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News Anchor: So, according to the Federal Reserve, the purpose of this morning’s coordinated central bank action is to ease strains in financial markets and to help foster economic activity. Joining us now on the phone, in a First on CNBC interview with his reaction, is an outspoken critic of the Federal Reserve, Republican presidential candidate and Texas Congressman, Ron Paul, calling in from Manchester, New Hampshire. Good morning, sir.
Ron Paul: Good morning, it’s nice to be with you.
News Anchor: We’re told that the Fed voted 9 to 1 for today’s action. What do you make of it?
Ron Paul: Well, the fact that they voted 9 to 1 doesn’t mean a whole lot, that’s what they’re in the business of doing, and that is to inflation the currency to tide people over and to provide liquidity. And providing liquidity in a situation like this just means that they’re buying up bad debt that nobody else wants and they do this by creating credit. But I think it’s sort of a reflection of a panicky type reaction to get everybody doing this, including China. They must really be worried to get together like this. But it can’t be good on the long run, all they’re doing is, it’s a form of worldwide quantitative easing and, of course, the financial markets seem to be reassured on the short run, but that’s happened before. So I think this is just a temporary benefit, I think ultimately … it already has started, it’s bad for the dollar, it’s bad for inflation, prices will go up and there will be a penalty to be paid. They just can’t solve the problem of excessive debt and too much inflation with more debt and more inflation.
News Anchor: So, if you won power and you had a Fed chairman of your choice, what do you believe the approach should be? When you’re faced with a liquidate crunch in Europe, and clearly the possibly that some major financial institutions could fail, what would you do?
Ron Paul: Well, you shouldn’t dump it on the American tax payer, because when we create dollars and buy up this sovereign debt, we more or less are using dollars to buy up Greece’s debt. I mean, that penalizes the American people, we shouldn’t do that. And we should allow the debt to be liquidated. Greece should have liquidated their debt, they should have defaulted 2 years ago, they should have gone into bankruptcy, they shouldn’t be propping this up. They keep propping up the debt, propping up the debt, that’s why economic growth is not likely to come for a long, long time.
News Anchor: Let me bring you back to your own race, sir. 81% of Americans are dissatisfied with the way in which the country is going, and certainly dissatisfied with Congress. Why do you think that Mitt Romney is not able to better capitalize on that? Clearly he is the favorite to win the GOP race, and yet he’s rarely in the lead.
Ron Paul: Yea, I think it’s because it’s more of the status quo, I think thing all the other Republican candidates just represent the status quo: more of the same, no change in the foreign policy, no change in the Federal Reserve, no cuts in spending. I’m the one that’s offered a trillion dollars in cuts because I believe the government is so big and so out of control, we have to have real cuts. But all these other talks about cuts, whether it’s Romney or anybody else, are just cuts in proposed increases. And that’s why the American people don’t believe that they have a solution, we just keep doing exactly what we’ve being doing for 40 years: spending, excessively, running up debt, printing the money, and manipulating interest rates and we’re up against the wall now, it doesn’t work anymore. Lowering interest rates is essentially impossible, that’s what they’re desperately trying to do today. But, you know, when our interest rates to the banks are down to 0%, what are they going to do? And it used to be that the Congress would just spend more money and that would help. But how do they spend more money when there’s no money in the treasury? So no, Romney and the rest aren’t offering anything new.
News Anchor: The most successful independent candidate, Ross Perot, ran in this country when 39% of Americans were dissatisfied with the way in which the country was governed. Gallup now reports that’s up to now 81%. Many people say that the time is absolutely right for a third party or an independent candidate. In the event that you don’t win the GOP nomination, are you still leaving that option open that you would run as an independent?
Ron Paul: No, I don’t plan to do anything like that, because the system is so biased against anything against the one-party system. When you put the Republicans and Democrats together, politics never changes. The rhetoric is different, but they all endorse the same foreign policy, monetary policy, and deficit spending. But you can’t get on the ballots, you can’t get in the debates, so the system is very, very biased. We have a very undemocratic system that we have to deal with.
News Anchor: But Congressman, whilst you don’t plan to do it, are you ruling it out as an option?
Ron Paul: Well, I have no intention, I don’t talk in absolutes, but I can’t imagine it, it just seems so unreasonable. I don’t want to it, the system won’t permit it. There’s no logic to doing it.
News Anchor: But it’s still a possibility, from what you’re saying?
Ron Paul: Well, if you think one out of 20 million is a possibility, I guess. But no, that’s not going to happen.
News Anchor: Good to talk to you, sir, thank you very much for your time.
Ron Paul: Thank you.
News Anchor: Congressman Ron Paul joining us there from Manchester.