Ron Paul: It’s very nice to be here and see so much enthusiasm, because I think we live in very important times. And it’s an American issue or a Canadian issue or a European issue, it is a worldwide issue. Because the times that we live in are different in many, many ways, from my viewpoint, because I believe we’re in a transition, we’re in a transition from a system of economics and politics that’s ending. The biggest event in my lifetime was the disintegration of the Soviet Empire, it came to an end. As early as 1912, it was predicted by Mises that it’s not viable; you can’t have socialism, you have to have a pricing system. And it came down, but it wasn’t replaced by the concept of liberty, it was replaced by what we call ‘interventionism’, and that’s what we’re been living with. Interventionism is government planning, welfarism, inflationism, central banking, and believing that deficits are alright. And this type of a system comes to an end, too, and that’s what we’re facing today.
In almost every country in the West, it’s debt. Debt is the big problem because it was taught for many, many years. The Keynesian theory of economics says that deficits don’t matter, and if you come up short, you keep taxing the people till the point where they can’t be taxed anymore, and then you keep borrowing till you can’t borrow anymore. Then they think, “It’s magic, all you have to do is print the money, and it’s going to work out”, and you can do that for a while. My approach to all this is that that’s all completely wrong, and it’s coming to an end, and there is a replacement and it can be found in the cause of liberty.
One thing I want to talk about for a minute or two is the labels. This is a conservative group, and I’m seen as conservative, but even the term ‘conservative’ has relative terms. If you were in the Soviet Union when it was starting to come apart, the conservatives were the ones who wanted to conserve Marxism, and the liberals were the ones who wanted to believe in liberty. The founders of the United States called themselves liberals, and that term was, in many ways, destroyed and undermined. One of the terms that I always used to have sympathy for, because it sounds good … sure we’ve all been progressives, sure we want to look into the future and see new things, but I don’t know how the word ‘ progressive’ is used up here, but in the United States, it’s a bad term if you’re a conservative. And maybe that’s true here, too. But then the term ‘libertarian’ comes up, and that has a controversial connotation. So you have moderates and libertarians and conservatives and liberals and progressives and socialists, so the terminology is very tricky. So I’ve simplified my terminology for what I’ve believe in to a simple term, and that is ‘interventionism’. If you believe in interventionism across the board, that means you want the government to tell us what to do with our personal lives, you want the government to tell us what to do with our economic activity, and you allow the government to tell other people around the world what to do. So guess what, I’ve come down on the side of saying, “I am a non-interventionist”.
And that’s what freedom is all about. The term ‘freedom’ has been around for a long time, ever since the Magna Carta, there has been bits and pieces coming about. But, right now, in the United States, I would say that we’ve been going backwards in the last 100 years. We have undermined our monetary system, our free market system, our personal liberties, we have become interventionist overseas, we endorse the idea of central banking, we don’t believe in sound money. So, in the last 100 years, we have gone in the wrong direction, and it’s coming to an end, and the limitation is the debt. And yet, the far Left will say that debt doesn’t matter. When you get into a problem, what you want to do is to spend more money. So we get into trouble economically, governments spend too much money, they borrow too much money, they print too much money, the interest rates are too low for too long, and then they say, “Well, now we’re in a recession, and it’s very serious”. So what is their solution? “Spend more money, borrow more money, print more money, have more intervention”. And then they wonder, “Why hasn’t the recession ended?”
So that’s really where we are today, so I don’t see an end to the recession coming. Yet, today, there were very good statistics on the unemployment rates in the United States, that there were more jobs made than there has been for quite a few years and the unemployment rate has dropped. But just as labels can be tricky, we have different statistics. We have government statistics, and we have real statistics. But I’m sure that doesn’t occur in Canada, because you’re all very honest and friendly people, and your governments would never want to deceive you in anything. This past week, I happened to have had a quick visit to New York City, although they have to really talk me into going to New York City after living Texas. But there was news this week from New York City, and the stock market hit new highs in nominal terms, not in real terms. If the price is in dollars, it’s a disaster, the price of the stocks are way, way down. But nominally, there was excitement on Wall Street, and people who do the trading made a lot of money, there were historic highs, over 14, 000, it was exciting. At the same time, it was announced in New York City that there were 50,000 homeless people looking for a place to sleep. Now, isn’t that astounding? But it fits in to this understanding of Austrian economics that some people thrive and some people suffer. Our school system in the states is in a bad shape in the United States, there was this statistic this morning that said 80% of our graduates from high school in New York City can’t read. This is a big serious problem. If you look at the superficial, you might say, “Well, we’re coming out of this”, but you need to look at what the reality is. There is an Austrian free market economist by the name of John Williams, and John Williams does what you call ‘shadowstats’. He measures most of the government’s statistics by the old method. Say unemployment, what’s the real unemployment according to the old statistics? He say it’s 22%, and that explains why the people feel worse than what the headlines are saying. He says our inflation rate, the prices going up, is 10%. So, this, in a way, explains the discrepancy between the way people feel and people are actually going. There’s a simple solution to all this: don’t send anybody to your legislature and to your government unless they tell you the truth all the time, that’s what we need.
But that’s been happening for quite a few centuries, because it’s supposed to be a ‘noble lie’. The government tell lies because the people can handle the truth, and I don’t accept that. I don’t accept it in foreign policy; we in America have been deceived too many times about the threats that we have around the world, we are deceived by our financial threats. And therefore, politicians and the people capitulate to the point where they want the government to do more, people become fearful and they say, “Yes, do whatever is necessary”. This has been especially true in the last 12 years since 9/11. And when people become fearful, they are more willing to give up their liberties, and, unfortunately, that’s what’s been going on. And when I talk about ‘our civil liberties’, I want to make it clear and put it in the disclaimer that I’m not talking about anybody other than the United States, because our civil liberties in the United States are threatened. This whole idea that our President now believes that he can actually assassinate individuals that have assassinated Americans without due process. That, to me, is very dangerous to be arrested by the military, these are attacks on civil liberties that cannot persist. And yet, people say, “They’re terrorists”. Well, they’re not terrorists, they’re suspects. If you have due process, you don’t handle it that way. So we’ve had an undermining of our civil liberties. But I think the solution only comes if we have a clear understanding of what liberty is all about. To me, I don’t see people in groups, I don’t see rights as designated as women’s rights or gay rights or minority rights. There’s individual rights, everybody has an individual right to their life and they should be treated equally under the law. And this is not because government says so, my belief is that it’s a natural God-given right to your life and your liberty.
Now, what would be the consequence of this if our governments did this? Well, if it’s your life and your liberty, wouldn’t it be correct to assume that the fruits of your labor are also yours to keep? My goodness, that would be a challenging thought, what does that mean, there wouldn’t be an income tax? That is right, we wouldn’t have income taxes, because it would be your money. And then they start worrying, “Well, how do you pay for the government?” Well, why don’t we have a lot less government, and then we wouldn’t have to worry about that, that’s what I’d like. The best thing to try to work into this structure is to try to have a rule of law. In the United States, it’s the constitution, all of us take the oath to follow the constitution. But, low and behold, everybody takes the same oath and everybody has a different interpretation of the constitution, and they don’t lose any sleep over it. So the rule of law doesn’t work. So you have to have a rule of law, but you have to have quality people and people of character who will actually follow it. But restraints have to be placed. Our constitution was written not to restraint the people. If you read it carefully, it was written to restraint the government. It said, “The government, thou shall not do this, this and this … and stay out of the personal business and economic business of all individuals”. One issue that I’ve addressed quite frequently, and I think it’s important, because what has happened, probably over the past 100 years, is we’ve taken this concept of liberty, which I think our founders understood pretty well while writing the constitution, that liberty was life, liberty was a right to your life, a right to keep what you earn. But somehow, a while ago, it turned out that people took liberty and chopped it into two. They talked about personal liberty, your lifestyle, your religious values, your personal values, your sexual values and all these social things, and they said, “Oh, we can’t allow you to just do what you want, you might do dumb things”. And the other group says, “Yes, but we can’t have economic liberty because somebody is always going to suffer, people will suffer, and we have to make sure that there’s equal distribution”. So some people will object to that and protect economic liberty, and some will protect personal liberty. My belief is that if you believe in liberty, you will protect economic liberty and personal liberty, and they’re all one and the same.
This also offers a political opportunity, because, generally, from my viewpoint from the United States, I feel the Left is a little bit better, but not really all that good in protecting personal lifestyles. And the Right is generally better, even though we have conservatives in the United States that aren’t all that conservative, but they generally are known to protect economic liberty as well. But if there is an appeal for liberty to bring people together, why shouldn’t we be able to get people of all persuasions to come together to defend liberty. It’s not so much that everybody will use their liberty in the same manner, but they want their liberty because of their personal use. The big challenge, though, economically and socially, is if you get your personal liberty and you get your economic liberty and if you don’t do well, or if you do harm to yourself or you can’t take care of yourself, you can’t go bugging your neighbors through your member of parliament and say, “Well, I didn’t do so well, so I want you to go to my neighbor and get something and take care of me”. You have to assume responsibility for all your actions if you expect to assume the benefits of all your actions.
What I’ve come across in the United States in these last 5 years is a dramatic change in attitude, it’s an exciting change, and especially with so many young people as I go to our college campuses. And that is, there’s a recognition that what I’m saying is true, that there is a disconnect between many who are making a lot of money and doing well and getting the bailouts, and those that are suffering. Our housing programs were designed to make sure everybody had a home, and it was magic. Buy a home for $100,000, and in a few years it’s worth a $150,000, its magic, it’s a cure-all. And everybody qualified for credit. Now, Austrian economics teaches that if you create a lot of credit and have artificially low interest rates and have overbuilding, you have a bubble, and the bubble will burst. So the programs were designed to make sure all poor people had a house, and they would get rich because the value of the house would go up. The truth is, you can’t create wealth out of nothing, and it will end, and it did end. So what happened to the poor people? They lost their jobs and they lost their houses. And guess who got bailed out, the people who were doing all the speculating and making billions and billions of dollars got bailed out. And then the poor and the middle class get upset.
I think we as libertarians and conservatives come up short in identifying with the people who get messed up with this economic policy, and we lose the moral high ground because those who want to use force to take from productive people and give to the non-productive, win by saying, “We really care”. But if we really care, and if we have humanitarian instincts and we want to help people, we’ll argue for the cause of liberty, sound money, and free market economics.
But the recognition is there today, and most people are starting to realize it’s not sustainable. Even those who are able to work in the system and trade the stocks and make money know it’s coming to an end and that these debts are unsustainable. Our cities and our counties and our federal government are all at that point where they can’t reverse the tide. Now, the one advantage that we have in the states is the fact that since World War II, we have been the economic and military powerhouse. Economic wealth and military power conveys confidence in the system, it conveys confidence in the currency, and it was designated that the U.S. dollar would be the reserve currency of the world after World War II. And this gave us a great privilege, so we immediately abused that privilege from 1945 up until 1971. And as predicted, when I was starting to read economics and the predictions were made in the 1950s and 1960s, this can’t work, you just can’t print dollars and pretend that if any foreigner (Americans weren’t even allowed to own gold), comes and puts down $35, he can get an ounce of gold. We went from 700 ounces of gold to less than three hundred million ounces of gold, and it had to end, and it did, the market ended it. So it broke down, and it was eye-opener for me on august 15th, 1971. And I thought at the time, “This is a big, big moment, where is it going to lead to?” And I thought it would lead to a lot of trouble, and we’re still suffering from that problem. But I never dreamed that the confidence worldwide would last so long, that there would be such a trust in the dollar. Today, we’re suffering from a severe inflation, there’s no confidence in the economy, and that’s why real investors worry. We’re not rebuilding our steel plants and all, we’re not productive. The only thing that we’re capable of producing that the world is still willing to take, are the dollars.
And I don’t understand for how long or why they will, but they keep doing it. But there is an interest in protecting the dollar. Even if the Chinese became unhappy with this, and they could bring us down because they have 1.3 trillion dollars, they can mess up the markets pretty well. But why would they want to ruin their dollar holdings? So, in a way, we’re holding people hostage. And as long as there’s trust in the dollar and confidence in the dollar and confidence in us, this thing is going to continue. But what it does is it builds a bigger and bigger distortion, a bubble, and the biggest bubble from my estimation today is in the bonds, because you’re getting negative interest rates and people are still buying them. And some day that will come to an end, and things will have to change.
So we still have prosperity, you see it here and you see it in the United States, but the prosperity too often is based on debt, and that is where the limitation is. So we have seen the consequences in some of the European countries, like in Greece and Spain and Italy and these other places. But it will come and it will affect all of us, and when it affects the dollar, it’s a worldwide phenomenon. And this is why I believe that a revolutionary spirit and a change of things, the acceptance of the fact that we’re working with a failed system … the Keynesian system doesn’t work, it’s not socialism in the sense of government controlling wages and prices and supply and demand. There’s no way, because the most important thing in a free market are prices.
If you’re in business, and you have to decide something, if your competition is giving the same product at a better price, you better do better. Because, in a free market, the real determining factor is the consumer, the consumer is King. It’s not the labor union, it’s not labor, it’s not the businessman, and the businessman should never be protected. But, today, what’s happening is we protect our businessmen all the time; we bail them out, and we have a military-industrial complex way out of proportion to what it should be. And, for this reason, the people have allowed this to go on for so long that now it will come to an end once this debt is recognized.
Now you can say, “Well, if you don’t have wage and price controls, why do we have such distortion?” It has to do with the monetary system. It’s the fixing of interest rates. They say, “Oh yes, isn’t that wonderful that interest rates are 0%?” Greenspan was doing this for a long time, and most people can see that Greenspan had interest rates too low for too long and he created this distortion. So Bernanke says, “That is true”, so what does he do, he lowers them even more and he even prints more money. So it just goes on and on. But the big point there is the fixing of interest rates lower than the market value. You cannot run a sound, growing economic market without savings rates that are honest. The government today has a system with central banking where they are the central economic planners, and they come in and we get into a recession, which is essentially what happened here, and they say, “We can get out of the recession by printing more money and lowering interest rates”. And then we’ll wait and see what they’ll say what happens if prices start to rise, which they will, and they’ll say, “Oh, then we have to slow the economy”. So a booming economy with growth is corrected by causing a slower economy. Now, if you have a free market and the economy is booming and there’s economic growth of 25%, nobody wants to turn it off. We purposely turn it off to crash the economy to manipulate the prices. So they’re price fixers, they’re worried about the prices of commodities, and they’re going to fix it always with central economic planning.
We had that debate at the time of writing our constitution between Hamilton and Jefferson. Jefferson was a hard-money, he was against the central bank, Hamilton argued for the central bank, and they had the first national bank. So we’ve been arguing this case for a long time. Guess which side I come down on? I say no central banking and no Federal Reserve System. But that could be designed not by ending the Fed in one day, we’ll give him a week or two to just introduce competition, allow competition to exist. Today, in the United States we have a gentleman that instituted the Liberty Dollar and let the people use their own silver dollar, and the constitution said only silver and gold can be legal tender. Well, he was immediately arrested, his gold and silver to the tune of millions of dollars was confiscated. He never committed a crime, never committed fraud, never told a lie, and he was charged with counterfeiting and terrorism. So I would say that’s overstepping the bounds and abuse of liberty and common sense.
One reason why a lot of people object to giving too much freedom of choice to the individual is that if you have your social liberties to make your decisions about your own lifestyles, you might do things that others might not think appropriate. They say, “Well, we have to take care of people and guide them”. And I think what has to happen and what is the problem there, is if people do things that they don’t approve of, they become more intolerant. But, if you legalize freedom of choice in personal behavior, it doesn’t mean you endorse the behavior. If we have legalization of religious freedom, some people have this religion and some people have another religion and some people have no religion, but most people will accept that, and that’s rather tolerant. In the last 30, 40 years we’ve spent about 5 to 6 trillion dollars enforcing laws which I think make no sense whatsoever, they have caused our prisons to have more prisoners than China, and that is the irrationality of the drug laws that tell people what they can put in their mouths and what they can put in their bodies. I think the drug wars needs to be repealed.
But, at the same time, I have children and grandchildren, I’m a physician, and I say drugs are very, very dangerous. But, if you compare the so-called illegal drugs to prescription drugs, a lot more people die from the prescription drug abuse. Right now we’re suffering from an epidemic of suicide in some of our veterans, and we have a lot of violence in our schools. And somebody just did a study in which they took the last ten episodes of violence where young people went and took guns and irrationally shot people, and all then of them were on psychotropic drugs. So this is a different problem than some people might think.