate poor people,” you said and you predicted, “If we continue to inflate this bubble this way the housing crisis is going to cause an explosion and there is going to be damage worldwide.” What did you know, Ron Paul, in 2003 that nobody else on the banking committee, or the United States Congress, or in the media knew? What did you know?

Ron Paul: I think it reflects an understanding of economics. I didn’t know anything special other than the fact that I’ve studied Austrian Economics and their understanding of the business cycle comes from the Federal Reserve, the creation of credit. We’ve been working with Keynesian Economics since the Depression; we’ve had perpetual bubbles and recessions and ups and downs and inflation and Nixon really sealed it over when he said, “We’re all Keynesians now,” and we still are in Washington. They still use Keynesian Economics to try to solve these problems. It isn’t all that complex. Interest rates are very, very important and prices are very, very important in a free market. When you distort prices, like wage and price controls, everything ceases up, nothing can happen. But when the Federal Reserve comes in and fixes the prices of interest rates you deceive the savers and the spenders and the investors. People believe that there has been a lot of savings and interest rates are very low. And that wasn’t the case, we weren’t saving a penny. We were giving low interest rates because we were creating money out of thin air. That’s why I keep coming back to the Federal Reserve, it was the policies of the Federal Reserve that created this and we shouldn’t have been surprised at all that we eventually had this tremendous financial crisis.

Host in grey suit: So, Congressman, is your solution then to get rid of the Federal Reserve? What else are you proposing we do here to make sure this kind of stuff doesn’t happen again?

Ron Paul: Well, first off we ought to obey the Constitution, live within our means and balance the budget, quit war-mongering and quit the welfare state. Minor things like that. But eventually you don’t need the Federal Reserve. No, it’s caused too much trouble. Central banking has always been harmful. It’s a seductive way of financing big government. Conservatives love it because you can pay the military bills. Liberals love it because you can pay the welfare state bill. But it’s all deception, it’s all a tax. It eventually destroys and hurts the very people you are trying to help. You try to help poor people by giving them stuff for free but you end up giving them inflation. They are the first ones to lose their jobs, they’re the ones who suffer the most from inflation. We have inflation today much more so than anybody admits because that’s why the cost of medicine is so high and the cost of education is so high. It’s the devaluation of the dollar. So with all these good intentions of helping poor people, the very people who are doing this are actually making it more harmful and hurting those they want to help.

Joe Scarborough: Arianna, let’s talk about September 15th, today. You have been writing in the Huffington Post for some time about the fact that this administration and the last administration couldn’t stand up to Wall Street, couldn’t pass the tough regulations that need to be passed. You still think that’s the case and now Andy was just saying you took on Larry Summers.

Arianna Huffington: Yesterday, when Larry Summers spoke, I asked him whether he really believed that they would have fundamental reform of Wall Street, because they had been saying that since the administration took office. And the truth is that they are all like the captain of the ship telling us we are going to go in this new direction but the autopilot in the boiler room is set in a different direction than the one they want to take us.

Joe Scarborough: The same direction.

Arianna Huffington: The same direction we are going now, and the autopilot is really controlled by the lobbyists in Washington. You know, thousands of lobbyists spending literally tens of millions of dollars, undermining reform efforts. Remember what happened, this is critical, to the cramdown amendment? I would love to ask Congressman Paul about that. The cram down amendment was critical to the foreclosure reform effort, because without that, without being able to modify your mortgage purchase, nothing is going to work. Now we are having thousands of foreclosures everyday which is affecting the whole community. This is not just people who took crazy sub prime loans. They are people who are losing their homes because they lost their jobs. There was a moving article in the New York Times about over a million school children are going to school right now, homeless. This is having a huge impact, not just on this generation but on the next one, and the administration is still more concerned with saving Citigroup and saving the big five banks which are now much bigger than they were a year ago.

Joe Scarborough: You started to bring it up and it’s a question, Ron, that I keep raising on my show. Why is it that the same people, and I know Arianna you’ll agree with me, the same people who got us in this mess, whether you talk about Tim Geithner who was at the reel of that ship for a very long time or whether you’re talking about Larry Summers who was a part of some things that happened in 1998 and 1999 or whether you’re talking about Hank Paulson that was pushing for 41 leverage rates. Why is it that these same people who got us in trouble in the first place are the same people who are still running this economy?

Ron Paul: Well they’re in charge and they have the power and they’re believers in Keynesian Economics but they are the ones who caused the trouble. Look, the President wants to give more power to the Federal Reserve and if you come anywhere close to my understanding of the Federal Reserve that’s the last thing, I want to get rid of the Federal Reserve and he wants to enhance it. But I think they are locked in, whether they are Republicans or Democrats, they are going to support the corporations, even in medical care reform. Who do you think is going to come out well in this? Corporations, drug companies, and insurance companies, they are being protected. You know, some conservatives accuse Obama of wanting socialized medicine. I don’t think so, I think he wants to perpetuate corporatism, whether it is in the financial markets or in medical care or whatever. I just think the difficulty is the transition: how do you go to where we need to go without hurting people. And quite frankly, you can’t do it, people are going to be hurt one way or the other. I just want to minimize the pain and I just don’t want to put the pain on the taxpayer.

Joe Scarborough: Arianna, you would agree with Ron Paul in that corporations, are getting, you believe, a free ride off of this administration as well as the last.

Arianna Huffington: Well I would also agree with Congressman Paul that this is not capitalism. This is not free enterprise capitalism.

Joe Scarborough: This is not capitalism at all.

Arianna Huffington: This is absolutely not capitalism. This is really oligopoly. We have 92 smaller regional banks that have failed but the five big banks are bigger than ever, their profits are growing, their toxic assets are still on the books. That’s what I want us to discuss. Congressman Paul, how come a year later, after the bailouts which were supposed to get rid of the toxic assets, the toxic assets are still there and still a potential time bomb for another economic meltdown.

Joe Scarborough: And Ron, we are up against a hard break so give us a 30 second answer.

Ron Paul: Well, because they haven’t solved the problem. Some of the toxic assets are now owned by the taxpayer. That’s one thing. But this is my argument: they won’t get rid of them. You have to liquidate and you should allow the correction to occur in one year and get all those bad assets out of the way. The fact that they’re propping them up means that we are working very hard to perpetuate this problem into the second great depression, if not as bad but much worse if we continue to do what we’re doing by not allowing toxic assets to be liquidated.

Mika Brzezinski: Absolutely right. Congressman Ron Paul.

Joe Scarborough: He was right before.

Mika Brzezinski: We are going to continue this conversation on the radio, you’ll be our guest. It’s 10:00 am to noon EST, on WABC radio. Congressman Ron Paul, his book is called End the Fed. Thank you so much for being our guest on Morning Joe, we will talk to you on the radio.

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16 Comments:

  1. A few minutes later, the patient’s relatives arrived and the nurse told them about the fall in great detail,
    right in front of the X-ray tech. It is necessary for people to recognize that they just can’t walk into the career of Anesthetist.
    Schools that prepare nurses to enter psychiatric nursing are limited to the four western
    provinces of British Columbia, Alberta, Saskatchewan, and
    Manitoba.

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  2. The collapse of the US $ has begun with many dumping it.Ron Paul and many others predicted this when the Fed started printing money 12mths ago.This is where Congress must remain resolute since the pressure will now be on for the Amero that joins the economies of Canada,USA and Mexico.If the Amero is owned by the Fed ,then it will be the same old story in the long term of devaluing currency and assets,labor etc by creating inflation.

    Each yr new money must be created to equal the increases in pop growth and productivity.Private banks should not own this new wealth by virtue of creating money.It belongs to the individuals who created it.

    Any new currency should be backed by something of substance,be it gold,land or even infrastructure owned by the US Govt.It is time to think outside the square and see that money only is a representation of potential wealth and has no intrinsic value.

    This is where the Fed has really come unstuck,since they will have trashed real wealth in the US economy and their shares,monopoly money etc,will depreciate drastically.

    Probably the Yuan will become the reserve currency for a while and the balance of power economically will switch to China.

    The people who caused this whole debacle were not very smart and do not deserve to be in charge of the US economy.They did not perform their single most important,prime function,ie the measured and responsible of money.

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  3. That’s what I was going to say. I use to watch Bill Maher alot. I finaly realized there is no substantive debate on that show anymore. Almost all his quests agree with each other so it has detrioated into a show where everyone just pats each other on the back for being “enlightened” and everyone else is just a fool. The best part is that their all Obama socialist/facists who equate welfarism with morality. Without realizing the pragmatism of true libertarian values doesn’t even outweigh the true moral authority it stems from.A lack of theft/force which leads to the most fair distribution of wealth on an imperfect planet. When Huffington is scared to debate a “conservative” (in the Thomas Jefferson/Robert Taft mold) because she secretly doesn’t want to lose the intellectual debate on moral grounds, I would say the intellectual debate is finally starting to tip in our direction.

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  4. I have been a paultard for over a year now, and i have seen every media appearance he has done and in each appearance there has been hostility and constant attacks,being laughed at and taken as crazy person. There are few words to say about this interview, phenomenal is one and for once Ron Paul was not degraded but respected im glad to see this man finally get what he deserves.

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  5. I could not believe this interview was on network television and it did not involve any debating congressman Ron Paul. One can sense the truth when it is spoken, can we not? I am upset with myself for not knowing to write him in for president on the balot for the last election.

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  6. It’s great to see Ron Paul getting the media attention he deserves. I’m new to Ron Paul (within the last couple of months), but have always been a libertarian.

    It’s time for those who want a solid foundation for our future to spread the word and take ACTION. I think the first thing would be to contact our senators and congressman to sponsor the audit the Federal Reserve bill.

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  7. All of the band-aid measures will fail. The problem is the Federal Reserve, which concept is founded upon debt-based currency and fraud. It must be closed down or it will continue to suck the resources of the U.S. with its currency management contract.

    […]

    The Federal Reserve is a cancer that has nearly killed the entire world economy. That cancer must be surgically removed from the world’s economy, or it will soon kill the patient. There is no other viable alternative at this late stage.

    http://thomaspainereturns.net/posts/sdfr.html

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  8. Yes. It’s very promising to see this kind of conversation. Ron Paul, you are a very great man. I hope that this book reaches the majority of people that post.

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  9. You know people are beginning to come around when Arianna Huffington and Ron Paul are in agreement.

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