Ron Paul: Rescind America’s Fictitious $1.6 Trillion Debt to the Federal Reserve




Transcript

Lori Rothman (Fox News): And hello everybody. Welcome. I’m Lori Rothman, sitting in tonight for David Asman. Stocks are tumbling today. Wall Street may be waking up to the idea that a deal to raise the debt ceiling (especially one with tax hikes) is exactly the last thing a huge majority of Americans want right now. The fact that Americans don’t want a deal is hanging over the White House talks like a giant elephant. A recent CBS News poll finds that just 24% of Americans support lifting the debt limit, but 69% say the debt ceiling should not be raised. Americans are aware of the consequences, too. Fully, 72% believe it is at least somewhat likely the economy will take a severe downturn if the debt ceiling is not raised. Americans clearly do not want more spending, no matter what. The President is not listening.

[Video clip: President Barack Obama: I’d rather be talking about stuff that everybody welcomes, like new programs, or the NFL season getting resolved. Unfortunately, this is what’s on our plate.]

Lori Rothman: Republican Congressman Ron Paul (R-TX) says, “Everybody does not welcome new programs.” He is running for President and he has his own solution to the debt problem. Welcome, Congressman.

Ron Paul: Thank you. Good to be with you.

Lori Rothman: Great to have you. You famously said that we should not raise the debt ceiling, and you have an idea to save 1.6 trillion with one swipe at the Fed’s balance sheet. Explain the idea.

Ron Paul: Right. We’re over the debt limit and they’re worrying about it. And I said, one solution — if we wanted to get serious and get down to business in the next year, do all the work we should do — we could get a reprieve, because we owe $1.6 trillion to the Federal Reserve. But where did they get the money to buy our debt? Well, they created it out of thin air. So taxpayers keep working hard to pay the interest to the Federal Reserve, as well as to finance these bonds if the Fed wants to take the monies. So I would say that is not a real debt. It’s a fictitious debt. It’s a dishonest debt, and that we’re not obligated. So if you don’t want pay interest for a while to the Fed, or just quit paying, then we can meet all our other obligations, and people shouldn’t be panicking that we’re going to default on our debt.

Lori Rothman: But it isn’t fictitious debt, Congressman, if you consider that that liquidity is in the financial markets. And so, if you wipe off the bonds and other assets off the Fed’s balance sheet, you still have all that money — right — that’s being hoarded by the banks, and at some point it’s going to be lended [sic: loaned] out. And then you have a big problem with inflation, don’t you?

Ron Paul: Well, this doesn’t change it. It stays the same. The Fed is not about to call that money back in. They’ve said, “Oh, when are we going to end QE2 and when are we going to downsize our balance sheet?” They’re not going to do that! The market—

Lori Rothman: But the Fed needs to have those to maintain those bonds, so that if it does call that liquidity out, in inflationary times, it can do that, to sell those bonds back into the financial marketplace.

Ron Paul: Well, all they have to do is raise Reserve requirements, and they would accomplish the same thing. So no, you don’t have to do that. But what I’m exposing is the fiction of the Federal Reserve on how they buy bonds, and what do they do with the interest, and why we owe them money, and why they contribute to the total debt of the country. And it’s not real debt in the sense that, if you owned a Treasury Bill, that’s a lot different. Or if we owe — if a Chinese owns a Treasure Bill, yes, if we default on that, that’s going to raise some eyebrows, but the Federal Reserve is quite different. I mean, this is debt that they were able to buy out of thin air. But they’ve already monetized that debt; that money is in the economy. Now, if you expect next month the Fed is also about ready to shrink the money supply, well, that would provide a problem. But that isn’t likely. That isn’t going to happen. They’re not in any mood to do that. And they’re going to continue buying debt, as they always have, so they can — they have plenty of room for manipulation, believe me! They manipulated trillions of dollars during the bailout and took care of their friends. They’re not handicapped. The only thing that’s handicapping the Fed now is people want transparency. Before, they did it in the dark of night and nobody knew what was going on. Now that we’ve exposed them, we have to see the Federal Reserve Board Chairman having press conferences, and—

Lori Rothman: I know that you are notable for — you’ve written a book about wanting to get rid of the Fed. Would you at the very least, though, be satisfied, Congressman, if the Fed just ditched its dual mandate – right — just got rid of the jobs mandate and just focused on price control? Because really the Fed, Bernanke was right when he said fuel prices, energy prices and food prices were transitory. We’ve gotten a bit of a lift off the gas price.

Ron Paul: Well, I think that’s a good suggestion, because they’ve had a dual mandate — one, stable prices and one for employment. We have no stable prices and no full employment. So I would take both mandates away from them and let them have a check-clearing outfit there, or something like that. But no.

Lori Rothman: So you must love this idea for an infrastructure bank. The jobs report — the June jobs report — was horrible. And now there’s a talk — they’re not calling it “stimulus,” but by any other name it would amount to that. What does this country need for job creation?

Ron Paul: Yeah. Well, what you need to do is change everything that we’ve been doing. We have too much spending and too much taxes, too much regulation, too weak of a currency, and we’re doing all the things wrong. But the most important thing that we’re doing wrong – and devastating thing – is we don’t allow the correction to occur. We don’t allow the liquidation of debt. We prop up all the mistakes. We buy the bad debt, where the banks that held this bad debt and these derivatives, they should have all gone bankrupt. Instead, the taxpayers got stuck with them. So we bailed out the financial institutions — the banks and the corporations and Wall Street — and they’re doing quite well. And yet, they said there would be a depression, of course, if we didn’t bail them out. We still had the depression! We still—

Lori Rothman: So do you think Americans don’t want a deal on the debt ceiling? Sorry to interrupt you.

Ron Paul: Let me still fin — let me—

Lori Rothman: Go on.

Ron Paul: Let me finish. We still ended up with the depression, because the People lost their jobs and lost their houses. Go ahead.

Lori Rothman: No, I just wanted to put to you — I mean, fine. Leave the debt ceiling; deal with the economic consequences; we hear you. So, I mean, do people just not want a deal in the end? I mean, how are we going to sort out and deal with the ramifications here?

Ron Paul: The ramifications of what is going on now and how we get back to full employment? Is that the kind of thing you’re talking about?

Lori Rothman: Absolutely.

Ron Paul: Yeah. Well, you have to do what I said. You have to change policies. We do have to cut, but we have to cut a lot! But we have to change the philosophy of government. We can’t maintain an empire. As long as we think we can do that, we’re on the way — I mean, we are literally and technically bankrupt; we can’t pay our bills, and we don’t have enough income. The only thing that keeps us going is counterfeiting our money. And the people — even today — people were buying dollars, because there’s nothing else out there other than gold. So yes, the dollar is still providing funds, but we’re counterfeiting the money. But we’re defaulting because the dollar’s going down in value when you look at your prices. The government — our government — defaults all the time. And we’re going to continue to default. But the way we’re going now, though, it’s going to be much much worse than — if we raise the debt limit, it’s going to be much worse than us biting the bullet and saying, “We need to change our attitude. We have to look at this. We have to change our way.”

Lori Rothman: We’ll have to leave it there. Thanks for engaging us, Congressman Ron Paul. Appreciate your time.

Ron Paul: Thank you.

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227 Comments:

  1. LOL..Fox News obviously backed by the foreign bankers and propagating false information.

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  2. Shame on all you negros for voting for Obama.

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  3. What?? we want to talk about new programs??? We want to act to get this country to work as it should, but he is worried about the NFL, sounds like Calderon in Mexico watching soccer when the country is crumbling down in blood!

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  4. Ron Paul fantastic ideas!

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  5. ELECT THIS MAN!!

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  6. i just watched mr. paul own ben bernake. and i say go for it to the end. audit the fed even if they try to threaten that they will crash the wall street like few years back when wall street lost 1000 points in few hours. i wish you would go for it again and audit the fed because they are just bluffing. wall street is where their buddies are and all those numbers are nothing else but numbers

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  7. Ron Paul could do more good for the economy in two weeks as President than Obama could do ever.

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  8. I think porn and news should not be mixed. I kind of get distracted.

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  9. man, i got a boner

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  10. I’m tired of everyone talking about how smart Ovomit is. He’s a moron. Every time he opens his mouth he says something idiotic. We could say that about Shrub and it was fine. You say it about Ovomit and you’re a racist.

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  11. oh and by the way you see the game here a subject as serious as the country going into the crapper and this chick is showing so much cleavage here, this is not jerry springer its financial news. Just another distraction for the sheeple

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  12. This guy Ron Paul is a really on the ball and the reporter like many people are asleep in the matrix. My only fear is a man like this who can bring about significant change in government may be a threat to the banking cartels and the fed. Kennedy tried to do away with the fed and we see the result of that. Debt is fictitious and creates more wealth for those on top. I wish this brother the best, i would vote for him in a heartbeat.

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  13. Ron Paul is awesome and the girl is easy on the eyes. I really worry for this country though because everyone says he is un-electable and yet who else can have any chance of saving us? I’ve been reading comments for a while now and most of Americans are just worried about defending their party. Both parties have screwed us. This debt is insane and Ron stated it perfectly…we need to let corrections happen. All we did was add a huge mountain of debt trying to prevent what will happen anyway.

    People please take back America. Earn the Constitution we were given to defend. Stop blaming “the other party”.

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  14. Sooo.. what did he say about job creation?

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  15. stupid bisshh its seems like she can’t digest all the truth he is tellling and her brain is exploding with all the truth.

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  16. IndianaPolitico

    Ron Paul needs our help! Donate during his “Ready, Ames, Fire!’ Money Bomb on July 19th and let’s “Restore America Now!”

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  17. 301 views on the sidebar and 1,800 under the video, what ya scared of youtube?

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  18. What the “fat cats” have that we don’t are billions of dollars at their frivolous disposal, what we have that they do not are our our sheer numbers of voting power. Otherwise money will be the main decider of our countries fate. Don’t miss the chance to correct the mistakes our prior leaders created. Ron Paul is the only congressman to have not fallen prey to greed and corruption, this country CANNOT afford another Bush Administration.

    Ron Paul 2012

    Copy paste and thumbs up

    God Bless America

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  19. She’s got great tits.

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  20. SpendAllYourMoney

    oust the crooks and liars by voting for Ron Paul in 2012

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