Ron Paul: Bernanke and Krugman are Destroying the Dollar

Encouraged and misled by Paul Krugman’s outdated economic views, the Federal Reserve is leading the charge to destroy the dollar.

Date: 11/08/2010


Joe Kernen: All right. Fed Chairman Ben Bernanke says the Central Bank’s trying to help a weak economy with its new $600 billion bond purchase, not jump-start inflation.

Ben Bernanke: There’s a sense out there that ‘Quantitative Easing’ or asset purchases is some completely foreign, new and strange kind of thing and we have no idea what’s the hell is going to happen. It’s just an unanticipated, unpredictable policy. Quite the contrary. This is just monetary policy.

Joe Kernen: Bernanke spoke alongside Alan Greenspan this weekend at an event commemorating the 100th anniversary of a meeting on Jekyll Island that led to the creation of the US Central Banking System. Our next guest probably wasn’t celebrating this historic occasion. Ron Paul, ranking member of the Domestic Monetary Policy and Technology Subcommittee is with us this morning. A day that will live in infamy a hundred years ago, Congressman?

Ron Paul: Sure was and is. And it will end though. I don’t think I’ll get legislation passed to repeal the Federal Reserve Act, but I think it will self-destruct. They can’t manage a dollar like this. People are going to desert the dollar. I think the Chinese are hinting at that already. They’re not wanting our dollars as much as they want raw materials and other things, so…

No, it’s going to end. But this is a deeply flawed monetary system. It can’t last. Here we have a small group of people, maybe one person, who can create $600 billion with the stroke of the pen and say “OK, it’s there, we’re going to spend it.” After having spent foolishly and put into the market, the financial market, $1.7 trillion. It didn’t work. I don’t know where people are coming from to think that this can work.

You know, what really astounds me is how tolerant the people are. The people in the Congress and the financial markets. Where did this authority come from? In the old days, I used to think that Congress authorized money and appropriated money and spent the money. But now somebody outside of the government, that actually Congress created, they can spend trillions of dollars and not think anything about it.

But, you know, if it really worked it would be hard to argue against it, even though we should. But it doesn’t work, it’s a failure. And next year it will be more. I don’t think it will stop at six. It has to be eight. Bernanke is very, very clear on what he’s going to do. He’s going to create money until he gets economic growth. And there’s no evidence to show that just creating money causes economic growth.

Joe Kernen: Maybe just creating some inflation would at least preclude something like Japan and the 20 years that we saw there which, if you had to pick one or the other, you’d probably take a little inflation rather than debt deflation for twenty years.

Ron Paul: No, I think inflation is fraud. I think it’s theft. It’s stealing. It’s taxation without representation. I think it’s wrong. You don’t have to have inflation. Matter of fact, the whole concept of inflation is misunderstood because we have tremendous inflation. Every time you create new money, that’s inflation. It distorts interest rates, causes business people to do the wrong things. It creates a debt bubble. That’s the real harm. And then many times it will cause prices to go up. But what he wants to do is devalue the debt. He wants to liquidate debt. And he’s admitted this. He wants liquidation of debt because the debt is unsustainable. So they’re praying and hoping for, no, not just two percent, they want four percent. Like they have control.

Prices are set subjectively. When he gets to four and he decides to go eight, there’s no way they can stop it. If they withdraw it might make things worse. So they think they have control, but they don’t.

When I first started looking at this our government believed that they could fix the dollar and guarantee the dollar. “Dollar’s good as gold at $35 an ounce.” And they did that what, for 15, 20 years, and finally the market overwhelms and destroyed Bretton Woods. And the market is more powerful than the central bankers. And they won’t admit it. And they’re going to keep doing this for a long, long time until they destroy the dollar. And they’re doing a pretty good job of it.

News Anchor 2: Congressman, if you look at monetary and fiscal policy as kind of a bridge between periods of risk taking by the corporate sector. Let’s put aside for a moment what the Fed is doing. What should happen? Not what they’re already doing and doing wrong. What do you think should happen that will generate interest from the corporate sector to actually begin investing more aggressively?

Ron Paul: Well, what should have been done three years ago is just nothing and allow all the bad debt to be liquidated instead of the people who had benefited by the derivatives markets and the mortgage market, they shouldn’t have been bailed out. And the taxpayers, they get dumped on. You know the Fed bought this stuff. No, the debt should be liquidated.

There was a lot of good parts of, say, General Motors and it should have been… go through bankruptcy. There are some good mortgages out there. But the bad ones need to be written off the books. We’re doing exactly what Japan did. We’re propping this up. Keeping bad debt and bad assets on the books. But the tragedy is that this is being dumped on the American taxpayer and on the dollar, which is pervasive. It’s worldwide. It’s just not a few people in this country. It’s worldwide. So we’re working very hard to destroy the value of the dollar.

So the sooner we do nothing, the better. We need liquidation of debt, so that it’s off the books so you can go back to economic growth. As long as you prop up all the mistakes and all the pyramiding of debt, the longer this will last. So I don’t think we’re doing things much differently than Japan. We’re certainly not doing things a lot differently than we did in the Depression. We’re just doing the bad things more so.

Becky Quick: Congressman, Paul Krugman argues today the exact opposite. He says that we’re not doing enough. He lays out this reasoning for the Fed getting even more involved and says what they’ve just done with this $600 billion is not nearly enough and that we’re going to go back to the same mistake that was made back during the Depression.

Ron Paul: Well, he is exactly the opposite of a free-market economist and sound money. So he and I wouldn’t have very much in agreement. I would think by now he would have been totally discredited and it’s tragic. I pray every night that his views will be… just disappear. Because what he wants to do is more of the bad stuff. So I think that… he gets a lot of credibility. He’s leading the charge, the intellectual charge for total destruction of the money, the dollar. So, I just don’t see how he has any credibility whatsoever. Because if $3 trillion is not going to do the trick, he wants $6 trillion dollars. I mean twelve year olds who know a little bit about arithmetic and the game of Monopoly know that that can’t possibly work.

Carl Quintanilla: He’s definitely buying Park Place and Broadway. Congressman, if you had the power to push some legislation now that really would end the Fed, as your book is titled, how would you do that without going through the volatility that would scare markets around the world? Isn’t your exit strategy as tumultuous as the Fed’s would be?

Ron Paul: I think if some people think that I would just take the key and lock the doors and close it down, yeah that would be not such a very good idea. No, I believe in transitions but what I fear is there will be no transition if you have a dollar crisis, a major dollar crisis. So I’m trying to head that off.

What I would do is legalize competition. We have competition on the international markets. When China gets fed up with our dollar, they start buying hard assets, so they can ease out. So the American people ought to have the right to do this. We should legalize the Constitution, allow gold and silver to be legal tender, allow us to carry out transactions in another currency and have it go back and forth. And then I think the Fed would just disappear eventually because nobody will want to deal in dollars. And the competition to the Fed will make the Fed be more cautious.

Carl Quintanilla: And when you say, just a personal question, when you say that you pray every night for his views to be invalidated, are you serious about that or is that just a figure of speech?

Ron Paul: No, hardly do I pray that way. But it’s a cliché to say that… But no, I don’t want his views to prevail. And they almost are. We’re living with them. I mean, Paul Krugman is leading the charge. So if you like his views actually you’re winning and I’m losing. But we’re gaining in numbers. A lot more people are looking at what we’re talking about. A lot more people are saving in gold in spite of the fact that we don’t have competing currencies. Everybody can go on a gold reserve standard and they can do a lot better than they can going on a dollar reserve standard, let me tell you that.

Carl Quintanilla: Well, we’ve got the front page of the FT. Bob Zoellick talking for more gold in the debate, you know.

Ron Paul: He’s not exactly a radical either. I think he has a lot of good common sense. I’d rather listen to him than Paul Krugman, that’s for sure.

Joe Kernen: So, is your son “Paul light” or is he… do we… we just got to wait till we see?

Ron Paul: I’m sorry, I didn’t get that one.

Joe Kernen: Is your son “Paul light”? That’s what we hear. He’s not quite you. A little more mainstream. Or will we be surprised? You must be excited, I would imagine. I mean congratulations.

Ron Paul: Oh yeah, really. He’s had a lot of criticism during the campaign from all sides. The libertarian side as well as the conservative side and liberal side. But I think you’ll have to wait and see how he’s going to vote. I was very pleased yesterday when he suggested that everything is up for grabs. You can cut everything. And of course, I’ve been making that point.

You can’t deal with our budget problem because the debt puts a lot of pressure on the Fed too, because they have to monetize our debt. So you have to get the house in order. But he was willing to say that even this military spending around the world is on the table too.

We have a trillion dollars that we spend every year just on maintaining our empire. And there’s no way in the world we can deal with our budgetary problems if we don’t and aren’t willing to do that. And too many conservative Republicans aren’t willing to think about that. But to me it’s necessary.

But it’s across the board. We’ve got to cut the welfare state and the warfare state and live within our means. You know, this whole idea that deficits don’t matter, that language comes from both liberals and conservatives. Many times you hear conservatives “Deficits don’t matter. Cut the rates and it will increase revenues”. Well, even if we cut the deficit and increase revenues to the government, that’s detrimental. The government is not our friend. The government just wants to regulate us. They’ll just pass more Sarbanes-Oxley regulations.

So I would just keep the government out of it except for enforcing bankruptcy laws, have sound money, allow liquidation of debt. Just to get out of the way and let people keep what they earn. Get the tax levels down, get rid of the income tax. Get off the back of the corporations and freedom, well actually, is a pretty good idea. It’s just that we’ve lost confidence in this country.

The business community, Wall Street they think there’s much more to be gained by being buddies with Washington than it is to be buddies with the marketplace. The market really works and that’s where the prosperity comes from. But understanding the market and having trust in the market is something that we need to do a lot more work on.

Joe Kernen: All right, Congressman. Thank you very much for appearing this morning. We’ll see you again soon. We always enjoy seeing you. We get a huge response whenever you’re on.

Ron Paul: Thank you.

Joe Kernen: All right.


  • M

    It’s funny.. all this talk about the federal reserve and control.. So lets step back once, who “is” the federal reserve? A U.S. Organization? Nope.. A group of wealthy banks located in mostly European markets? YUP.. Lets step back a little further.. the LAST person to take on the federal reserve that I can think of was J.F.K. He renounced the reserve, gave back control to the U.S. and 6 months later he was shot.. Then about 6 months after that all the silver certs issued by his administration in an attempt to give america back it’s currency were suddlenly ‘gone with the wind’.. Correct? (you look, this isn’t a conspiracy rant).. Now lets talk money & debt, there is more debt than money. There will continue to be more debt than money but the banks are betting (calculating) years out.. My question to you all is simply this: If we (you or I) were to ‘lend’ money to someone without really possessing it, it’s called fraud.. When a bank does the same thing it’s called fractional reserve banking.. legal fraud.. So how in the hell does an issue like the one we’re in get resolved when the damn framework is designed to ‘hide’ inconsistencies and accountability? Just curious…

    • DEBT IS NOT THE PROBLEM. It´s the interest that causes inflation because debts are irreversable mulitplied by INTEREST to a point where the vital circulation no longer can service the debt, and new money needs to be borrowed. So an interest based money system can only sustain itself by a growing money supply and therefore rising prices. Constant inflation is a fact CAUSED BY INTEREST. Check out Mathematically Perfected Economy, Mike Montagne.

      The goal for most sheeple seems to be to try and take away the top of the pyramid (the fed), and leave the remainder of the pyramid intact. Will that destroy the pyramid?? NO Mathematically Perfected Economy (our mandate) will take away the complete pyramid from top to base and leave them with nothing.
      All banks must go, we do not need them! They are the problem by intervening at interest, between fair traders.

      Check out my channel:

  • TheArsenalfc101

    love ron paul. what a beast

  • afterniatis

    end the fed. buy gold and silver first.

  • catobear1704

    I love RP but he’s not speaking very eloquently. I want less rhetoric and more substance.

  • Ben…Is that you? How did the meeting go on Jekyll Island?

  • MrTeslasRevenge

    7:11 Theres no Broadway in Monopoly. LOL

  • MrTeslasRevenge

    Ron Paul you are a rose in a pot of dirt !!

  • doc7474

    Rand Paul definitely isn’t Ron Paul..

  • Rasengax

    First: when collapsing the dollar, One World Currency and Second: One chip under your skin. its Implantation will not be forced, you’ll demand it because you’re a slave of money and its world.

  • because… Would you like to back up your statement with factual arguments or just use ad hominem attacks? So far your credibility is zero.

  • because… Would you like to back up your statement with factual arguments or just use ad hominem attacks? So far your credibility is zero.

  • PrettyPiZZAface

    i am the one who stole all the money from america and now spend it on german prostitutes. ron paul is envious of me. try to get me, i give you only one information: my right ball is bigger than my left, which is only common to 10% of the world population.

  • jw16e4

    Go to this website:
    human events dot com

    vote ron paul the next conservative of the year

  • TheBigBadWoIf

    hopefully folks will wake up one day but i’m not holding my breath

  • fuzzywzhe

    The vast majority of Americans have EXACTLY what they deserve for a government.

    Are you a fat lazy asshole that doesn’t understand anything about the government but you still vote, and have confidence in your government?

    Reap what you sow, asshole.

  • planet misunderstanding, most likely. When two people are mentioned, one being interviewed and one referenced, specifying a first or last initial would be beneficial. Ignore my original comment if you were referring to Paul Krugman…

  • forced4motorsports

    planet misunderstanding, most likely. When two people are mentioned, one being interviewed and one referenced, specifying a first or last initial would be beneficial. Ignore my original comment if you were referring to Paul Krugman…

  • bonfirejovi

    I love the idea of creating “some inflation”, like the fed is able to target it. They don’t have that power. Inflation is unpredictable.

  • JLowry

    No taxation without representation!

    History is repeating itself.

  • 0ctobit

    “Huge response whenever you are on ” people are waking up to the fed’s game.