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Encouraged and misled by Paul Krugman’s outdated economic views, the Federal Reserve is leading the charge to destroy the dollar.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


  • RonandRand2012

    The best way to strengthen the dollar is to stop printing money and end the fed.

    • Steve

      It’s there dollar to begin with, let them destroy it and let’s return back to specie!

  • RonandRand2012

    The best way to strengthen the dollar is to stop printing money and end the fed.

  • billtorny

    Federal Reserve has to much power and this power needs to be curbed.

  • sniper71267

    There is no way they can just cut social programs to the poor until these people are trained and jobs actually exist for them to go to. These people on welfare have been there for 3 generations now and only know one thing and that is sticking their hand out for more. If social programs just go over night so will the USA. Well it will take a week before they start to riot, kill and do whatever it takes to survive. The trap was set and they want you to set it off.

  • sniper71267

    Funny how they tell you they want to remove Fox news and then go and remove the most popular radio station in upstate NY and replace it with Glen Beck. LOL Retards better bet they are doing it all on purpose just to piss you off so you riot in the streets. They want total chaos so they can get rid of our constitution so they can kill off the unwanted people of society. Freedom will never exist again on this planet if they succeed and you will do what you are told or die.

  • Gonji

    Well, no doubt the structure of society is going to collapse, I don’t know if Ron Paul is going to fix years of problems in just 4 yrs of office, after all those years we voted in the wrong president.

  • samatention

    Less government over site I like that . I bet the home mortgage companies like that to. I am not sure the people that lost there home do though.

    You see some one convinced the dem and rep that the gov was in the way and should deregulate and allow derivative to be sold. And to use mortgages with out the over site.

  • samatention

    That sound like libertarian at ideas don‘t it? Except for ripping off the citizens. You know some thing going all the way back to 1965 every time there was a melt down of finance about 4 to 6 year before that you hear some thing like this (the government should not be in business. Business can do it cheaper then the government) or some derivative of that. In a year or so we get less government and then a melt down.

  • ConsciousObserver

    I said it 2 years ago and I say it today. Ron Paul should be president…. however i dont think the office of the presidency is strong enough to get done what needs to be done.

  • brokencountry123

    Ron Paul wants to seal the deal. He wants to cut social spending so ultra wealthy don’t have to foot the bill for the masses that they’ve screwed out of a job by offshoring, outsourcing, and simply being giant parasites on our economy. Look at Washington state, we have Bill Gates with $80 billion dollars yet we homeless and 9% unemployment. He could give 1 billion to fix roads or something and that would help everyone.

  • brokencountry123

    Yeah right Ron Paul, lets just drop the income tax and get the “government off the backs of corporations”. I guess those poor corporations, who offshore and profit heavily off of cheap labor abroad should just be able to keep those profits while destroying American jobs. Maybe us common folk can see some of that money should the rich spend it on foreign made products at home.

  • NaturalGroundation

    I love how Ron chuckles at the beginning “Yea *chuckle chuckle* It’s going to end”

    LOL and then throughout the whole thing he is chuckling I LOVE IT

    GO RON PAUL GO!!! Kick that Federal Reserves ASS!



  • stimmty001

    Thumbs Up if you think we should know who voted this down so we can find them.

  • bassbiff

    Knowing how intelligent the devilish families who own all the banks are, it’s hard to believe that they would allow Ron Paul to win in 2012. I want to believe otherwise, but they are so damn powerful.

  • sarasmiles05

    Quantitative easing is monitary policy? Quantitative easing is something they do when the all normal means of stabalizing the money supply has failed…. the last thing they want to admit is that they failed in monitary policy, because that is their only purpose in life and can’t get it right. Failed to get banks to lend because everyone is holding on for dear life to the falling dollar.

  • Gioxtream

    RON PAUL MY BEST CHOICE ……He touches my heart.He speak the true nationwide.

    I love you .

  • jack
  • 333burwi

    unseen problems???? wtf

  • MegaSpiderman66

    Ron Paul 2012!!!!!!

  • Gassebol

    RP is a living legend!