Gerri Willis: Congressman Ron Paul is a leading voice in America’s libertarian movement. He’s favorite to win the Ames straw-poll tomorrow. But will he connect with mainstream voters nationwide? Joining me now by phone in Ames, Iowa, presidential candidate Congressman Ron Paul, Republican from Texas. Congressman, welcome to the show.
Ron Paul: Thank you, Gerri. Good to be with you.
Gerri Willis: I hear you guys are having a lot of fun out there but what I’m wondering is is if you have any reaction to this devastation last week when S&P cut our treasury credit rating?
Ron Paul: I think it was so little so late. I think that our rating on bonds should have been lowered a long time ago. I don’t think our credit’s all that good. Because we steadily default by depreciating our currency which is a real nemesis as far as I’m concerned. But nations that get this much debt, they never pay it. But I never thought for a minute that they wouldn’t send it out. And that’s usually what bond ratings agencies worry about. Whether you’re going to send out the checks and pay off the notes. But I never thought for a minute we wouldn’t do that. So, they did pass it. But if we didn’t resolve the differences, I guess I was a little bit surprised that they went and did it. But I don’t know why we should place so much emphasis on that because they did the wrong thing with Fanny Mae and Freddie Mac. They were real late on that. They didn’t give us any warning. So, you wonder. Could our own bond market be worse than they’re even rating us now? Maybe their rating actually should be even lower, since they weren’t very accurate the last time.
Gerri Willis: Well, to your point today, the Wall Street Journal reporting that their ratings aren’t even accurate. That they failed to call countries that are deep in debt and having major problems and then go bust. So, the shocking thing is we had this huge market sell-off. A crisis, a panic really in the stock market. And they don’t even get it right to begin with.
Ron Paul: I think the agencies aren’t that good at it. I think the market is much better. They discount things rather quickly. But I think the real problem is that we have a world engulfed by a fiat currency. And they’ve been holding paper money around the world for forty years as if it were gold. And we’ve pyramided debt on this. So, this crisis is very, very bad. I think the world is waking up to this fact and they don’t know where to go. Are they going to buy euros or yen or whatever? But I think that’s one of the reasons why they’re buying gold. They don’t know what to do. And we have so much liquidity in the system because that’s all the Fed knows what to do: create liquidity. But eventually that depreciates the currency and, of course, I think that’s their real goal, to tell you the truth.
Gerri Willis: Another thing that we’ve been hearing this week from market players, experts. They’re saying QE3 is a likelihood. What do you make of that? Should we be doing more stimulus? Should we be pumping more money into this economy?
Ron Paul: Well, what Bernanke said the other day was essentially QE3. He says he’s not going to touch anything until 2013. And I actually assume QE1 was what Greenspan was doing. Everybody can see that he was doing – he kept interest rates too low too long. So, I think QE is steady. And the fact they’re not backing off on that QE2 and not allowing interest rates to go up… So, it’s continuous. And the money supply figures will show in time. And the holdings of the securities by the Fed, they’re going to continue to go up. So, I don’t see that those numbers mean an awful lot. I think it’s continuous, steady with blips upward with a little extra. Symbolically, they’re trying to reassure the markets. But eventually, that doesn’t work. It works for a while and did over forty years. They’d spend more and they’d inflate more and they’d get us out of recession. But eventually the bubble got too big. The debt got too heavy. And I think the fact that more than 40 percent of our money that we need every year is borrowed, that’s a significant number. And there are many who say that when it gets this big it spells big trouble. And I don’t think anybody would argue that we’re not in big trouble.
Gerri Willis: Of course, we’re having a big national debate about how to fix that. Last night at the debate Newt Gingrich had something interesting to say about this new Super Committee that’s being appointed to fix the problem. Here’s what Newt Gingrich had to say.
Newt Gingrich: I think this Super Committee is about as dumb an idea as Washington has come up with in my lifetime. They’re going to walk in, just before Thanksgiving, and say “All right, we can shoot you in the head or cut off your right leg. Which do you prefer?”
Gerri Willis: So, tell me Congressman. Do you agree with Newt? Is the Super Committee super stupid?
Ron Paul: Newt and I have been friends. But we’ve been on the opposite side of a lot of political things. He actually had campaigned against me when I was coming back into the Congress. That was one of the best answers that anybody gave last night. I think that was great. It was entertaining. But he was very accurate. Not only is this a stupid idea, I think it’s not going to work. And I think it’s unconstitutional. I think it’s degrading to all the members of Congress and to the people. Okay, you guys can’t get together so we’re going to get 12 guys to do it. I don’t think it has any answer at all. It doesn’t address the real subject of really cutting. And all these proposals to cut they’re talking about, well… the way we’re going to spend $9 trillion worth of debt money in the next 10 years. We’re going to cut it down to $7 trillion. Nobody can make those calculations. Nobody knows anything other than the next year. We don’t know what the unemployment rate is going to be or interest rates are going to be. So, these are all projections. They don’t know what the inflation rate is going to be. To pretend they can do anything this many years out under these conditions is just daydreaming.
Gerri Willis: Well, I’m going to ask you a strictly political question here. You won the straw-poll at CPAC in 2010, 2011. At the Republican Leadership Conference this past June you were forecast to be in the top three. Are you winning this thing this weekend? And what will it mean for you if you do?
Ron Paul: I’ll answer that tomorrow night. I’ll tell you if I’m winning. I don’t know. I think we’re going to do well. And I’ve told everybody that if I don’t do better than I did four years ago, I’m going to be very disappointed. It won’t be a good sign. But I think we are going to do better. And others have rated and gauged that I’m probably in the top 3. And that’s good. We’re not going to know until tomorrow. I certainly feel good about the enthusiasm out here in Iowa. So, I suspect we’re going to do pretty well. But I guess tomorrow we’ll find out.
Gerri Willis: Congressman Paul, dunk Bernanke once for me, and have a great time this weekend. Thanks for being on the show. We really appreciate it.