Ron Paul on the World Debt Crisis


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Neil Cavuto: Republican presidential could, Ron Paul, says, “Think again”. He joins us on the phone. Congressman, your concern has always been, “We’ve got a world that’s broke, and a world that just has to wake up to that fact”, right?

Ron Paul: Right, I don’t think we’re willing to admit the truth around the world, we know where all the problems are, but the only thing they talk about is spending more money and increasing the debt. But it’s a debt crisis, and it’s worldwide. This week, our national debt crossed our GDP for the first time in its history. But the world is that way too, they have a 195 trillion dollars worth of debt, and that’s approximately what the GDP is. So, the world is literally bankrupt, and all they can say is, “Where are we going to get the money from? How are we going to bail them out?” And we’re very much involved because our banks are involved with the derivatives, protecting the banks of Europe, so that’s why they don’t want the banks to go under. But you can’t solve the problem of debt and too much spending by spending more and increasing the debt. I just don’t understand how they can believe this would work.

Neil Cavuto: But would Americans be any more receptive to this painful medicine than the Italians are right now. You know, a lot of these folks singing and celebrating in Rome as we speak – we can take a peek at that again – they’re not inclined to want to accept cutbacks of any sort, even slightly raising the retirement age in Italy, which I believe is 55, they want to make it 57; it’s 52 in Greece, they want to make it 54. And they resist that in any way they can, and these Italians are resisting any adjustments in the social net in any way they can. Would we react the same way?

Ron Paul: Yea, and I think you can understand that; people become very dependent, they don’t want their allowance cut because they won’t know what to do. But the whole thing is, if we continue to do this, it will be cut. For instance, the cost of living is going up for the retired people, the standards of living is going down, so if we keep doing what we’re doing, they will be cut. And I think the government knows that, I think Bernanke knows this, but they want inflation. Certainly Paul Krugman argues this case, and they want inflation and therefore that will reduce the standard of living without saying that you have a nominal cut. But this has been around for a long time, that’s how you cut real wages when wages have to come down, because nobody will accept the nominal cut, so nobody is going to accept this. Their problem is the usual tools of spending and printing money hasn’t worked for them because the debt is so big. And just continuing to do this just makes our problems that much worse. And what I have always worried about has been that this would lead to political turmoil, and that’s what we’re witnessing today; and that will be worldwide.

Neil Cavuto: So I take it from what you’re saying, Congressman, is that you certainly, if you became President of the United States, would not be adding American moneys to either the IMF, a big international lender, or the World Bank for that matter; we are, of course, the biggest contributor to both. And when it came to bailing out a country, be it Italy or Greece, you would say no?

Ron Paul: I would say no, but what the IMF does is into the billions, but the Fed plans to spend trillions. And Bernanke was rather clear the other day: “We’re standing by, we’re watching this, and we’re ready to act so that the system doesn’t collapse”. And there will be a lot of threats and intimidations and fears, just like they did in 2008, and they will resort to bailing out. But I think the people are waking up, the rich get bailed out, the banks stay in business and the corporations get the money. But the common man, the middle class, lose their jobs and they get the disadvantage of their cost of living going up, and then they lose their houses. So the resentment is there and it’s justified. What I worry about, though, is where the blame goes. Is the blame going to go to the monetary system and the bailing out of the special interests, or will the blame go to … I don’t want them to start blaming capitalism and free markets and profits, per say.

Neil Cavuto: I was just going to say, Congressman, because you were sounding like an occupy-Wall Street there, I guess you relate more to their frustration, but not to their target. In this case, and in some of these protests this week, a lot of banks and brokerage houses and that sort of thing.

Ron Paul: Right, and I think it’s a mixed bag, I think there are some people there that are directing their attention to the Federal Reserve, but there are a lot of them saying anybody who’s rich has to be taxed, and that is wrong. If you’re rich because you provide a good product for the marketplace, you should be rewarded and encouraged. But if you’re rich because you have an inside track to easy money and credit and you get bailed out and the Fed takes care of you because you’re too big to fail; people have caught on to this and that’s their anger. But the big job we have is sorting this out and blaming the bad economic policies that we’ve been putting up with for so long.

Neil Cavuto: Congressman, good, at least, hearing you again. Be well.

Ron Paul: Thank you.

Neil Cavuto: By the way, I was getting a clarification on this concert going on.