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Dylan Ratigan: Congressman Ron Paul serves on the Financial Services Committee, where he chairs the Subcommittee on Domestic and Monetary Policy. He is also not seeking re-election in the House of Representatives to focus his ambition solely on his run for the White House as a potential Republican nominee for that candidacy. And, Congressman Paul, it’s a delight to have you back here.
Ron Paul: Thank you.
Dylan Ratigan: Give me any sense of why it is we’re not having any conversation on canceling some of this debt, especially the debt that has been fabricated, invented, and absorbed into the Federal Reserve.
Ron Paul: Well, that would disrupt things, and it would expose the Fed for some of the tricks that they play. So, they’re not interested in it. I was very pleased – I did get a fair amount of attention on the Internet. People praising this idea that it was a sort of a painless way of solving the problem. But it’s really only temporary too because you don’t want to do that permanently. But if you wanted a year reprieve, and maybe the American people would get this Congress serious about straightening up their act, and get together, and bring this under control. But, yes, I suggested that it’s not a real debt. They created it out of thin air and they bought treasury bills. So, the taxpayer has to continue to work hard to pay the interest to the Federal Reserve. So, if you dismiss that debt of 1.6 trillion dollars, and payment came off, all of a sudden we’d get a reprieve. The only thing I feel that is dangerous about that, is they’ll take it like: oh boy, I can go back to spending again, and we don’t have any pressure on us to solve our problems. But it would solve the problem. No need to close the government down and we wouldn’t have to threaten people and say: well, the Social Security checks won’t be out next week, and that sort of thing.
Dylan Ratigan: And, not only that, but it also, I think, is a great way of making the point that people forget, which is that the central bank is the instrument by which we are financing our own national borrowing at the Treasury Department. In other words, we’re lending ourselves our own money that we’re making up on a computer.
Ron Paul: Yeah, it’s really a fraud and it’s deceiving the people. And, even today, before Bernanke, the Financial Service Committee had brought up the subject again that there’s a lot of people at fault. All this special interest, and the military industrial complex, the wars going on, and the members of Congress who are vying for power, and buying votes. But, ultimately, none of that would happen if you didn’t have that Fed always there ready to buy whatever is necessary to have a fixed interest rate that they think is the best interest rate. And usually it’s much lower than it should be, and, therefore, they allow this process to go on. And I said, and I truly believe it, if you didn’t have a Fed responding that way, yes, interest rates would go up and a lot of people would be worried about it. But then the whole burden would be on the Congress. The Congress would say: the more we spend, the higher interest rates go up. We shouldn’t be doing this. We shouldn’t have this much debt. And, I think we’d all act more responsibly. So, I think the Fed in many ways is a crutch. And I’d like to break that up a little bit. That’s why I suggested that we – not feel obligated to pay this debt off to the Federal Reserve.
Dylan Ratigan: And the other aspect of that, I suppose, is that this is a complex problem. And, yes, that doing what you want to do with the Federal Reserve could be a very good way to make the point, and begin the process of having to do bank restructuring. That would capitalize a long list of other things. You need to do a lot simultaneous to do anything like that.
Ron Paul: Yeah. There’d be a lot of other reforms that should be done. And some criticize my suggestion and say this would take some tools away from the Fed because the Fed might want to withdraw funds from the banks, which I rather doubt. They’re not about to do that. From Bernanke’s testimony today, there’s no intention anywhere soon to do that. But you could adjust that problem by just raising reserve requirements. If they want to remain in the business of manipulating the interest rates, they still have management tools other than only those treasury bills and draining the banking system of dollars with them.
Dylan Ratigan: For years since the financial crisis, Congressman Paul, we’ve watched the central bank print trillions of dollars in so-called quantitative easing: QE1, QE2. They did this instead of writing down the debt at the time and restructuring the debt at the time. And, instead, they gave the banks and the household debt of this country to the American government. And, so, we find ourselves at this precipice. At the same time, they’re still talking – I want to play a sound bite by the Fed chairman – they might want to do more money printing – QE3 – even as housing, jobs, and the debt problem have not been helped by those activities. Take a listen to the Fed chairman.
Ben Bernanke: The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might re-emerge implying a need for additional policy support. Prudent planning requires that we evaluate the efficacy of these and other potential alternatives for deploying additional stimulus if conditions warrant.
Dylan Ratigan: What is he thinking, in your view?
Ron Paul: He’s just expressing what he’s believed in, he’s written about, he’s taught for so many years, that the tool for the Fed, and the responsibility of the Fed, is to always print money and create credit and keep interest rates low. And he’s doing exactly what he said he would do. Of course, they’ve been doing it like you pointed out. And, today, I asked them about that 5 trillion dollars that was created. It’s essentially identical to the increase in the national debt during this period of time. You know, the position of many on his side of the argument is that we need more consumer spending. And I suggested to them – I said but all this money didn’t go to the consumers. It went to the big banks, it went to the corporations, and it went to the military industrial complex. If we had taken that 5 trillion dollars – it comes out to about $17,000 per individual – so, if they really believed in this philosophy, that if the consumer would only have the money and spend it. Of course, that wouldn’t be good policy, either. But I was trying to point out that they’re not serving the interest of the average person, they’re serving the interest of bailing out some friends on Wall Street by us buying up those bad assets. And the middle class and the poor really get dumped on. Because they’re the ones who have lost their jobs.
Dylan Ratigan: And then the issues of Washington go beyond the out-of-control banking system and its obedience to support the incumbent structure. One other of your favorites is, and rightly so, the out-of-control nature of the TSA and Homeland Security. You and I did a half-hour podcast recently which we just published this afternoon. And I want to play everybody an excerpt of your thoughts in that conversation, in which I think you were so articulate, and allow you to elaborate as to why you think what we’re seeing in the TSA is so emblematic of an out of control government. Take a listen to Congressman Paul.
Ron Paul: I think we should be regulating the Federal Reserve and the bureaucrats because we’ve allowed ourselves with this careless thinking to see what is happening at our airports and, symbolically, it’s horrible. Just think of this 95-year-old lady in a wheelchair being forced to get undressed. I’ve been saying that, if we accept that, and we’re not annoyed by it, and we don’t want to change it, I think we’re in bad shape.
Dylan Ratigan: How does the culture of the TSA reflect the dysfunction in our government?
Ron Paul: We’ve been taught and conditioned to be very tolerant of them because after 9/11, people were taught to say: giving up our liberties is very important to be safe, which I do not believe. But we’ve been willing to do that. But how far can we go, and it’s incremental. The other day, there was an announcement that, possibly, Al Qaeda might be making this plan to implant bombs under their skin within their bodies. Which means that the TSA has to be even more aggressive with what they’re doing. So, those problems are getting worse. But it’s this, I think, conviction that freedom doesn’t mean that much to people. We accept central economic planning. We accept going to war carelessly without the consent of the people and the Congress. And, here, we stand by and we say we have to go onto an airplane. It’s a little annoying but let’s do it. But it’s getting pretty humiliating and a lot of people are getting upset. But my point that I was trying to make there was: if we don’t say anything, if we don’t become outraged, what will they do next? And I do believe there are some who like to condition us to be humble servants, that is do exactly as they tell us, and be obedient to the state. And that’s not the kind of society I want to live in.
Dylan Ratigan: Me neither, Congressman Paul. And I thank you for your efforts to provoke, at the very least, debate on these critical issues, like monetary policy and the military. We’ll talk to you sooner rather than later, I’m sure. Thank you, Sir.
Ron Paul: Thank you very much.
Dylan Ratigan: Ron Paul. And I do want to direct your attention as well on the Ron Paul subject to the newly-revamped dylanratigan.com. Our entire, 30-minute exclusive podcast with Ron Paul, on everything from the TSA to the debt ceiling to the toxic political atmosphere in Washington. We cover all the big issues in depth and you can hear it all only and exclusively at dylanratigan.com or, if you follow us on Twitter, at dylanratigan.