Show: Morning Joe
Channel: MSNBC
Date: 12/16/2009
Transcript
Joe Scarborough: If I could pick someone to follow up Rick Stingle’s person of the year, Ben Bernanke, seriously, it would be our next guest. Introduce him.
Mika Brzezinsk: Republican representative from Texas and member of the Financial Services Committee, Congressman Paul joining us on the set of Morning Joe, nice to have you on sir.
Ron Paul: Thank you.
Joe Scarborough: You actually just wrote a book about the Fed. I mean, by God, tell us? Off camera you were telling me that you think that Ben Bernanke probably deserves to be person of the year because of the power he has.
Ron Paul: Yes, he’s the most powerful man in the world; I believe a case could be made for that. Because he controls the supply of money, which is the dollar, which is the reserve currency of the world. He can create a trillion dollars in secret without any monitoring of the Congress. So, there is no transparency. And I think he’s more powerful than the president.
Joe Scarborough: The president we are talking of here, again the president has all these checks and balances. Bernanke and every other Fed chief operate in secrecy. Like you said, he can create a trillion dollars out of thin air.
Ron Paul: Right. The big question is: has he used that power for good, or for evil? And, of course, my side of the argument is the system is evil, and the chairman, whether it’s Greenspan or Bernanke, they can do no good. They cause our troubles, they cause the inflation, they cause the bubbles. And, therefore, the bust, the correction, is always their fault. So the problems that we have and because this is such a worldwide phenomenon, you know, since 1971 everything has become worldwide and global economy. There is no backing of any currency. And yet our Federal Reserve controls the gold, so to speak, the paper gold. And therefore this whole mess that we’re in, which has a long way to go, has been caused by the Federal Reserve.
Pat Buchanan: Alright, that’s exactly what I was going to ask you. We just heard Rick Stingle say [Bernanke] saved us from a great depression.
Mika Brzezinsk: From the brink.
Pat Buchanan: He pumped 3 trillion dollars into the economy. Who was responsible, if you name one, two, three people or institutions, to take this country, the greatest country on earth, to the brink of a depression?
Ron Paul: Well, the Federal Reserve.
Joe Scarborough: How?
Ron Paul: By creating money out of thin air, causing interest rates to be low, causing the malinvestment and causing an artificial economic expansion that has to correct. Like if you build too many houses, eventually it crashes.
Joe Scarborough: Bernanke gave us the disease and cured it, both.
Ron Paul: Yeah, but there are other things that contributed to it; like Congress having laws that say you must make bad loans and give money to people who don’t qualify.
Joe Scarborough: I got to interrupt you, Pat. You read my book?
Pat Buchanan: Right.
Joe Scarborough: That quote by Ron Paul, and I remember the date: September 10th, 2003. And buy my book or just google “September 10th 2003, Ron Paul“. In September of 2003 you predicted in the banking committee exactly what was going to happen in 2008.
Mika Brzezinsk: Word for word.
Joe Scarborough: Word for word. And I read that and people always say, “Are you making that up?” You knew in 2003 what was going to happen.
Ron Paul: You’re better than I am, I can’t remember the dates. I knew that was the position I’ve taken for years and years. And, matter of fact, I was motivated to go into Congress and run for political office in the 1970s because I understood the principles of malinvestment. But I didn’t come up with these ideas. It’s the Austrian economists and the sound-money people that said this would happen; and they were correct. Matter of fact, when the Bretton Woods System collapsed in 1971, that was the confirmation that Austrian economists were on the right track.
Joe Scarborough: Buchanan, didn’t you want to [...] some Austrian economist?
Pat Buchanan: I said something about dead Austrian economists during one of my [...]. Murray Rothbard… They were gone.
Ron Paul: He was your friend.
Pat Buchanan: He was always my great friend, but we slam-shut the gold window in 1971. I was with Nixon in August. That’s what you’re talking about.
Ron Paul: That’s your fault.
Pat Buchanan: But look, what were you going to do? They had all that money abroad and if you ask me… the Brits wanted to come in and clean out Fort Knox. What would you have done?
Ron Paul: Well, you should have done a lot more a lot sooner. That is don’t print so much money.
Pat Buchanan: It was LBJ’s guns and butter. But what do you on that day? I mean, my friends tell me you should have let them clean it out. You can’t do that.
Ron Paul: No, I would say that was only half the thing. If you’re going to quit, what you have to quit is printing the money. So we quit handing out the gold, but then we said we’re just going to print money and there is no restraint. So what you ushered in was a system in 1971 which created this huge, huge bubble and that’s where the real problem was.
Mika Brzezinsk: But congressman, given the bubble and given restraint, where would you stand now on regulation? Would somebody like you say less regulation or off to the crisis? Or would you say actually we do need tight regulations?
Ron Paul: Well, I want more regulations of different things. I want more regulations on Treasury, on the Congress, and on the Fed. But I want to have less mischief by bureaucrats because they do a great deal of harm. We introduced a lot of regulations in the 1930s and it just prolonged the depression. When we had Enron fail we had Sarbanes Oxley. That did harm because our businesses left our country. I don’t like those kinds of regulations. But you have to enforce regulations like contracts and bankruptcies. We ignore that. We don’t follow the contract of money, so the government does everything opposite. They violate contracts and they don’t use bankruptcies. They bail out people. So yes, you want the market to regulate, you want to get rid of bad investments and people who are bankrupt.
Joe Scarborough: Ron, really quickly, we’re coming up on a hard break. But I’ve got to ask you about Afghanistan. Pat Bucanan, myself and other conservatives are very concerned about the so-called surge. We’re concerned we’re going to be in Afghanistan for another decade. What do you think?
Ron Paul: Well, we’ll be there for a decade or longer if the money holds out. But because we are doing exactly what Osama Bin Laden wanted us to do, that is get ourselves bogged down, spend a lot of money, and get people discouraged about being bogged down. At the same time have an incentive to build up the Al-Qaida. So we’re doing exactly the same.
Joe Scarborough: The thing is Al-Qaida is not even there.
Ron Paul: Yeah, but there are a lot of people who hate our guts and they do it because we bomb them, invade them and occupy them and steal their oil and all these things. So that’s going to continue.
Joe Scarborough: What would President Ron Paul do?
Ron Paul: The troops would have been home by now. I’d bring them home. You know the famous saying, “Declare victory and come home”. There is not much victory to declare. But just come home. I’d come home from Korea and Germany. Save the money. This country needs the money, we’re all broke. Quit printing the money; save the money.
Joe Scarborough: Alright. [...]
- Ron Paul: Ben Bernanke is More Powerful Than Barack Obama Show: Your World with Neil Cavuto Channel: Fox News Date: 12/16/2009 Transcript Neil Cavuto: Man...
- The People Are Catching On That The Government Is Bankrupt Ron Paul was interviewed on MSNBC’s Morning Joe this morning. The Congressman believes that Obamacare...
- Is Ben Bernanke the World’s Greatest Counterfeiter? Channel: Fox Business Date: 12/16/2009 Transcript Jenna Lee: We’re joined now by an outspoken citric...
Forest,
Robert Rubin. Sorry, I misspelled his name. Clinton’s Treasury Secretary.
Despite your rude behavior, I do know what I am talking about.
Are you saying the unregulated, secretive derivatives market which has brought the world to a financial meltdown was a good thing?
The question remains a serious one. And I am looking for a more complete answer.
What is a more complete response from the AusEco view to which Greenspan religiously clung to, until his admission that he was wrong, before the Congressional hearing on the matter?
Joseph G.
Like or Dislike:
0 
0
Austrian Economics
How would an advocate respond to the unregulated speculative investments in derivates that happened on the watch (in the late 90s) of Ruben, Greenspan and Geitner?
It turns out the head of a Govt Agency, attempted to blow the whistle on this secretive, unregulated derivative speculation and was shut down by the “inner circle” of Greenspan, Ruben and Geitner as well as the SEC Chairman at the time, who all said, that NO regulation is needed.
They went even further, when her agency attempted to blow the whistle, by getting congress to directly restrict her from an investigation, let alone regulation.
When the WHOLE thing blew, starting with Fred/Fan leading to AIG and other institutions, Greenspan admitted before congressional hearings that he had been “wrong” about free-markets.
In one aspect you could say, that if their had been NO bailout, then the derivative speculators may have learned their lesson; still, must people learn, too the hard way, that banks are supposedly trustworthy only find out that their homes are worthless or that that have lost or will lose now their life savings when the runaway, hyperinflation comes because of the bailout action.
So, what’s the answer NO regulation, NO oversight, that may have prevented this problem in the first place? Isn’t the truth that you have to guard the chicken coop or the fox will get in.
Answers please!
Like or Dislike:
0 
0
Hmmmm, ‘Credibility FAIL’
How about a question… Who is this ‘Ruben’ you continually refer to?
Since you apparently have no idea what you are actually talking about, unregulated, speculative investments are a good thing! That would be the powerful, yet invisible hand of the free markets working!
Greenspan wasn’t ‘wrong’ about free markets! They were never actually ‘Free’ because ‘Free’ markets don’t fail?
Wait, all this hypocrisy this website has filled me with is starting to get a bit too obviously confusing.
Like or Dislike:
0 
0
Ben Bernanke speaks out about the taylor rule and how the federal reserve has not followed this rule of thumb to prevent bubbles and how they will have to in the future.
http://cspan.org/Watch/Media/2010/01/04/HP/R/27933/Bernanke+Calls+for+Regulation+First+then+Interest+Hikes.aspx
Like or Dislike:
0 
0
Well he actually proves how the housing boom was influenced more by incoming foreign capital rather than monetary policy.
Like or Dislike:
0 
0
He hardly ‘proved’ anything except the folly of micro-managing an economy.
Like or Dislike:
0 
0
I still can’t believe that they’d entrust the banks with trillions in reserves. Hasn’t anyone learned yet??!!! The banks can’t help themselves. Greed is their psyche, their bread and butter, their be all and our end all. This is a culture of corruption. Who da man? Ron Paul is da man! Out with the old and in with the new. Happy New Year to all and to all a g’nite
Red
Like or Dislike:
0 
0
It’s time; in fact, we have only one day left to identify the top ten conservatives of the decade.
http://www.conservapedia.com/Essay:Conservatives_of_the_Decade
Like or Dislike:
0 
0
Nate, either you can’t read charts, or you dont know what the charts represent, and I know you have no clue of whats going on. Again.. Yes the M1 and M2 are growing “according to seasonal change” but the M3 which is the total overall money supply (including M1 and M2) is REDUCING.. Anyways, the M1 money supply only increased by 300 billion, not 2 trillion (or whatever the fed created).. That 300 billion came from the “stimulus package.” The money the fed created is not entering our economy. They purchased assets so banks can lend money, whenever the banks make money they will purchase the assets back. The feds money never will touch the economy. They acted as a middle man to unfreeze the credit.
Like or Dislike:
0 
0
As if 300 billion is a drop in the bucket. Anyway, we’ll just have to move on from the money supply charts. You say I’m not reading them right and I say the same of you. I’m content with the information I have provided. So I think it best to just let everyone else decide what arguments are closer to the truth.
“The feds money never will touch the economy”
Sure it won’t.
Even if it doesn’t, their interventions have already caused plenty of economic dislocations. Firms that should have gone bankrupt have been propped up, credit has been diverted to favored banks, companies, and financial institutions, etc. The result? A fundamentally less sound economy with the politically well connected enriched at the expense of the common person on the street.
Like or Dislike:
0 
0
Nate.. I read all the articles you post on here. You are too stubborn and one sided to even read what I post. Being ignorant about the fact doesn’t make you right. Again.. Read this, it will explain exactly what i’m talking about. Its not even a long article. You can read can’t you?
http://www.huffingtonpost.com/hale-stewart/inflation-from-money-crea_b_207126.html
The point is, there will be no hyperinflation. I’m not defending what the fed did and i’m not supporting their policy. I’m just not being an ignorant paranoid fool about it.
Like or Dislike:
0 
0
I read the article. The author makes a few fundamental mistakes that greatly hamper his analysis. He doesn’t know what inflation is. He seems to switch between two different definitions (with neither being very good). At first he seems to think that inflation is just rising prices. Then he states “Keep in mind the most fundamental definition of inflation: Too much money chasing too few goods” but this is not the most fundamental definition of inflation.
Also, he distorts the M3 line chart. He does indee recognize that the RATE of increase in M3 has contracted. But he acts as if this constitutes a decline in the M3 supply itself. This is just foolish. This is like me saying “It’s true I’ve been borrowing and spending at a steady rate of $1000 a month for the past few years but over the past 2 months I have only borrowed $600. You see? I have decreased my debt burden.” But I have done nothing of the sort. I have merely increased my debt burden at a slower rate.
The author concludes with “Simply put, monetary based inflation isn’t a problem right now.” This is largely true but the key words are “right now”. As Marc Faber aptly puts it “Inflation is a dynamic process”, the consequences of inflation make themselves known over time.
Moving away from the article, I have no idea why you are acting as if I brought up hyperinflation and have been rattling off a pile of posts saying that such an unhappy scenario is inevitable. I didn’t bring up hyperinflation in this thread. You did. It’s true you thought I implied it but there is absolutely nothing in my December 28, 2009 at 7:54 pm post that could have possibly given you that idea.
To be honest, I do think a dollar collapse/hyperinflation/very high inflation scenario could happen. But it depends on a great many things that may or may not come to pass. I’ve hedged my bets with some silver but we’ll just have to wait and see what happens.
Like or Dislike:
0 
0
The money supply is contracting. According to those charts in that link you showed me. We were up to almost 15 trillion dollars in the economy and now we are back down to 14 trillion.
Like or Dislike:
0 
0
Billy Preston comes to mind.
http://www.youtube.com/watch?v=OYgf7WkrFHw
Like or Dislike:
0 
0
There’s a couple problems with this and they are related. First, when we use words like “contracting” or “expanding” we must use them in the context of a particular time period in order for them to have any meaning. Secondly, yes, M3 is seen to be contracting recently. I can look at the chart. There has been a decline in the second half of 2009. By the way, you were plenty generous with your estimation of an almost 1 trillion decline in M3. The highest it got was around 14.7 trillion and it’s currently around 14.2 trillion. So you were off by about 500 billion. Certainly not a trivial amount. Anyway, as you are so eager to point out, M3 has declined…in the past few months. The problem with this as it relates to the article/link you posted is that the article was written in late May. M3 was still expanding during that time.
You’re fond of charts. So let’s look at shadowstats’ seasonally adjusted M3 chart. It runs from early 2007 to the present. In early 2007 M3 was about 10.3 trillion, it peaked at 14.7 trillion in the summer and is now somewhere around 14.2 trillion. So it started at 10.3 Tand is now at 14.2 T. What’s the trend? Is it expanding or contracting?
Like or Dislike:
0 
0
Yes, the money supply has expanded since 2007, but i’m talking about what has been done recently since the crisis started. The money supply is shrinking back down to the level before the fed created all of that money.
Like or Dislike:
0 
0
Redfish,
Bonner and the entire team at Agora are simply awesome. I’m sure you already know but you can check out their daily commentaries at dailyreckoning.com.
It is true that the dramatic increase in the money supply by central banks hasn’t reached the real economy…yet. But that’s the key. What happens when yet comes? What happens if/when the money does reach the real economy? There’s still a debate between the deflationists and inflationists and this period has been termed a “deflationary inflation”. Deflation in private sector and inflation in the public sector. Based on what Bernanke has said, he’ll certainly try his best to overwhelm the credit contraction.
Anyway, I just like Bonner’s style. He’s been proven precient regarding economics and markets and he delivers his information with a clever wit. It’s definitely fun reading his commentaries.
Like or Dislike:
0 
0
Thanks for the link Nate to daily reckoning – it’s in my favs now! I posted that previous reply in case some that are reading this, like me, didn’t understand how the money supply could be contracting when the Fed is smoking the printing presses. I sincerely thought we were inflationary right now. Bubble Ben’s recent comments on reserves at the banks being held really related to what you guys are talking about and it’s coming together in my mind. I’m of the opinion now that inflation is inevitable but for now we’re deflationary. If that knife edge of deflation or inflation happens credit has to loosen first. The Fed has no tools left to force that. So, we’re on an edge, like Brando’s slug in Apocalypse Now slithering up the length of a razor, unhurt. The banks are holding those reserves and we all know how trustworthy and adverse to risk the banks are {sarcasm}. Bubble Bernacke is going to offer them a CD type instrument to hopefully contain the reserves (by paying them interest on the money they loaned to them – our money and also paying them interest with our money). What a mess. MBS’s and CDO’s are not going to be bought by the world anymore. I guess they can try to give them a quadruple A Platinum rating (ha ha) but once burnt twice shy. To be honest I know little about the Fed’s institution and how it should be changed – except from what I’ve read here and Jekyll Island readings. Obviously the Fed needs to go and I’m not the one to speculate on how. I leave that to the learned historians here. Just wanted to let you guys know – good thread. It’s been like a good mystery novel that’s hard to put down.
Like or Dislike:
0 
0
Redfish:
Thanks for an informative article.
If inflation began in 1913…What was different then vs the other times America had a National Bank or Banking Acts (of 1867) when inflation didn’t occur?
Was it the fact that the Federal Reserve was “not” a National Bank in the America Tradition of Hamilton but an invention of the British using “Keynesian” manipulation for the first time?
This is a hypothesis…but perhaps you’d care to comment?
Joseph G.
Like or Dislike:
0 
0
Hi Folks,
This short documentary provides the rational for a National Mission and great infrastructure projects of a Nation to increase its capacity for increasing productive labor.
Unlike the British “view” of mankind as depicted in the hateful writings of Thomas Malthus, or in the “environmentalist” view of mankind as destroyers of the “natural world”, the case is made by Vladimir Vernadsky that there are three phases of development identified as the Lithosphere (in-organic world creation), the biosphere (organic natural world) and the Noosphere (mankinds willful ability to increase power over nature).
Here is the link and the short film is concluded with some remarks by Lyndon Larouche about the view of Leibniz, the pursuit of Happiness and aspects of immortality.
http://www.larouchepac.com/lpactv?nid=11573
Joseph G
Like or Dislike:
0 
0