Federal Reserve Behind Greece Bailout?

Channel: Fox Business
Date: 02/09/2010


Brian Sullivan: Congressman Ron Paul says that it’s time to rain on the parade of government interventions. The Texas Republican and former presidential candidate is joining us now by phone.

Congressman Paul, thank you very much for joining us. Brian Sullivan in for Neil. What do you make of the news that European officials are mulling bailing out Greece?

Ron Paul: Well, I think it gives everybody a reprieve maybe for a day. You know, the dollar goes down, the stocks go up, the euro improves. I think it’s temporary. It is such an overwhelming problem. But we ought to learn a lesson about what’s going on. And when you look at Greece, it’s a country that’s 1/3 the size of California, they have 600,000 public employees who are on strike and then they wonder why they have problems.

But even though they’re in bad trouble and they make us look good in comparison, we’re facing the same type of problem. California is in desperate shape. Our country isn’t far behind. But the other European countries are so bad, that it sort of gives us a false sense of security that we can bail out everybody.

But it will end. It’s going to all end, I think, in a tragedy for the whole world because we’ve all lived beyond our means and we’re all trying to bail out everybody. I wouldn’t be surprised if the Fed is very much involved behind the scenes, even with what’s going on over there with Greece right now because they’re allowed to. That’s the reason they don’t want any transparency because they can be involved in all these kinds of bailouts.

Brian Sullivan: How would the Fed be involved, Congressman?

Ron Paul: Well, they’re allowed to make loans and guarantee loans to foreign central banks and foreign governments. So if the euro is having a little trouble and the Fed wants to act behind the scenes, they can literally do that. And they don’t have to be responsible. It doesn’t have to be on the budget. We don’t have to know about it. And with this movement to audit the Fed, that is one of the things that has made them most concerned, is that we would find out what kind of international agreements that they’re making. Under the Monetary Control Act of 1980, literally, our Federal Reserve is allowed to buy foreign debt. You know, they buy these housing securities. But they’re allowed to buy foreign debt as well, but they can do it in secret.

Brian Sullivan: I know that might sound insane to a lot of our viewers hearing about the U.S. Fed possibly being involved in the Greece situation. But let’s not forget, right, we’re already had essentially a U.S taxpayer backed bailout of European banks through some of the AIG transactions.

Ron Paul: Yeah, that’s right. And we have a lot of trouble getting transparency of that as well. So yes, they’re very much involved. That’s why, as bad as Greece looks, I think there is a worldwide phenomenon, this is something I’ve been arguing since 1971, that we have embarked on a very flawed system of money, that the dollar was the reserve of the entire world that we had license to print, and the trust overwhelming because we are the economic powerhouse and a military powerhouse. So we were able to do what other nations couldn’t do. Other countries would have been called to pass, but we have literally been able to inflate at will, spend at will, and export our inflation to other countries who then would monetize our debt for us.

Brian Sullivan: Well, is the term bailout, maybe, a misnomer, Congressman? Isn’t it just kicking the can down the road? I mean, even if they help them out with their debt, they restructure some of their debt, these problems, you mentioned all the government employees, the big pension, the early retirement: those problems are not going away.

Ron Paul: I think you’re absolutely right. And that’s where the real problem is. As you know, even domestically here we so-called bailed out Goldman Sachs and these other companies. But all we did was we took some bad assets and dumped them on the American taxpayer. Treasury got involved, the Federal Reserve brought them. So the victims might have changed, but the problems have just been continued. And we have not resolved it because it requires cutting spending.

And that’s what Greece is facing right now. You know, their Prime Minister wants to cut, or at least he’s proposing to cut. But that’s why the 600,000 thousands are on strike saying, “We won’t have any part of this cutting”. You know, it’s insanity. And some day the world will wake up and say, “It’s unbelievable what the world has done”. And actually we had led the charge because we run the reserve currency and we have literally been printing the gold for these 30 some years.

Brian Sullivan: Congressman Ron Paul, sir, thank you very much for joining us.