David Asman: Republican Congressman from Texas, Dr. Ron Paul. So Congressman, why do you think we’re bailing out the banks that bet on Greek debt?
Ron Paul: Well, I think the banking system is international. I think we do have a global economy, and even though they may be foreign banks, I think they’re all interrelated. They may analyze and say “Well, if we let it go, it will affect more countries. We have to stop it.” Just like all the argument was stopping meltdown we had here a couple of years ago. To me, it is a real shame that’s been happening, but I think the burden is placed on our dollar, and we’re going to see continued depreciation of our dollar. To me, the only measurement of the dollar value is against gold, and we know that the dollar is being deeply depreciated constantly.
David Asman: Now as bad as it is, US taxpayer dollars going to pay off banks that bet on Greek debt… There is a possibility that some of our tax dollars will go to paying off those who hedged their bets and voted with their money on credit default swaps, betting that in fact Greece will fail. Is there any chance that any of our money will go to pay off credit default swaps?
Ron Paul: I would think so, because it’s going to be very hard to follow all this. I was hopeful that we get a true audit of the Fed and we can trace all this and find out what goes on, but no, I think the expansion of credit by our Federal Reserve will be able to bail out anybody and everybody they think necessary to bail out. So, our money will not be well regulated except for those special interests.
David Asman: Now, here’s a question. By the way, we’ve contacted AIG about this question, and we’ll tell you about their response in a moment. Is there any possibility that AIG, which of course issued credit default swaps on those bad subprime debts, and that’s what taxpayers had to bail out, may have been issuing CDSs, credit default swaps on Greek debt?
Ron Paul: I would think so. I don’t know in detail, I don’t have the information, but I don’t know why they wouldn’t be. Because they knew it was a crap game and they thought they could make it, make money on it. They would go and do it. It wasn’t like Goldman Sachs was ignorant of it. In a way, you would say “If Goldman Sachs was just shorting the market, that was one thing.” But when you’re on both sides of the argument and both sides of the trade, and with these countries in trouble, just think of how many people deal in this. I mean, George Soros, not that he was dealing in this particular instrument, but he knows about international currencies. So there’s a lot of people who do this and if they know they’re coming into trouble, they can anticipate it, and they can get very much involved.
David Asman: We have heard that AIG is denying that they did issue any credit default swaps on Greek debt. However, since it’s an essentially US government owned entity right now – we’ve taken over most of the obligations, if not all of AIG – do you think that their books should be open so we could see for sure whether or not any of our money was going to pay off their CDSs on Greek debt?
Ron Paul: Absolutely. Once the taxpayer is stuck with some of these bad companies and bad debt, we have an obligation to open the books. Not just a right to open the books, but we need to find out. You know, we do live in an age of transparency now, at least the people want transparency. We don’t want secrecy of government.
David Asman: If we have the right as taxpayers to know what AIG was doing, whether they were selling any CDSs on Greek debt, we should know more about these swap lines between the Fed and European governments. Shouldn’t we know whether taxpayers are getting stuck with euros that are going to go down in value?
Ron Paul: I think that’s where the real damage is right now. The swap lines and the Fed is directly involved in that. Yes, we should know and it’s just amazing to me that the system hangs together so long. It doesn’t deserve to be, but so far they keep patching it up, patching it up. To me, that’s just building a bigger bubble. To me, I think this participates in the American US bond bubble. Because people still are buying these things. Who would want to invest in one of these bonds for 10 years or 20 years? But they keep buying them.
David Asman: I agree with you one hundred percent. Final question though sir, I got to ask. As we go into November, if there was a sea change in November, will there be any way to open the books of the Fed with this new Congress? To open the books of AIG? To stop this bailing out of foreign socialists?
Ron Paul: Let’s hope so, but I’ve learned to be skeptical. Right now there’s talk about if the Republican would regain… but they don’t always fall through. I will do my very best to hold them to arguing and promoting transparency, but we’ll have to wait and see. Taxpayers and the voters should hold us accountable to demand more transparency.
David Asman: All right. And don’t forget the Blue Dogs. Some Blue Dog Democrats are more reliable than some so called conservative Republicans.
Ron Paul: Yes. There you go.
David Asman: Good to see you. Ron Paul, from the halls of Congress. Thank you very much for being here.