Show: CNN Newsroom
News Anchor: We’ll go to Capitol Hill where Congressman Ron Paul joins us now. Congressman, thanks for being with us.
Ron Paul: Thank you.
News Anchor: We have been talking extensively this week at CNN. First of all, we’ve been undergoing a stimulus project. We’re going through the stimulus bill, 57,000 projects, and seeing where the money is spent, whether it’s created jobs. You haven’t liked the stimulus bill from the beginning, from the first day it was even talked about.
Ron Paul: Right.
News Anchor: Let’s look at it a year later. What, in your opinion, has it done to the economy?
Ron Paul: Well, it’s hurt the economy because even if you argue, as the administration does, that is has saved some jobs, we don’t know which jobs were lost or which jobs could have been created if the people were controlling the expenditures, if the capital was delivered by individuals rather than by the government.
So could have had a lot of jobs created, but we don’t know that. For the government to take a lot of money out of the economy and try to stimulate the economy where it doesn’t want stimulated, it’s not a surprise that we’re not having growth. So I think they’re on a failed policy, and how long are they going to keep interest rates at 0% before they think, “Well, maybe we’re on the wrong track. Maybe it’s not working”.
News Anchor: What’s the right tract, congressman? What would you do? Because right now the White House is looking at perhaps a shift in direction, or at least communicating one. What’s the right tract for them?
Ron Paul: Well, I think the market should decide interest rates so that we go back to saving and the government quits wasting money, spending, running up deficits. Because if you had higher interest rates, we would start saving again and we would pay down our debt and then people would make market decisions.
Maybe they would invest and the prices of the house come down low enough and the market is liquidated, then we go back to building houses and producing jobs again. But we don’t need more debt, and what we’re doing is borrowing more money.
News Anchor: Fair enough, but let’s talk about this. The stimulus bill is above 800 billion dollars, according to the congressional budget office now. It was 787 billion dollars, they added 75 billion dollars. But really, I’ve been looking at the government’s interventions since the beginning of this crisis: somewhere above 4 trillion dollars. And a lot of that is money that the Federal Reserve put into the housing agencies to keep mortgage rates low. And that’s why we have 5% rates for a 30-year fixed mortgage. Isn’t that better for recovery than raising interest rates? Isn’t it better that we got low mortgage prices?
Ron Paul: It delays the recovery because the liquidation of the bad debt isn’t liquidated, it’s propped up. The people end up buying these securities and these derivatives of securities, and they’re propping up a very bad system. So you want the prices of houses to come down faster and more dramatically, they should have been at this price a year ago. And now people are starting to buy these houses when they’re so desperately cheap. And that’s what you want.
But we do everything in Washington to prevent the correction. But when something is sick, you want to correct it. But governments can’t do that because it doesn’t appeal to the politicians not to do anything. They have to do something so they try to have a correction, but they prevent the correction. We want the market to correct, and the sooner the government gets out of the business of allocating credit and creating money out of thin air, capital has to come from hard work and savings. The rest of this is nonsense. It has nothing to do with capital.
News Anchor: Okay. So what do you want to hear from the president tonight if you wanted him to go a little further in your direction? What would you want to hear from him?
Ron Paul: Well, next year we would not just pretend we’re freezing something a year from now and we know that’s not going to happen. But the country is not quite ready for free markets, so it’s not likely to happen. But what should be said is we’re cutting back on spending. We’re going to get rid of a lot of programs, we’re going to cut our militarism around the world by 50%. And we’re going to go back to free markets and individual liberties and property rights and rule of law and bankruptcies occur, and liquidate debt and get the correction over with.
Before the Great Depression we used to allow corrections to occur. But since the Great Depression we are compelled to re-inflate all the time, because we’re destined to have the destruction of the dollar. That’s my biggest concern. So I would say, “Obama, don’t perpetuate this idea that printing money is a solution.” And they’ll say, “Oh, yeah. You’re right Ron, you’re right about this. But we’ll do that later on. But right now there’s a crisis.” But the crisis was brought on by too much spending, too much borrowing and too much printing and too low interest rates. That’s exactly what we’re doing. You can’t solve the problem by doing exactly the same thing. So I don’t see the recovery coming very soon.
News Anchor: Congressman Paul. Good to talk to you, thank you very much for joining us today.
Ron Paul: Thank you.
News Anchor: Congressman Ron Paul joining us.