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.

  • rcpubtree

    Ron – spend less time on the Fed Reserve – it’s too complex for voters to figure out – talk about reforms maybe, but this issue is making you look too far out…your are right of course, but you need to stick to the others issues that you are strong on, like against the wars and fixing the economy….dumping the fed makes you too fringe right now…

    • JoeShmoe

      it’s not so hard to figure out. the fed = debt slavery.

      i’m sure you know this but i said it for the benefit of the really slow people out there.

  • yavanna1969

    NO offence Ron and I mean that most sincerely but you’re a heart beat away from ……”what?” DOnt flame me guys its a serious question.

  • herodot2

    A nice man and an idiot.

  • ChrisPCrunchy

    If Ron Paul was to win he would be JFKed.
    The New World Order wants to own and control the world and they cant do that without owning and controlling the worlds only remaining superpower.


  • ChrisPCrunchy

    If Ron Paul was to win he would be JFKed.
    The New World Order wants to own and control the world and they cant do that without owning and controlling the worlds only remaining superpower.

  • USFullOfLies

    Pentagon Deploying More 20,000 Troops In U.S. To Prepare For Economic Collapse Civil Unrest
    youtube. com/watch?v=lXHmBYkNHQg
    Clown’s Message on Debt Agreement
    youtube. com/watch?v=y82n1vSM4v0

  • wdcsucks1

    5:05 “did you find the answer not satisfying”?…what a stupid question!!!

  • yourmusicispoop

    hope they don’t pull a jfk on this one

  • tektheater88

    why is your user name RonPaul2008dotcom shouldnt it be RonPaul2012dotcom

  • nicholas02071978

    Ron Paul don’t have no string attach to him like other of the people of the Republican and even Obama has had. The only interest Ron Paul has is in us the people which is why he would make a great President. He is a guy that would stick to his gun. But he should ran as an Interdependent party. He don’t need the Republican party he would do just fine on his own. That is what we need in this country.

  • genesistwoeighteen

    Good job Ron!!! We who love liberty love you!!! Thank you.

  • hstone39

    We need to end the fed because they are the vehicle of the economy.

  • 1cont

    p.s. I just watched the tom woods video on yourchannel liked it a lot. thanks.

  • jeffbell1301

    Ben Bernanke disliked this video

  • gigiontube

    One decent and intelligent person in the whole government: Dr. Ron Paul !

    May God help us to have the wisdom to vote for decency and intelligence in the next election, otherwise we are lost forever.

  • HenSongful

    “It’s my strong defense of liberty that separates me from other candidates.”- Ron Paul. The only man who will speak the truth.

  • junkers1337

    Never blindly follow a politician. How good will this man be in a stressful situation? What if the shit goes down in Korea? How will he handle that situation, especially if China supports the North.

  • HenSongful

    “It’s my strong defense of liberty that separates me from other candidates”- Ron Paul. Only man who speaks the truth

  • atraldreams

    in debates, Ron Paul doesn’t speak as professionally or “presidential” like the other speakers because Ron Paul doesn’t train himself to brace himself for potential questions like the other candidates.

    on other words, Ron Paul speaks truthfully from the heart.

  • PeoplePower

    Save the Dollar just use Gold cpr …

    Go Ron Paul 🙂