Ron Paul to Fed: Stop Buying Illiquid Assets, Open up the Dollar to Competition


CNBC: The other thing the markets are looking out for, about an hour from now, the Federal Reserve’s interest rate decision. Texas Congressman and Republican Presidential Candidate Ron Paul has been calling for an “end to the Fed” for years, so what better day to talk to Congressman Paul than today, “Fed Day.” Good to see you, Congressman. Thank you very much for coming on.

Ron Paul: Thank you.

CNBC: So, it looks like one thing we will see—I don’t know if you take any solace in this—is this end to this $600 Billion bond buying program on schedule, the end of so-called Quantitative Easing. Is that at least going in the right direction, from the Fed’s #1 critic?

Ron Paul: Well, if they quit, maybe that’s going in the direction. But it’s going to continue, I think is what will happen. If they quit, interest rates will go up, and the markets wouldn’t like it, and there would be panic, and they’ll do it again. So, what they do in one week or two weeks or three weeks is pretty irrelevant. My challenge to the whole system is, how did we ever get to this point where we think individuals or a small group of people can get in a room and decide what interest rates should be? It’s sort of—everyone would check the idea if a few people got together and said, “You know, prices are too high, and people don’t like high gasoline prices. We are going to fix the price of oil at $75.00 a barrel.” Everybody would say, “Wait! Price controls?! They don’t work!”

CNBC: No, they don’t.

Ron Paul: But why do they accept this notion that price controls with money work? Because it really doesn’t.

CNBC: Well, we had a State Senator come on our show last week. He wanted to cap the price of gasoline, and we basically had that exact conversation about that, about price controls.

Ron Paul: There you go.

CNBC: Well, definitely, we’ll give you that. But let me ask it to you this way then, from the Federal Reserve’s—from the point of view of watching the Federal Reserve. Absent just going away and eliminating the Federal Reserve—and I know you’ve been a proponent of that for a long time—what could they do differently now, as opposed to the course that they are taking? What could they change that would make sense, inside as opposed to outside the current structure?

Ron Paul: Well, the first thing they should do is swear off buying illiquid assets, like they did in the crisis. They bought the illiquid assets that would have bankrupted some of the banks, which they deserved, and they dumped them on the taxpayer. The other thing is, not only the illiquid assets, they shouldn’t be allowed to buy, but why not just tell them they can’t buy Treasury Bills? As long as they finance our debt, there is no major crisis, we’ll keep spending the money. We’ve been doing it, especially since 1971, because there have been no restraints. So the Fed always complains about the Congress having too big of a debt. But the debt wouldn’t occur, the deficits wouldn’t occur if the Fed wasn’t always there to pick up the pieces and say, “Oh, well, we have to do it. We have to monetize it.” So they should be restricted. But I’d like to suggest another thing, because in all my writings I don’t say, “Close the Fed down in one day,” because that would be chaotic. But I always advise that you could introduce the notion of competing currencies. Legalize the Constitution, legalize gold and silver—and if nobody likes it, they can ignore it, but if people want to use it, they can. We live in a modern age, and we can calculate the differences. Internationally they trade currencies. We could trade currencies here. But you’d have to get rid of the taxes on the gold, and you’d have to change Legal Tender Laws.

CNBC: So it seems like a lot to get. I mean, I always try to look at what can be done, realistically, within our own political system versus what somebody wants to do. And you’ve been outspoken about this for many years. Even one of our viewers wrote in and said, “If you get Congressman Paul on, just ask him, if he took office, if he was President, how long does he think it would realistically take to go back on the Gold Standard? Would that be something you could—and how would you even go about doing that, just logistically?

Ron Paul: Well, we have a very good example in our history on how it was done once. We were off the Gold Standard from 1861 till 1878. They made the decision, but it was rather easy then, because we weren’t running huge deficits; we didn’t have a warfare state; we weren’t overseas; and we didn’t have a welfare state. And they quit printing greenbacks, and it was a pretty mild transition. It was uneventful. But today it would be very very difficult, and that’s why I keep arguing the case for competing currencies and a transition. Because when you—if you continue to do what we do, you’ll have to deal with it with a cataclysmic crisis where the world rejects the Dollar. And right now it’s in the interest of everybody, because everybody uses the Dollar as if it were gold. When they reject the Dollar, we will be forced to accepting the notion that we no longer can issue the reserve currency of the world, and that will play havoc with us. I’m trying hard to avoid that crisis.

CNBC: Where, when—well, I’m sure everybody is, but—where is that crisis coming from. It’s just hard to see cataclysm in 3% interest rates, for the government to borrow money for ten years. People look at that and they say, “Boy, if things are so bad, wouldn’t investors be demanding much higher interest rates?” It just doesn’t look like the world’s about to fall apart. But apparently you think it is. When?

Ron Paul: Well, I don’t know when. But it could be tomorrow or a month or two years from now, because you can’t predict timing as much as you predict trans—

CNBC: Brought on by what?

Ron Paul: We did not know when the housing bubble would collapse, but we knew it would collapse. But it’s going to be brought on by the loss of confidence in the Dollar. We almost lost complete confidence in the Dollar in 1979, and it took 20% interest rates in order to save the economy and save the Dollar. So, it will happen. And you can’t compare it to—our Dollar compared to the Euro or the yen. Everybody’s in business, and they also all use the Dollar as their reserve. So you only can measure it against real money, which is the price of gold. The price of gold when the Fed started was $20.00 and now it’s $1550.00, so that’s a huge devaluation. And also, prices are going up. No matter how much they tell us, the housewives know that prices are going up. So we have about an 8% price inflation. That is devaluation of the Dollar. And there are people now who are claiming that’s “good” because real debt goes down. And that’s why the Fed wants to devalue the Dollar. The worst thing you can do for a people is purposely devalue the Dollar. That is morally wrong; it’s bad economics; it’s actually unconstitutional, and it leads to big trouble. And that what we’re doing: we’re stealing wealth from the People by devaluing the currency. You need a strong currency to invite in capital. That’s what we need to get our economy going again.

CNBC: All right. Congressman Paul, it’s always good to talk to you. We appreciate your views. And thanks for bringing them on the show.


  • rekindling1

    Protect our borders, Protect our constitution, Protect our Bible

  • LoboDeBayamon


  • illuminatioification

    Grevlo is gonna be the whore of the United States.

  • tytymill

    I want to be the guy who kneels down so Ron Paul can step on my back to get up to his Throne. Ron rules!!!!!!

  • dvsxavier

    Wow, this guy is really smart…

  • toasterwaterable

    Ron Paul has MY VOTE in the 2012 republican primaries and the general election. Thumbs up if he has YOUR VOTE too!!

  • in reality the 14T is cake compared to all the unfunded liablities. the promises we’ve made in SSI and medicare CANNOT be kept.

  • 2wheels88

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  • EJsTV

    Ron Paul is 75. He has to get in this time. We need to make people aware of Ron Paul, who he is, and what he stands for.

  • lestliness

    ..lets get back to Nichole.

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  • Snowblindinfinity

    Slaves, you are all slaves, I know, I am too. We kick the dirt and try to comprehend the issues, but the truth is IT IS ALL FICTION. They took away money and gave us paper, they took away our property and gave us paper, they took away our rights and gave us paper. They claim everything and we get nothing, and we continue to support them because we do not see the their only power is the gun they put to our head or the chains they put on our feet. Take the paper or die, that is their rule.
    Wake Up

  • zg76

    Now that was good interview!

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    Let’s go Paul!

  • MrEdwinauer

    TRILLIONS of DEBT isnt very clear to people?????
    What is then? C’mon interviewer, get real.

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  • “EVERYONE” is not trying to avoid the crisis. Whoever the interviewer is false…

  • slumberingsam

    “EVERYONE” is not trying to avoid the crisis. Whoever the interviewer is false…

  • zekezero12345

    The only politician I have any real time for – Ron Paul is like a breath of fresh air.

  • WKaliberr