Female News Anchor: Wow. Our nonstop coverage of “They’re burning your money” week continues with our next guest who says government spending will only worsen the current, very fragile economy.
Male News Anchor: Republican Congressman Ron Paul joins us on the phone from Clute, Texas. Congressman, I know it’s a drastic step, but do you think we’re at the point where we need a Constitutional solution to stop the deluge of government spending?
Ron Paul: Oh, it would be great, but nobody cares about the Constitution. So I don’t think that’s going to solve the problem. The other problem you have, even if you had a constitutional restraint, you would still have the Fed. Just remember, the Fed pumped in 2 trillion dollars off the budget. They just created the money and passed it out, and they can give money to foreign governments and foreign banks. So the problem is much bigger than having a legal or a constitutional limitation on what they can spend. I think it would be a good idea to make the point, but that’s far from the solution. The solution is what the people in this country think our government should be doing. As long as they expect this much from their government, that we can take care of everybody in the world and that we can have a welfare state here, you’re going to have this problem, no matter what the Constitution says, because they already totally ignore it.
Female News Anchor: Now congressman you, of course, have been quite vocal about your call for the Fed to be non-existent, basically. So I’m just curious about what you think would have happened had we had not had that first run of quantitative easing at the height of the financial crisis?
Ron Paul: We would have had more bankruptcies and if the Congress would have just kept their hands off, the whole correction would be over by now. But because we took it over and prevented the liquidation of the debt, this just delayed the inevitable. I’m not opposed to spending, it’s just that I’m opposed to government spending and the Fed spending. We want more spending, but that means you have to allow the people to have more money and the business people have more money, the spending has to come from them. But once the government takes over the spending, the only way they can do that is that it distort the markets further. That’s what the Fed does and that’s what the Congress does. But yes, it would have been a rough year, but it would have been over by now. I think all the liquidation would be done.
Now, with this mortgage scandal going on, that’s further delay. Everything they’re doing is delaying. And you want the liquidation to occur, the people can’t afford it, they have to give in and they have to go to somebody else who can afford it, and the prices have to go down. But this is what we did in the 1930s, we propped it up, we wouldn’t allow the market to clear the market, we didn’t believe that these corrections were necessary and the politicians can’t stand the idea of not doing something.
Male News Anchor: Well, speaking of politicians, Congressman Paul, we’ve got about three weeks before mid-term elections. Is there a consistent message out there from those on the right that would support curtailing spending?
Ron Paul: Well, it’s pretty good. I mean, I think everybody in the Tea Party Movement would say, “Yes, we want to curtail it”, but the Tea Party Movement actually originated during the last presidential race and they understood where I wanted to cut, and that was every place. The Tea Party Movement now has a lot of people in here that are picking and choosing. They say, “Well, we should cut this, but not that”. So we have a ways to go, but I think it’s very, very healthy. I think the consensus in the Tea Party Movement is to cut. I think there will be some more debates on exactly where to cut it.
Female News Anchor: Alright, Congressman Ron Paul, many thanks.