In his latest video update, Ron Paul reports on a recent House Foreign Affairs Committee hearing concerning Iran as well as a House Financial Services Committee hearing on financial regulations. He also comments on the latest GDP data.
Ron Paul: I’m Congressman Ron Paul and this is a weekly update for the Campaign for Liberty.
Update on the House Foreign Affairs Committee
We were quite busy this week in Washington, a lot of hearings and a lot of activity. First off, we had very significant hearings in the Foreign Affairs Committee. This was somewhat different because in the past with previous chairmen of this committee, they would frequently bring up resolutions which I considered very, very important and they’d bring them to the floor, under suspension, with no announcement, no hearings and no mark up in committee and sometimes, they’d bring it up under unanimous consent. Well, at least, Howard Berman, the chairman, brought this to the committee and we did have a bit of a debate and a vote. Unfortunately, there were only four of us that were actually opposed to the bill, and this is the bill that’s to put much stronger sanctions on the Iranians and it is to prevent petroleum-refined products getting into Iran. And the debate was the same old story. You know, “they’re a great danger to the world and if we don’t stop them, someday they might get a nuclear weapon.” So it was war propaganda. It reminded me, and I said so in the committee, it reminded me of some of the talk that happened before we went into Iraq.
But nevertheless, I tried my best to make the point that it won’t be of any benefit to us or to them. It will aggravate and anger the people. The people will not be turning against the [Iranian] leadership, which are out on the fringes. They’ll turn their anger and hostility toward us. But it is a significant event because it represents the continued and perpetual determination to alienate the Iranians and it’s a big debate over nuclear activity and whether or not they might have a nuclear weapon someday. It’s a significant event, but quite frankly, I think our policies of intervention in that area of the country causes more trouble than the Iranian government itself. They are a Third World nation. They don’t have intercontinental ballistic missiles. They have no nuclear weapons. In 2003, our CIA said they quit any effort to make a nuclear weapon. But I’m sure they have an incentive to make a nuclear weapon, but most of the incentive is the fact that we have an interventionist foreign policy. The Pakistanis have nuclear weapons. The Chinese have nuclear weapons. The Indians have nuclear weapons. The Israelis have nuclear weapons. We’re surrounding their country. We have nuclear weapons. So it’s not the most outlandish thought in the world for a country like that wanting to have those weapons.
But I hope that we come to our senses, but right now, we have a President that seems to be determined to follow the foreign policy of neoconservatives. Fortunately, though, he is trying to have some negotiations and trying to talk to the Iranian government, but quite frankly, I think behind the scenes they’re really planning to continue this more aggressive foreign policy. Someday, when this country comes to its senses or we go broke, I’m sure this policy will change.
Update on the House Financial Services Committee
This week we also had significant hearings in the Financial Services Committee and this brought Secretary of the Treasury Geithner to our committee, and of course, I had my five minutes of questioning with him. The reason for the hearings is to start looking at this bill that the chairman of Financial Services, Barney Frank, is bringing forth, which is 280 pages of more and more regulations of the financial system. The point I made with Secretary Geithner was that regulations can hardly solve the problem if you’re only treating the symptoms of a flawed monetary policy.
I used a quote he made earlier this year where he said that, “The number one problem that led us to our troubles was the fact that we had too low interest rates too long,” and I tried to throw that back to him saying, “Well, that’s the kind of language that I use and I believe that is the case and you can’t solve that problem by just doing more of the same,” pointing out to him that it doesn’t make much sense to admit that the interest rates were too low too long and then turn around and endorse a program that we’ve endorsed for the past year and that is if one percent interest rates were too low, taking them to zero is hardly going to help, at the same time doubling the money supply. I mean, low interest rates and excessive monetization of debt either is a problem or it isn’t. Of course, he danced around that issue.
On a follow-up question that I had for him, which might have even been more significant, but unfortunately for him the time ran out, and that is that he did admit that they were making negotiations with the international organizations trying to internationalize all our regulations and of course, I made a statement I don’t even like the regulations coming out of Washington, DC, let alone having them internationalized and under the UN and IMF.
But I did mention the fact that that very day I read that the United Nations are talking about a new reserve standard. Because I think most people admit that the dollar reserve standard is dead, although the dollar is not dead and the dollar is still limping along, but the reserve standard that built the very friable, fragile financial system that has already collapsed is not going to be rebuilt with the dollar. So my question to him was, “in these conversations you have about regulations, how often do you talk about and what are your conversations at these meetings about a new reserve standard?” Well, his answer was, of course, the time had ran out, he didn’t have time to answer, but that he suggested we get together and have a conversation. I doubt if that would happen, but if he invites me to discuss this, I would just for educational benefits, not that I think he’s going to convert me or I’m going to convert him, but it is a significant question. What are they going to replace the dollar with? Will it be the international paper reserve standard? Or will we wake up and once again realize that the only truly reserve standard that would work for a sound economic system throughout the world would be something that would be backed by more than government promises, and he was indicating that this has to be a worldwide approach and my answer, of course, was that if we do the right thing for us, it will be the right thing for the world and others would follow us. So if it’s a bad idea to spend too much money and borrow too much money and print too much money and we just quit, not only would it benefit us, it would benefit the whole world. But we have a long way to go. I think that will come after we have a greater collision with the dollar.
Comments on the GDP
Along this line, we also had a report this week that showed that the GDP grew a little faster than I expected. It was up over three percent and the market responded by jumping up. The Dow Jones was up 200 points, which quickly corrected itself the next day. But the response was wonderful. “The GDP is up!” but when you think about it, why is the GDP up? Government printed a lot of money and passed it out and people bought cars and bought houses, even though they were buying them for artificial reasons. You know, they were stimulated. We don’t need to stimulate people to prop up prices of houses and building more houses. We need more of a natural correction, but they pass out money that they printed and it goes into the GDP. How can you believe that the GDP has much meaning if the government participates in spending money and calling that economic growth.
That probably is what changed the markets the next day because it was realized this isn’t real growth, this is just artificial. This is just gimmickry to claim the economy is growing by merely the government pursuing these giveaway programs. Eventually, the markets are always smarter than the government. The government can get away with it for a long time. They can get away with pretending there’s true value in our money and that this system will work, but in time it will be known exactly what true value is and the people and the markets will demand correction. That’s what we’re in the process of doing. The need for the correction is there. The resistance is just overwhelming in Washington and Wall Street to “do anything,” but they’ll just don’t allow the correction to occur. They consider that sound economic policy. I consider it foolish economic policy in doing exactly opposite of what they should do and we should have a lot better understanding how free markets work, how sound money works and have a lot more confidence that we will be all a lot better off if we follow those policies.