Ron Paul: The Dollar is Dying – And the Fed Is Killing It

Joe Kernen: Joining us now is a man who hasn’t been afraid to criticize the central bank, Congressman Ron Paul, he’s a Republican from Texas, also a presidential candidate. Were you watching yesterday, Congressman, as the statement was coming out? And what did you do as you heard each additional statement, what was your reaction?

Ron Paul: Well, more of the same, I wasn’t surprised, that’s the only thing that the Fed knows how to do, and that’s the only thing Bernanke ever believed in. For him to have done something differently would have been a real surprise to me. But the results of what he said weren’t a surprise at all, I mean, it’s just further devaluation of the currency, and that is why gold prices went up. Actually, gold prices don’t go up, it’s just that the dollar goes down and people are anticipating the dollar is going to continue to lose its value, so we can anticipate that there’s going to be a lot of price inflation down the road.

Joe Kernen: At this point, is it parabolic yet in gold in your view? I know you’re obviously not a gold investor, but when it moves 60 dollars day in and day out, and everything seems to be going in its favor, do you think it can go to 2000, 3000 dollars?

Ron Paul: Oh yeah, because [the dollar] could go to zero if we continue to do what we’re doing, because the bubble that I’m concerned about. I don’t think gold is what you would call a bubble. I think the bubble is in the price of bonds. I mean, how could anybody have this much trust in the bonds and buy a 30 year bond and earn the interest rates they’re making? That’s where the big bubble is.

But I think what’s happening today and why I see this as such a serious thing, is that I think what we’re dealing with is the end of the dollar reserve standard, and that’s a worldwide phenomenon, it’s not just for the United States. Just think how many dollars we’ve exported, how many people hold dollars. And if this dollar is in big trouble, which is what I think is the problem, I mean this is just not a minor problem, this is probably a bigger problem than the world has ever faced before. Never has a fiat currency been used as a reserve standard so pervasively around the world.

And there are not many other places to go even though they’re still going to treasury bills, but eventually they’re going to give up. I mean, just look at what’s happening to the Swiss Franc, there aren’t enough Swiss Francs for everybody to buy Swiss Francs. So there’s not much left other than commodities and real values. So actually I think that’s what’s going to happen, but it’s going to reflect the devaluation of the dollar.

I was really impressed in 1971 when the dollar’s relationship to gold went up $3/ounce, and I was really impressed and it motivated me to get very much involved in politics. So you can image what I think about 1/1700th of an ounce of gold is a dollar. It’s just phenomenal, I’m utterly amazed that it’s lasted this long, and they’re desperately trying to keep this together because everybody has an interest in saving the dollar, even the Chinese are. But believe me, I do not believe you can save the dollar reserve standard.

Joe Kernen: Congressman, did you believe that S&P’s decision to downgrade our U.S. debt was a responsible decision? Some people have actually suggested that what they were ultimately doing was downgrading our currency, which is what you sort of suggested just now is happening.

Ron Paul: In some ways I think it’s irrelevant, the markets are much more powerful, they’ll downgrade whatever they need to. But for the moment and for traders, this can be a big deal, and politically it can be a big deal. But if one announcement like that from somebody like Standard and Poor’s who didn’t have any idea what was going on with Fannie Mae and Freddie Mac, can change things … so if that announcement pushes the dollar down and causes some chaos in the stock market, they were destined to do that anyway. So these are just excuses.

I don’t think an announcement, although in the very short time in the day to day trading, has any significance. That doesn’t change things. What if they made this announcement that the dollar was as good as gold and everything was hunky dory, those announcements would have no meaning. So I think they’re just sort of trying to catch up with the market. I mean, I cannot believe people would have high rating for any of this paper money and paper bonds long term when it earns no interest. It’s so distorted. And then they decide that all we have to do is set up a committee of 12, and we’re going to come up with so-called cuts, which aren’t cuts. There are no cuts that’s anybody’s proposing, so no wonder why people are negative.

But what I worry about the most is the consequence of currency destruction as violence. And boy, every day there is more and more violence, whether it’s in London, demonstrations in Israel, all around the world, revolutions going on and this is all related to sometimes prices of food going up and this is all related to this fictitious notion about what money is and what it should be.

Joe Kernen: Yeah, I remember… when you asked Chairman Bernanke about whether gold was money, did you find the answer not satisfying?

Ron Paul: Well, it was sort of a silly answer. I mean, he can’t repeal 3000 or 4000 years of history. Money has to come out of the marketplace, as von Mises taught, he said you can’t create money out of thin hair. Now, when you do, the only reason the dollar has existed by being created out of thin air was because it originated in the marketplace; it was a silver standard, it was 370 grains of silver, that’s what the definition of a dollar still is.

So you can’t do this, so for him to say that he can repeal it by saying, “Nah, gold is just a regular asset and we hang on to it just because of tradition”. But the markets are saying, “Look, when times get tough, they go to the gold”. And that’s not my theory and that’s not a recent theory, that’s been around for a long, long time and they’re not going to be able to repeal it.

Joe Kernen: Alright, Congressman, we appreciate your time this morning, we hope to see you again soon. We know you’re like in the top 3 in most of these polls, so I don’t know how you get to the top, but it probably didn’t hurt coming on the show.

  • goldcurrent1

    Listen to that prick at the very end: “I don’t know how you got to be at the top 3 of all these polls” The mainstream media is so obviously bought off, its disgusting.

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  • goldcurrent1

    Listen to that prick at the very end: “I don’t know how you got to be at the top 3 of all these polls” The mainstream media is so obviously bought off, its disgusting.

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  • berserker1776

    that dollar to gold chart just scared the hell out of me

    »crosslinked«

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  • berserker1776

    that dollar to gold chart just scared the hell out of me

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  • berserker1776

    if the feds keep devaluing the dollar and are purchasing power goes down is there hope jobs will return to america ….. I am asking this as a question ….. because it seems like there might be hope after the bottom …..

    RON Paul 2012!!!!!

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  • berserker1776

    if the feds keep devaluing the dollar and are purchasing power goes down is there hope jobs will return to america ….. I am asking this as a question ….. because it seems like there might be hope after the bottom …..

    RON Paul 2012!!!!!

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  • NattligMelodi

    OMFG LOOK AT HIS FACE HE IS A REPTILIAN! Just. Kidding.

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  • NattligMelodi

    OMFG LOOK AT HIS FACE HE IS A REPTILIAN! Just. Kidding.

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  • ChristianWorldOrder2

    Ron Paul you have been in Congress for a long time now and its now time for you to move up in rank and become our President!

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  • Snowbunny4revolution

    I am so scared they will implant us with the chip, very scary

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  • Snowbunny4revolution

    Wow

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  • DJTmaq

    We don’t have to revolt in arms against the fed. We can just revolt by legislation in the states. Which is known as nullification. See Tom Woods.

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  • BagOfEyebrows

    Congressman Paul, educating people on economic truths, how refreshing (something schools, public and private, haven’t been doing for decades.) It’s about time an actual intellectual be president. Look what the ‘smart sounding’ parrots have done – no more of ‘the same’, please, vote this man into the oval office and replace every member of congress that voted to raise that debt ceiling.

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  • goshinbi44

    I’m putting in my vote for the good doctor ;D

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  • taggart64

    most yanks are too thick (stupid) to vote Mr Paul LOL

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  • catholicforever

    Ron Paul really needs to point out to that all of his Republican rivals are kindergarderners, when it comes to economics during the debates.

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  • LiveFreeorDieReport

    The title of this video should be… The dollar is dying and the Fed is ‘liking” it

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  • duhg599

    Dear Federal Government: Even though the government has three branches, it is not like the branches of a tree. Money does not grow on it. Please stop spending as though it does.

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  • kristopheraugust

    Ludwig von Mises 2012!

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  • MBaxtonM

    It’s really too bad that the Republicans won’t give him the Presidential Nomination. He’s clearly the right choice. Unfortunately, it’s going to be that puppet Romney and that crazy bitch Bachmann. Which means four more years of Obama. Or not. Either way, we are doomed.

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