David Asman: Well, the Fed announced it will continue pumping money into the economy, while the leaders in Washington still can’t balance the budget. Our next guest spent years battling policies like these when he was a Congressman, will his legacy live on? Joining me now on a Fox Business exclusive is the man, the legend, former Congressman Dr. Ron Paul. Dr. Paul, it’s great to hear from you, how are you and what have you been doing with your time since you left Congress.
Ron Paul: Just waiting on your call. I’m delighted to hear from you.
David Asman: We’re going to call everyday from now, you’re going to get sick of it.
Ron Paul: I’ve been pretty busy travelling and talking about … what are the things I talk about? I talk about the Fed, the economy, the fixing of the interest rates and all of the bizarre things that we’ve been living with, and why the Fed helped us run up that deficit and all those kinds of things that I think you’ve heard about.
David Asman: One thing that you haven’t been doing, unfortunately, is grilling Ben Bernanke like you used to do when you were a House member. And there was one classic exchange between you and Ben Bernanke, let’s just play the exchange and then I want to get you to it and current events. Play the exchange.
Ron Paul: Do you think gold is money?
Ben Bernanke: No, it’s a precious metal.
Ron Paul: It’s been money for 6,000 years, somebody reversed that and eliminated that economic law.
Ben Bernanke: Well, it’s an asset. Would you say treasury bills are money, I don’t think they’re money, either.
David Asman: So Ben Bernanke doesn’t think gold is money or a currency. But when you look at what happened in Cyprus, where the government was considering – and it still may do it, to some extent – going into your bank accounts and literally confiscating money that you have already earned and already paid taxes on, don’t you think that more people in the world are going to think of gold as money?
Ron Paul: Absolutely, and that’s the nature of government. When they get into trouble, they try to raise taxes, which is confiscation, but this is a little bit more blatant in the way they were doing it. But I’m just wondering what’s going to happen, whether they’re even going to open up those banks again. Instead of arguing whether they’re going to take 6% or 10%, they might be arguing, “When are we ever going to not open up these banks again”. So I’m sure it will happen, but I’m not amused by these kinds of things, it happened in the depression and at different times. In the ultimate test gold is money, not because I say its money, but because history has proven that. And if you really want to know the ultimate money, think of the countries that get into trouble and people try to leave their borders. You think you can give a paper dollar or a paper currency to bribe somebody at the border? No, you need gold, because gold is the ultimate money.
David Asman: Today, Ben Bernanke was been questioned a lot about QE2 and bond purchasing, about printing money to purchase government bonds, which, of course, helps the politician to pay for things he doesn’t have money for. But that idea of Quantitative Easing is running out of juice, and even people who have been supportertive of Bernanke are saying so now. Do you think that that policy might change in the coming months??
Ron Paul: It’s going to change, but not because they want to do it deliberately. Because, let’s say if today he would have announced, “We have a new policy. We think we have overdone it and we are going to gradually withdraw, we’re only going to buy 80 next month and 50 the next month”. I think that would have panicked the stock market. What we’re witnessing now is the result of this wild Quantitative Easing, pumping all the money into the bonds and the stocks, and at the same time we have 50,000 people in New York City that are homeless, we have 48 million people on food stamps. And free market economists claim, and I tend to believe them, that the real unemployment rate is probably close to 22%. So this pumping and Quantitative Easing has not solved our problems.
David Asman: Well, you mentioned the stock market, obviously it has helped the stock market go to greater heights, because if you feed free money to the stock market, they love it, they can borrow at no interest rates and make more money on deals, etc. But sometimes a company’s stock will go higher when they fire people, that happened recently with American Express, they fired thousands of people and their stock went up 5% – 6% in one day. Doesn’t trying to prop up the stock market contradict Ben Bernanke’s policy of keeping unemployment down?
Ron Paul: Yes, and I think there are two reasons for stocks to go up, one might be because the company is cleaning up its act and maybe firing people they don’t need, or there’s just a lot of money there participating in a bubble, such as with houses or with stocks, especially like the NASDAQ bubble. But that’s where the money is going, and fixing the price of money is the big deal. Many a times I watch these press releases and am fascinated with them where they go down second by second, and what is the announcement? On probably the most important price in the whole world, and most economist declare, “We don’t believe in price fixing”, but this is price fixing at its worse and everybody hangs on that, Wall Street hangs on it, and yet it’s completely foreign to the free market.
David Asman: Dr. Paul, we only have about 20 seconds, but as I said, people around the world realize the currency is not where they want to put their trust anymore. When you can look at Cyprus and you can look at what’s happening here, do you think the voters might turn back to a gold standard or something where the currency used is worth its weight in gold?
Ron Paul: I really think so, because that’s what history has shown, that ultimately once the government destroys its currency, they have to go back to something more trustworthy than a politician’s promise. And I go to a lot of campuses, and the younger generation are very much attuned to this, because I think they understand monetary policy a lot better than my generation did when we were in college.
David Asman: Dr. Ron Paul, it’s always great to have you, we will call you more frequently. By the way, how’s your son doing, is there anything you disagree with him on?
Ron Paul: I think he’s catching on pretty well, I think he’s doing great.
David Asman: Are you for his immigration policy?
Ron Paul: I haven’t got a hold of that yet, I’ve written my policy up, and I think it does pick up a lot from my book “Liberty defined”, I have a whole chapter in that. It’s not an easy subject for anybody to deal with, but it will be interesting to see how that shapes out.
David Asman: It’s a tough nut. Dr. Ron Paul, good to see you, thanks a lot.