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. Where does Faux ‘news’ find these bimbos?

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  2. Seriously why don’t people vote for Ron. They say Obama’s a good speaker? He can’t even talk right without a teleprompter and for one thing has done the exact opposite of what he should have done. Ron Paul was voted most likely to defeat Obama, and has received more donations from the military than any other candidate. How much more obvious can it get? Vote for Ron, the only one who gives a shit about personal liberties, getting rid of shitty programs, ending the war on drugs, ect.

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  3. the rest of the world is hoping u guys vote ron paul as president,,,we self need him 2 win n im from the caribbean

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  4. great video

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  5. RON PAUL FOR PRESIDENT

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  6. We want freedom now! Ron Paul, 2012!

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  7. Ron Paul is the last great hope for this country!

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  8. Obanga looked like GWB for a second there. thats what happens when he dont got his teleprompter

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  9. sciencegeekjsusfreak

    All Candidates: “I will fix your problems.”

    American People: “How?”

    Ron Paul: “Getting rid of the federal reserve, and giving liberties back to the people.”

    All Other Candidates: “Well, it’s um…err…It’s a secret.” (Discreetly shovels money up their asses.) “Now let me distract you by this trinket!”

    American people: -_- ….”BAHHH.”

    American People Now: 0.0

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  10. Ron Paul is the only hope for our country. There are no other candidates to vote for! the choice is clear vote for liberty or vote for tyranny. Ron Paul 2012

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  11. Ron Paul R[̲̅ə̲̅٨̲̅٥̲̅٦̲̅]ution 2012 Ron Paul R[̲̅ə̲̅٨̲̅٥̲̅٦̲̅]ution 2012 Ron Paul R[̲̅ə̲̅٨̲̅٥̲̅٦̲̅]ution 2012 Ron Paul R[̲̅ə̲̅٨̲̅٥̲̅٦̲̅]ution 2012 Ron Paul R[̲̅ə̲̅٨̲̅٥̲̅٦̲̅]ution 2012

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  12. imavoidingmyblock

    Ron Paul, the worlds only honest politician.

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  13. The FED actually owe the taxpayers money. Why? The constitution states only Congress can coin money. Yet that privilege has been passed onto the FED with is not part of our government. The FED is a private institution. So why is the FED allowed to coin money and then charge an interest on that debt to the taxpayers. SHOULDN’T WE BE CHARGING THE “FED” a FEE JUST TO HAVE THAT PRIVILEGE TO COIN MONEY?

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  14. Sounds like Obama is in the wrong line of work… “id rather be talking about …” maybe he should get a job on Monday Night Football or ESPN?

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  15. The media is already beginning their massive campaign to marginalize Ron Paul’s Presidential campaign for the Republican nomination in the 2012 election. In order for our movement to succeed in electing a real President like Ron Paul in 2012, we must all work together.

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  16. RON PAUL SIGN BOMB DOT COM!
    The sign bomb started out a good idea, but has turned into a HUGE network of Freedom-Loving Americans, ready, willing and able to make a difference in their communities. Our county leaders are doing amazing things in their areas, spreading the word like never before. Aside from this (HUGE) two hour event, this network of volunteers is growing into something much more powerful!

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  17. Daniel Wood Australia

    Look it doesn’t matter who you elect………….. Be them Reps or Dems, get rid of the mind set that you actually make a difference to the world and the world economy, you don’t anymore…. America doesn’t really produce anything, unless you count unrest and hate in the world (And I am not trying to be facetious here) Old saying “Charity begins at home”, start looking after yourselves because quite seriously, no on else really gives a toss………………

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  18. Lack of Sound Regulation caused the banking collaspe, you all remember 2005 & 2006 Senator Dodd was chairman of the Senate Banking Committee whose job was to provide OVER SIGHT. We as ordinary citizens who had lived and paid through the Home Savings an Loan fiasco, knew that those adds in the paper for low interest morgages, no verification, were the sighns of the coming disaster. There should be “Simple Sound Common Sense Regulation” to protect the citizens from “Corporate Crookery” and “Wall Street Wankers”. Stability for the dollar can be achieved by a return to the gold standard, The dollar printing press can be taken off overtime and put on part time. Close Corporate loop holes and end the welfare tax cuts, for the “Royal Rich. Lets get “Political Correct” out of the picture, and make “COMMON SENSE ” Legal again. VOTE FOR RON PAUL, our only hope.

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  19. First, good, objective reporting, “The President isn’t listening.” Second, yeah, we need less regulation. Because it was too much regulation that allowed the financial mess, the CDS’s, the 40:1 leverage, the oil spill, let’s have a nuclear accident over here because we ease up on regulations. Let’s use Critical Thinking! Because we still had a recession, does NOT mean that the actions didn’t work. Just bec. unemployment still went up does NOT mean stimulus didn’t work. They would’ve been worse!

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  20. First, good, objective reporting, “The President isn’t listening.” Second, yeah, we need less regulation. Because it was too much regulation that allowed the financial mess, the CDS’s, the 40:1 leverage, the oil spill, let’s have a nuclear accident over here because we ease up on regulations.

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