Ron Paul: QE2 Signals the Fed’s Desperation

Ron Paul weighs in on the Federal Reserve’s last-ditch efforts to boost the economy by printing more money.

Date: 11/08/2010


Neil Cavuto: With the President defending Ben Bernanke to the world, as Ben defends his latest moves to the world as a necessary step to boost the economic recovery for the world. Texas Congressman Ron Paul know how to end all of this defending: just end the Fed. Period. He joins me on the phone. Congressman, good to have you back.

Ron Paul: Good to be back with you, Neil.

Neil Cavuto: Now I know last time we chatted, sir, you were not a fan of just sort of like making a department store out of the Federal Reserve, but that there’re other more useful things it could take on. I assume buying 600 billion dollars’ worth of government securities ain’t one of them.

Ron Paul: Hardly, hardly. He’s not there to destroy the value of the money, he’s supposed to be there to protect the integrity of money. So no, this is foolishness, it’s going to do only harm. He’s been trying it for a couple of years now and it hasn’t worked. I don’t know how many more years he’ll get away with doing this before people wake up and say, “He’s going on the wrong track. He is going in the wrong direction”. But so far, you know, at least now I think there are more questions. A year-and-a-half or 2 years ago people hardly asked 1 question, now they’re asking more questions and holders of dollars are more concerned, and rightfully so, they should be concerned.

Neil Cavuto: But, congressman, what are his options? The argument for him doing this, whether you agree or disagree, is that he can’t lower interest rates anymore; they’re at zero. I guess he can give us a negative return. But the fact of the matter is this is about the last trick pony in his arsenal. What do you make of that?

Ron Paul: Yea, well, its desperation is what it is. And I think it does as much harm psychologically because it means that he has nothing else that can be done, and it means he has no real desire to return to the market place. I mean, if we want to have a market economy, we have to liquidate debt and get rid of all the malinvestment. We have to get market interest rates, we have to get people saving money. We have to reduce regulations, we have to reduce taxes.

Neil Cavuto: All of these efforts the Fed has undertaken, from lowering rates to buying back to the tune of trillions of dollars over the years, all this paper… Now I guess the argument for it is, “Oh, things will be a lot worse if we didn’t, we’ll never know.” But what then could the Fed do?

Ron Paul: Well, nothing would be better than what they’re doing. What they have to understand is they shouldn’t be buying up bad debt. I mean, people who’ve had illiquid assets floating around and we have a financial crisis because nobody could use them anymore – but to buy them up with new money, dilute the value money of the money, stick it to the American people with the coming inflation – at the same time with the assets of bad debt – it used to be we had gold and silver to back up our currency, then we had treasury bills. Now we back them up with illiquid mortgage debt.

Neil Cavuto: You know, I tip my hat to the congressman, because very early on before you were this presidential candidate sensation, people forget that you really knew your stuff in grilling Fed chairmen. You were merciless. You were like watching Mike Wallace on steroids. And one of the things I enjoyed about those gives and takes is that you cut to the core of the issue. The emperor sort of had no clothes. I alluded to that in the beginning here. The world is catching on to something you seemed to grasp years and years ago. That in itself is dangerous, isn’t it?

Ron Paul: What? The world catching up to me is dangerous?

Neil Cavuto: Well, no. But the world now sensing that Ben Bernanke has no clothes.

Ron Paul: Oh yeah, that is true. When he could do this and everybody ignored it, you know, it wasn’t as harmful. Reactions are crucial. And the reactions now are negative. Just last week it surprised me, and even to the point where people say, “Hey, maybe we should be talking about gold again”. You know, this is pretty amazing but it’s something that I’ve always anticipated, and you never know when it will come because if you really study fiat money over history, it always ends. Sometimes it lasts 20 years, sometimes 50, but it usually ends. Gold always lasts. Gold is the ultimate money, it’s been here for 6000 years and you can’t repeal it. I remember one time asking Greenspan – I said, “You’re repealing history”. He said, “I realize that”, he conceded what I was saying, but he said, “I believe, we as central bankers, have learned to make paper money act as if it were gold”. And I said, “Well, good luck, because it doesn’t work that way”, and I think that’s what they’re recognizing. But they’ve failed, central economic planning through monetary affairs, fixing interest rates and doing all the things they do; buying up bad assets. Really, it doesn’t seem that complicated. It never seemed that complicated to me. I talk to a lot of young people (high school kids and college kids) and it seems that it’s not a complicated issue that just doubling the money supply doesn’t create wealth, it just lowers the value of the currency. Most people would realize that if you doubled the number of shares in a stock company, would everybody be twice as rich? No. The stock prices…

Neil Cavuto: That’s an excellent analogy. And again, whether people agree or disagree with you, you were way ahead of this whole debate. I mean, way, way ahead. Congressman, a pleasure, thank you.

Ron Paul: Thank you, Neil.

Thanks to Kathleen Keane for proofreading this transcript!

  • Gioxtream

    End the fed = Good bye to the corrupt baking system. They will be History.


  • Daimonxy

    I agree. It is desperation and it will not work.

  • MeatLoafEnchilada

    Oh wow, somebody missed the like button.

  • BillymanWag

    Oh yeah, and as for QE2? It’s real purpose is to shore up the banks in order to prevent a total collapse from the biggest ponzi scheme in US history with the bogus mortgages that are being unveiled now. And of course, the Fed won’t tell us this and will not allow us to look at their books. The number of crimes being hidden here are astronomical, I am sure.

  • BillymanWag

    The Fed knows exactly what they are doing. I know it’s hard to believe, but they are doing this on purpose. It is a Crisis By Design. It ain’t an accident ladies and gentlemen.

    Bernanke is a crook, along with Volker and Paulson and Greenspan, Geithner and Henry Kissinger, etc….

  • Or we could be both right but from different angles

  • 44connected

    Its amazing how as a human race we screw each other over for money, and yet money, if you look at it closely, I mean really closely, you will notice its just pieces of paper.

    And we kill for it, we lie for it, we deceive and cheat for it and some fools even work for it.

    I wouldn’t mind so much, but money is not even worth the paper its written on.

    One day in the not so distant future some nutter will press the red button because if it.

    Its just a piece of paper !

  • Gravija1980

    I think a better answer to printing, is that dollars should be genectically modified, pumped with rBGH and aspartame THEN dropped out of airplanes with the chemtrails. Then of course, Monsanto would own the rights to all ‘dollar seeds’ and sue the pants off every hardworking farmer, while the rest of America watches football and Dancing with the Stars.

  • GB

    Audit the CPI.

  • DEBT IS NOT THE PROBLEM. Fractional is not the problem, but it´s rather the legalized leverage they are using.

    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.

  • vannassaue

    Print more confetti , later you can mix it with chemtrails
    and see how fast it falls. The wonderful thing will be to make it difficult or illegal
    to hold Euro or AUD ….then foreigners will get black market dollars cheap just like Rupees and travel the FORMER land of milk and honey for peanuts, Yes peanuts
    may temporarily survive the poisoning of air, water and soil. Bees already dead .

  • Dfens

    You’re both right. If we are to become competitive with Communist China, we have to devalue our dollar. Plus it allows us to pay back their cheap money with our own even cheaper money which is an advantage to our nation. On the other hand, when the value of our money falls, the value of our savings falls. The joke there is that Americans don’t save, so who cares, right? Even so, saving should be rewarded, not ripped off so what are we teaching Americans with that approach?

    While you mull over that conundrum and try to figure out how Ron Paul’s call for “unilateral elimination of tariffs” helping this country get out of economic trouble (I know, hilarious, right) here’s someone who has taken up Ross Perot’s call to end that “great sucking sound”.

  • jim

    And to tell you the truth i think their is an insidious reason why Dr. Paul’s message is being supported by Fox News now.

    The goverment and all their buddies know true wealth comes from the productivity of the people. They siphon off as much as they can which eventually becomes the out of control monster we have today. They will keep sucking as much as they can until the economy collapses. When there is nothing left to suck because the economy implodes most of their money will be sitting in gold and other commodities safe as can be. But where will their new revenue come from???

    Then they will get off our backs, let us do all the hard work of fixing the economy and when the pig is fat they will strike again. By slowly letting out Dr. Paul’s message now, they are “preparing us for the “tough love” we are going to need to straighten the mess out so in 10-15 years they can strike they’re new “golden egg” again.

    I truly believe libertarian interests are going to come in line with corporate america. That will be good because there will be nobody holding us back after the collapse. But we must educate are children and they must educate theirs into infinity so they never get to destroy us again. That is why there is a bust and boom cycle and it has nothing to do with capitalism. It’s just once capitalism produces abundance people want more than their fair share. That’s why Dr. Paul is right when he talks about the rule of law. If we are all equal under it then nobody can benefit unfairly. (Equal taxes (if they exist), no subsidies, etc.)

    But what I meant by posting this. It is not like Fox News has become enlightened. I think they are still following corporate interest. It’s just getting to the point where the corporations have nothing left to squeeze and need us again. And in the end that is why the people always have the most power even though they never exercise it. The top 5% need us, we don’t need them. But ignorance keeps us down. God bless Dr. Paul for opening my mind to the evilness around us and being the only public figure willing to give me the true facts.

  • MrGb1965

    Too late with the RP adulation, Fox.

  • wheelori814

    Ron Paul needs to wake up, thats exactly what they want to happen to the dollar!

    • jim

      No you have to wake up. Ron Paul has consistently said the goverment (not the people) will benefit from inflation because they will be able to pay back their loans with worthless money.

      If you don’t know a person’s opinions you really shouldn’t try to speak for them.

  • Next G-20 meeting in Korea will set the gravestone for the US empire; then the time will have arrived for ethics to prevail.
    The time to put all the social excrements in jail will have arrived.
    This is not an apocalyptic statement, it’s reality.

  • edcugata

    Next G-20 meeting in Korea will set the gravestone for the US empire; then the time will have arrived for ethics to prevail.
    The time to put all the social excrements in jail will have arrived.
    This is not an apocalyptic statement, it’s reality.

  • MrDeppness

    0:08 “Texas Congress womb, Congress man, out of Ron Paul . . .”

    Is Cavuto on drugs? He went from annoying stupid to satirical.

  • savagegalt




    – B.S. BERNANKE (aptly acronymed)

  • wdcsucks1

    they didnt fail, its all going according to plan to destroy america!