Date: 02/26/2010
Channel: CNN
Host: Jack Cafferty

Transcript coming soon

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Government Stimulus, One Year Later

by Ron Paul

Last week marked the one year anniversary of the American Reinvestment and Recovery Act, or the stimulus bill, passing into law. While the debate over its success has been focused on whether or not it is stimulating the economy and on various questionable uses of funds, in my estimation this legislation is accomplishing exactly what it was intended to accomplish – grow the government.

Those of us concerned about the ever increasing level of government debt gasped at the astonishing $787 billion cost estimates for this bill. True to form it has actually cost 10 percent more at $862 billion. We heard over and over that government could not sit around and do nothing while people lost their jobs and houses. The administration claimed that unemployment would not go above 8 percent if the stimulus bill passed. Now, a year later, the government estimates that unemployment is over 10 percent. The real number is closer to 20 percent. It appears that those promises were total fabrications in order to close the deal.

In any case, the American people know that more government spending obviously equals more government. If the goal was to strengthen the private sector, Congress would have allowed businesses and individuals to keep more of their own money through meaningful tax cuts. Outrageously, the administration claims that they did “cut taxes” by reducing withholding, and that they have stimulated the private economy by increasing the amount of money in every worker’s paycheck. What they fail to mention is they did not change the total amount of taxes due. This means that all that money not withheld from paychecks will add up to a big unpleasant surprise when returns are filed this year. Many tax preparers are already seeing shocked taxpayers having to come up with big checks to the government when they normally expect a refund. Stimulus, indeed!

The administration also claims that thousands of jobs have been created or saved by this massive spending bill, but these are just more government jobs, and counterproductive in the long run. Funding for the public sector necessarily comes at the expense of an overtaxed private economy. But, it makes sense that government would seek to expand its payroll since every new bureaucrat becomes a likely advocate for big government, when an increasing number of Americans are demanding the opposite. But the more the burden, the closer the government parasite comes to killing its host.

Rather than learning the lessons of the past year, the administration is moving full-speed ahead to do even more economic damage. With the stimulus bill set as a precedent and victory declared, another “jobs” bill is in the works. And, in order to address the unavoidable issues of our massive deficit, the administration has named a bi-partisan commission to find ways to decrease it. Tax increases on the middle class are notoriously back “on the table”, exposing that campaign promise as another instance of merely saying what the people wanted to hear. If the obvious solution to our spending problems was seriously put forth, that is, getting back to the constitutional limitations of government, I would be shocked. More likely, this will be a tactic to increase taxes and spending in a way that passes the political buck.

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Date: 02/19/2010
Channel: CNBC

Transcript

News Anchor: The new normal may mean big changes at the institution that controls America’s money; that, of course, is the Fed. Our latest survey from December at CNBC shows more than 30% of Americans have little or no confidence in Ben Bernanke’s Federal Reserve. So, are major changes in store for the Fed, changes that will affect how all of us live our lives, literally?

Texas Congressman Ron Paul is fighting for congressional oversight of the Fed. David Wessel is author of “In Fed We Trust: Ben Bernanke’s war on the great panic.” And, of course, he is the economics editor for the Wall Street Journal. Representative Paul, go ahead to the uninitiated and please make the case for what is so wrong at the Fed.

Ron Paul: Well, first off, the Fed was created in an unconstitutional method. You’re supposed to have authority somewhere to establish a central bank. And second, it’s only economic mischief that the Fed creates. They created bubbles in the 1920s and depressions in the 1930s and business cycles all depended on the Federal Reserve creating bubbles and then the bubble has to correct itself. It’s based on the theory that there should be central economic planning.

I happen to believe in the free market. And it amazes me listening to the business stations, how easily they just accept this notion that economic planning is okay and the Fed is in charge of it; they just manipulate interest rates. “Oh, they’re going to raise the interest rates a quarter percent.” Banks are still getting their money for free, and yet when the little guy and the businessman and the individuals go to the bank, they can’t get a loan. They either don’t have the right collateral, or they don’t qualify. And yet a bank can have bad collateral; they can dump all their bad assets on the Fed.

So it’s a wicked system, it’s immoral, it’s bad economics, it’s not constitutional, and at least even for those who disagree with me on what we should do, I have a large number of people in Washington now, 317 co-sponsors say “We at least ought to know what they’re doing. Who’s getting the money? What their deals are? How do they bail our foreign countries? What kind of deals they make with foreign countries and foreign central banks?” They have this authority, but we in the Congress have no right to know what they’re doing and I think that’s wrong.

News Anchor: Alright, I’m going to follow up on that in a moment. But first, David Wessel, obviously you were one of the most knowledgeable people about this institution in the world. What do you think about Ron Paul’s point? Is the Fed, despite all these minutes that come out after every meeting where they supposedly tell us what went on, is it still a black box institution as evidenced by what happened last night? They had a recent meeting and didn’t do anything and then they came out and surprised us last night with a rate hike.

David Wessel: Well, Congressman Paul has a very strong point of view, and he’s written a pretty interesting book called, “End the Fed”. So you know where he wants to end up.

News Anchor: We know where he stands, yes.

David Wessel: I think that the Fed has traditionally been too secretive for its own good. Every time somebody asks them for information, they say we can’t give it to you because it will harm the economy. Then a couple of years later they let the information out, and the economy doesn’t come to an end. I think the Fed does provide more information than Mr. Paul suggests, and frankly I don’t see how anybody was surprised by the discount rate move. You’re absolutely right, they were. Ben Bernanke said he was going to do it; we had the minutes of the meeting on Wednesday that said they were going to do it. And then on Thursday a whole bunch of people, who apparently don’t read the Wall Street Journal or listen to CNBC, said they’re surprised. The question is, why weren’t they listening.

News Anchor: But why didn’t they do it at a scheduled meeting? See, that is a fair question, isn’t it? I mean sure they everyone knows they’re going to do it at some point. But they like to keep us in the dark as to when. Why is that helpful?

David Wessel: I don’t know why they didn’t do it at a scheduled meeting, but frankly I don’t think that that’s really a big deal. I think the big deal and the thing that Mr. Paul is saying and which gets a lot of credibility with people is, we have set up in this country like in every capitalist democracy, an independent central bank that is not controlled by the elected leadership. And most of the elected leadership thinks that if they set interest rates, the economy would be worse. And as a result, they’re a kind of anti-democratic mysterious thing off to the side. And that was okay when the economy was great, it doesn’t look very good when we go through the worst crisis since the Great Depression. So they have become a lightning rod for everybody’s anger. Everybody senses that Wall Street got bailed out and Main Street didn’t.

Ron Paul: Can I answer that?

News Anchor: Ron Paul, go ahead.

Ron Paul: Because I don’t think it was intentional, but it was intended to discredit what I’m saying. But I don’t want Congress to set the interest rates. I want the market to set interest rates. I want the market rates of our CDs so the people who save… I used to think savings was a good idea; people who are frugal and take care of themselves. But today they get 1% or 2% on their CDs; the market rate might be 8%. So I don’t want the Congress to set the rates, and that’s a lot different than me saying, “Well, congress would know.” I mean, it would be a disaster. I don’t like economic intervention. And we don’t have capitalism, we have economic interventionism, we have crony capitalism. But we do not have free markets at all.

News Anchor: Let me ask you your point of view, Ron Paul, on what David Wessel said when he said, “I don’t think it’s a big deal that they did this inter-meeting.” And I know people will make the argument that it’s not really a rate hike and they’re trying to say it doesn’t matter and that’s why they did it. But isn’t what they did last night evidence of what you are concerned about in terms of the lack of transparency.

Ron Paul: Sure it is. To me that’s rather minor compared to what I’m interested in. I want to find out all the details about why a company like Goldman Sachs can come out pretty well and Lehman Brothers don’t come out so well. And I want to know what they do internationally as well. I mean, like for instance, I would like to ask Bernanke next week whether or not we were in the discussions to bail out Greece. I can’t for a minute think that we weren’t involved in that. And if it involves extending a loan or a grant or being involved and putting pressure on our dollars, indirectly over time, the middle class in this country, the people suffer because they lose purchasing power. The people are behind. Wall Street’s doing great; they’re making more profits now than last year. They’re all up. But the average person is not as well off as they were 10 years ago. And this is because we believe we can bail out everybody. I think the system is very politicized because Congress runs up the debt and they know the Fed will be there; they’ll monetize the debt. But the interest rates will sky rocket.

News Anchor: One quick final question I want to ask each of you to react to: Mohammed [...]’s biggest concern now – it was not as big as a year ago, but it is now – is the Fed losing independence, which would be your dream coming true, Mr. Paul. He says he’s concerned if they lose very independence that all of a sudden something unforeseen, unexpected happens and the Fed can’t go and act because it’s got go get approval, I guess, from the GAO, under your plan. What’s your response, Dr. Paul?

Ron Paul: No, that’s completely wrong. I have no oversight for 6 months. There’s no interference in the FOMC. Under these conditions nothing would change other than the fact that they would know that one day, not in the too distant future, we’ll know what they’re doing. So that’s an absolute misinterpretation of what I’m talking about.

News Anchor: Final word, David Wessel, to Mohammed’s question.

David Wessel: I think there is a risk, not necessarily because of Ron Paul, that the Fed will not have as much freedom to respond to a financial fire next time. But I believe that in the end, the politicians don’t want that to happen. They make a lot of noise and they might change the way banks are regulated, but in the end they’re afraid of taking responsibility for the next crisis. They want the Fed to be able to get the blame so they’ll give them the freedom to fight the fire.

News Anchor: Thanks very much, Ron Paul and David Wessel.

Ron Paul: Thank you.

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Location: CPAC 2010
Date: 02/19/2010

Transcript

Ron Paul: Thank you very much. Thank you. Wow, look at this. Thank you, thank you. It sounds to me like the revolution is alive and well. Wonderful, it’s great to see such a nice crowd. Quite a few here. 10,000 people, all interested in promoting good government, limited government, and personal liberty. I would say this is a grand opportunity for all of us to come together because something is brewing. Something is brewing big. This is a different year than anything we’ve ever experienced before, and I am optimistic to believe that a lot of good is going to come out of what is happening in this country today, whether it is the CPAC meeting or the Tea Party Movements or the recent victories in the elections. But believe me, by the end of this year I think this country is going to be a lot better off.

You know, the one thing I think brings so many of us together and what’s been happening since the last couple of years has been the idea of having change. Matter of fact, somebody won an election using that slogan: “a change”. But there is a change that we want that we haven’t gotten yet. And I think that’s what we’re here to talk about; what kind of change do we really want? And what can we agree on so that we’re not talking about different things? And to me it’s very important that we understand what conservatism means. To me, to be a conservative means to conserve the good parts of America and to conserve our Constitution.

I first got involved in politics in the 1970s because I was very concerned about the financial situation. The Bretton Woods agreement broke down, the gold standard was cast aside and I said, “This will usher in the age of big government”. And that came in under a Nixon administration and since that time we have been struggling. We have been struggling with the conservative message and we have had bits and pieces of this coming together. But we really haven’t had the follow through. We had a revolution of sorts in 1980 with Ronald Reagan. And then, of course, we had 1994 when we took over the Congress and that, of course, was very good, and that was designed to limit government. But government kept growing. Also in the year 2000 we had a remarkable event; something that hadn’t happen in more than 40 or 50 years when there was a Republican president, a Republican congress, a Republican house, and a Republican senate. But we didn’t get the revolution. There was a lot of desire and a lot of pressure by people like you, saying, “What we want is limited government. We want balanced budgets, we want our liberties back.”

You know, and I think what has happened, and I see what our problems are in philosophical terms, not in partisan terms. And I think what happened, especially back in the teens of the last century when Woodrow Wilson was president, and those boos are rightly deserved, let me tell you. But I also use this as an opportunity to put a little pressure on conservatives who had some of their views changed over time. Just think of what would Woodrow Wilson stood for. He stood for world government; he wanted an early United Nations, League of Nations. But it was the conservative Republicans that stood up against it. But how often have you heard today, maybe you did, but how many people are saying, “It’s the conservative position to not even belong to the United Nations”?

1913 wasn’t a very good year. 1913 gave us the income tax, the 16th amendment and the IRS. And what’s wrong with getting rid of the income tax and the 16th amendment. I think it would be a great idea. And, of course, I’ve already taken a very modest position on the monetary system. I do take the position that we should just end the Fed.

But there were other things that went on during Wilson’s administration. Our foreign policy changed, I think it was for the negative. His goal was to make the world safe for democracy and he prodded us into a war that we should have never gotten into. And we as conservatives, too many conservatives have accepted this principle that it is our moral and legal constitutional responsibility to engage ourselves and make the world safe for democracy. I don’t think it’s possible.

Matter of fact, if you think back just a short time ago to the year 2000 when George Bush was running, guess what he ran on, and guess what he won on? He was running against an interventionist foreign policy, he was running against Clinton’s policy of intervention and nation building and being the policeman of the world. And he was elected on that. There’s nothing wrong with being a conservative and come up with a conservative belief in foreign policy where we have a strong national defense and we don’t go to war so carelessly.

What is not conservative about saying, “Don’t go to war unless we go to war properly with a full declaration of war, and no other way”? Unconstitutional wars cost a lot of money, they undermine our constitutional principles, and, as Randolph Bourne said, “War is the health of the state”. So if you like small government, you need to work hard and have a strong national defense that is not so militant. Personal liberty is the purpose of government; to protect liberty, not to run your personal lives, not to run the economy, and not to pretend that we can tell the world how they ought to live.

Now for those who disagree, I have a few comments. Because I understand the disagreement; I’ve been there and I’ve been in the service and I’ve spent 5 years in service and I know all the argument. But the bottom line, eventually, for all conservatives and all constitutionalists will be, how are we going to pay for it? It’s driving us to bankruptcy. We are now spending 1 trillion dollars a year to manage our world empire. We’re in a 140 countries, we have 700 bases. And, quite frankly, have you noticed the debt is exploding and it’s not all because of Medicare. And believe me, we don’t have enough conservatives on the hill to start tinkering with Medicare; they’re not going to cut that.

So eventually this country probably won’t do what I suggest – that we back off and back down, spend only the money that’s constitutional. I’ve made to promises to my district. I will always vote what I have promised, I will always vote the Constitution, as well as I will not vote for one single penny that isn’t paid for, because debt is the monster, debt is what’s going to eat us up, and that is why our economy is on the brink. We haven’t had the collapse and we haven’t had the correction. We are on the brink of a financial cataclysmic event because what we’re leading to because we’re spending too much money, we borrowed too much. At the present time, the Chinese have backed off from what they’re loaning us, interest rates are starting to go up, inflation factors are coming up. Believe me, that next step is a currency crisis because there will be a rejection of the dollar. The rejection of the dollar is a big, big event.

And then your personal liberties are going to be severely threatened because then we’ll usher in people who say, well, just like they’ve had so far, “we’ve had an event”. And this is not the democrats alone. Democrats, Republicans … they said, “Oh, so what we should do is spend more money, stimulate the economy, borrow more money”. And still there won’t be enough, so what do they do? They go to the Fed and they tell the Fed, “Print more money”. Believe me, it won’t last. It’s going to end. You can’t double the money supply and not expect some really big events with inflation.

But back gain to Woodrow Wilson. He was not an individual who respected civil liberties. And the conservative Republicans at the time fought him on the Espionage and Sedition Act. The Republicans didn’t like him. He arrested thousands of people because they showed dissent against the war. Yes, how do you want it? You want it that way? Yes, you may have a position on the war. Others may have another position. But we all ought to be together, that you have a right of dissent and you should never be put in prison for dissenting.

A famous person was arrested back then. I wouldn’t have agreed with his political beliefs. But he was a famous person and he did speak out against the war; which he had a right to do. It was Eugene Debs. And he was put in prison because he spoke out and Woodrow Wilson didn’t like him and because the Congress passed these laws which the Republicans objected to. But he was put in prison indefinitely and I guess because of Woodrow Wilson’s illness and all towards the end, he never got a pardon. You know who gave him the pardon? Warren G. Hardy, a Republican.

There is nothing wrong with describing conservatism as protecting the Constitution, protecting all things that limit government. Government is the enemy of liberty. Government should be very restrained. And as I have said so many times, it’s time that we do study and understand from a conservative viewpoint on how much we should be engaged around the world. And we have good backing from good Republicans of the past. But now that is the past. I don’t live in the past because I see freedom as a very progressive modern movement. But in the past, since Woodrow Wilson’s time, we as conservatives, too many have taken on this saying that we are responsible, but that is a neoconservative viewpoint, and not true conservatism.

Who do you think it was that tried to keep us out of the wars? The Republicans did. One of the greatest republicans, and he’s called Mr. Republican, there’s a statue over in Washington of him, and that is Robert Taft. He worked hard to keep us out of war. He also thought that it was a violation of our rights to have a military draft. He strongly opposed the draft. He was strongly opposed to NATO and didn’t like the United Nations, and here we have casually accepted all this. But who was it that coined the word “The military-industrial complex, and beware of it”? It was Eisenhower that told us about that.

So there is every reason for us to think seriously about, you know, what we really believe in and what conservatism actually really means. You know, in 1956 I was in college but I thought a draft was coming because the French and the British got into a fight over the Suez canal with the Egyptians. The Egyptians wanted to run the canal. So I was worried because I thought I would be drafted. I wasn’t drafted for 10 years after that, but I thought I would be drafted because they came to Eisenhower and said, “Come help us, take care of us. We’re taking this canal.” And Eisenhower said, “I’ll have no part of it.”

But back a hundred years ago, especially around Woodrow Wilson, what happened in this country is we took freedom and we chopped it into pieces. We don’t think of freedom as something unified. There is only one kind of freedom, and that’s individual liberty. Our lives come from our creator and our liberty comes from our creator. It has not nothing to do with government granting it. If you want small government to protect liberty, that is well and good and that’s what the founders believed. And that is exactly what the Constitution was written for. But if we have some group over here defending, “Oh, economic liberty is good.” That’s right, we do. Accept a Republican president said, “We’re all Keynesians now”. We’ve been living with the Keynesian philosophy and economics are still all over the hill. And how many people on the hill are saying, “End the Fed”?

But personal liberty, if our liberties come to us as individuals, they are not collective, freedom does not come in groups. You don’t have freedom because you’re a hyphenated American. You have freedom because you’re an individual, and that should be protected.

But I do not believe freedom can survive and I do not believe we as conservatives can contribute much if we still think freedom only comes in pieces: that you can protect economic liberty but not personal liberty. Sure, I imagine everybody in this crowd would say, “Yes, protect our right of free speech. Protect our right to our religious values.” But as soon as it comes to putting something in your mouth or in your lungs, you say, “You don’t have enough sense to decide what you should do, so we are going to use the heavy hand of government, come down and protect you against yourself”.

But we have gone a long way from the dictates of the Constitution. The Constitution, of course, says that only under declaration can we go to war. But we’re in perpetual war now, in every country in the world and it’s going to last a long time until we go bankrupt. That is what I believe is happening. But we have done a few other things that aren’t conservative, as far as I’m concerned, endorsed by both political parties. And one is that we have now endorsed the principle of preventive war. Another term for preventive war is aggressive war; starting wars because someday somebody might do something to us. That is not part of the American tradition.

Just last week there was a hearing on the Hill. The subject of assassinations came up, and the administration was there and they explained that yes, they indeed do endorse the idea of assassination. And then they were asked, “Would you endorse the idea that we have the obligation to assassinate American citizens?” and the answer is yes, they do. They claim that they have a right to assassinate American citizens. Now what are the conditions? Somebody in the administration – we don’t know exactly who – makes the determination, that that individual is a threat. And if he is a threat, then he can be assassinated. Now you say, “Well, he is probably a bad guy” and he probably is… the people they pick. They only have three. But the principle is important. Some day there might be 6 or 8 or 10. What if that would have been the fact that Eugene Debs might not have been put in prison, he might have been assassinated because he was a threat.

So this is not just casual talk. This is not radical left-wing liberalism protecting civil liberties. This is protecting the whole integrity of our country and our Constitution and the rights of the individual. We now, as a country, have accepted the principle that Habeas Corpus is only worthwhile in a limited fashion; some people don’t deserve it. If they’re designed as a threat, they can be held for an unlimited time in secret detention, and still susceptible to torture. That is not what we’re all about. We’re much better than that. And we as conservatives have to realize that we have to bring this back together again. Good conservatives can believe that personal liberty is of the utmost value.

We all probably more easily agree the free market is a good way to go, and yet we still have a lot of people who reject the notion of regulations and benefits and bailouts for Wall Street and the Federal Reserve System and paper money. All these things have to be worked in. But there is nothing wrong with you being a conservative and saying the Republican conservative tradition, not too long ago, as recent as the year 2000 we won elections by saying we shouldn’t be the policeman of the world and that we shouldn’t be nation building, and it’s time we got those values back into this country.

I believe we’re on the verge of something very significant. I’ve spoken out quite a few times on college campuses in the last couple of years. And the reception is fantastic, and they want the whole package. They don’t want bits and pieces. They want their personal liberty, they want their economic liberty, and they don’t want dependency on the government because the government has failed and they know they’re not going to get their Social Security and they don’t want perpetual war. They’ll defend this country. I had more support from the military than any other one candidate during the campaign.

So let us take this opportunity. Let us take this opportunity, and for those of you who disagree, all I ask you to do is think seriously about it. Think about it and read about it and study it and put it in context and say, “Maybe that has a point”. You know, during the presidential campaign often they laughed at him all this stuff. Then all of a sudden, the crash that I was predicting and talking about and said we were on the verge of and we were beginning, it came. And then all of a sudden now Fox News Network had me on about 60 times since the campaign was over.

But let me finish by saying one reason why I really like this idea of bringing people together and why freedom works. Because I really think it brings people together. I do like different people coming together because freedom doesn’t challenge people’s personal values, they don’t challenge their religious values. They only say come together on your terms as long as you don’t mess around with me.

There are two rules that I have. One is that I want change and I want a lot of changes, but I preach nonviolent change. I want resistance to the current system. But the other thing that I have to keep reminding myself and I’ll remind others, that in the process of us pursuing our goals, that we should remain tolerant. People who disagree with you or look different or have different view, we have to allow freedom of expression. That will bring us together. Otherwise we can’t win.

So I thank you very much for this opportunity to visit with you. I hope it is challenging because we’re in challenging times. But, quite frankly, if we do the right things, we can pull out of the economic mess we have, and we can be better than ever. And I believe that’s what this type of organization and group of people coming together, because I know you want what is best for America. If we work together and are a bit more tolerant, I believe we can achieve it.

Thank you very much.

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Are US Taxpayers Bailing Out Greece?

by Ron Paul

Last week we were reminded that ours is not the only country suffering from severe economic turmoil. The Greek government is the latest to come close to default on their massive public debt. Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due. Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP. Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments. Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.

But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs. Details of agreements are not forthcoming.

Is it possible that our Federal Reserve has had some hand in bailing out Greece? The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit.

Greece is only the latest in a series of countries that have faced this type of crisis in recent memory. Not too long ago the same types of fears were mounting about Dubai, and before that, Iceland. Several other countries (Spain, Portugal, Ireland, Latvia) are approaching crisis levels with public debt as well. Many have strong ties to Goldman Sachs and the case could easily be made that default could have serious implications for big US banking cartels. Considering the ties between the Fed and these big banks, it is not outlandish to wonder if the US taxpayer is secretly bailing out the entire world, country by country, even as our real unemployment tops 20 percent. Unless laws are changed to allow a complete and meaningful audit of the Federal Reserve, including its agreements with foreign central banks, we might never know if this is occurring or not.

This global financial crisis is a predictable result of secretive central banking and unsound fiat currency. Governments are entirely committed to this system of fiat money and fractional reserve banking for obvious reasons: it enables them to do what they love most, namely, spend hoards of money with near impunity. Without the limitations of sound money, governments will spend without limit. They will spend money to hire their cronies, pay off special interests, give out favors, create dependence and generally distract from the terrible job they do at their chief mandate, which is to protect the liberties of the people. Fiat money is a blank check to government, which is very dangerous, and we are witnessing the death throes of the system as the bills come due and the underlying capital is squandered away.

Because of our globe-straddling empire and lingering reserve currency status, perhaps no one has a more vested interest in keeping this system cobbled together than our own government and the Federal Reserve. The agreements that Iceland and Dubai and Greece have negotiated can amount to little more than kicking the can down the road, as their overall spending habits remain largely intact, fiat currencies are still legal tender and more debt is issued on top of unsustainable debt. The American people have the right to know if they are going to be the ones holding the bag in the end because the Federal Reserve secretly put them on the hook for it. This knowledge would be a key factor in peacefully dismantling this immoral and unconstitutional system.

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Channel: Fox Business
Date: 02/09/2010

Transcript

Brian Sullivan: Congressman Ron Paul says that it’s time to rain on the parade of government interventions. The Texas Republican and former presidential candidate is joining us now by phone.

Congressman Paul, thank you very much for joining us. Brian Sullivan in for Neil. What do you make of the news that European officials are mulling bailing out Greece?

Ron Paul: Well, I think it gives everybody a reprieve maybe for a day. You know, the dollar goes down, the stocks go up, the euro improves. I think it’s temporary. It is such an overwhelming problem. But we ought to learn a lesson about what’s going on. And when you look at Greece, it’s a country that’s 1/3 the size of California, they have 600,000 public employees who are on strike and then they wonder why they have problems.

But even though they’re in bad trouble and they make us look good in comparison, we’re facing the same type of problem. California is in desperate shape. Our country isn’t far behind. But the other European countries are so bad, that it sort of gives us a false sense of security that we can bail out everybody.

But it will end. It’s going to all end, I think, in a tragedy for the whole world because we’ve all lived beyond our means and we’re all trying to bail out everybody. I wouldn’t be surprised if the Fed is very much involved behind the scenes, even with what’s going on over there with Greece right now because they’re allowed to. That’s the reason they don’t want any transparency because they can be involved in all these kinds of bailouts.

Brian Sullivan: How would the Fed be involved, Congressman?

Ron Paul: Well, they’re allowed to make loans and guarantee loans to foreign central banks and foreign governments. So if the euro is having a little trouble and the Fed wants to act behind the scenes, they can literally do that. And they don’t have to be responsible. It doesn’t have to be on the budget. We don’t have to know about it. And with this movement to audit the Fed, that is one of the things that has made them most concerned, is that we would find out what kind of international agreements that they’re making. Under the Monetary Control Act of 1980, literally, our Federal Reserve is allowed to buy foreign debt. You know, they buy these housing securities. But they’re allowed to buy foreign debt as well, but they can do it in secret.

Brian Sullivan: I know that might sound insane to a lot of our viewers hearing about the U.S. Fed possibly being involved in the Greece situation. But let’s not forget, right, we’re already had essentially a U.S taxpayer backed bailout of European banks through some of the AIG transactions.

Ron Paul: Yeah, that’s right. And we have a lot of trouble getting transparency of that as well. So yes, they’re very much involved. That’s why, as bad as Greece looks, I think there is a worldwide phenomenon, this is something I’ve been arguing since 1971, that we have embarked on a very flawed system of money, that the dollar was the reserve of the entire world that we had license to print, and the trust overwhelming because we are the economic powerhouse and a military powerhouse. So we were able to do what other nations couldn’t do. Other countries would have been called to pass, but we have literally been able to inflate at will, spend at will, and export our inflation to other countries who then would monetize our debt for us.

Brian Sullivan: Well, is the term bailout, maybe, a misnomer, Congressman? Isn’t it just kicking the can down the road? I mean, even if they help them out with their debt, they restructure some of their debt, these problems, you mentioned all the government employees, the big pension, the early retirement: those problems are not going away.

Ron Paul: I think you’re absolutely right. And that’s where the real problem is. As you know, even domestically here we so-called bailed out Goldman Sachs and these other companies. But all we did was we took some bad assets and dumped them on the American taxpayer. Treasury got involved, the Federal Reserve brought them. So the victims might have changed, but the problems have just been continued. And we have not resolved it because it requires cutting spending.

And that’s what Greece is facing right now. You know, their Prime Minister wants to cut, or at least he’s proposing to cut. But that’s why the 600,000 thousands are on strike saying, “We won’t have any part of this cutting”. You know, it’s insanity. And some day the world will wake up and say, “It’s unbelievable what the world has done”. And actually we had led the charge because we run the reserve currency and we have literally been printing the gold for these 30 some years.

Brian Sullivan: Congressman Ron Paul, sir, thank you very much for joining us.

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Show: Freedom Watch
Host: Judge Andrew Napolitano
Channel: FoxNews.com
Date: 02/03/2010

Transcript:

Judge Andrew Napolitano: Hello, and welcome to Freedom Watch, your daily dose of raw liberty, streaming online at FoxNews.com. I’m your host, Judge Andre Napolitano here, defending freedom, defending your natural rights, and defending your right to have a government that stays within the confines of the Constitution.

The bonuses to AIG executives are contracts between AIG and its biggest producers. There are enforceable contracts, and the Constitution prohibits the government from interfering with them. Recall that 79% of AIG’s stock is owned by the treasury department; that is the taxpayers. So one way to look at these payments is that the payment of bonuses of this magnitude means the AIG is making profits, and thus can keep making payments back to the taxpayers. Remember, we gave them 185 billion dollars.

The other way to look at this whole AIG bailout is that it was illegal because of the fraud involving Goldman Sachs, and unconstitutional, because the Constitution does not permit the government to choose whom to bail out and whom to let die on the line.

The third way to look at this is, will the AIG payments, over one hundred million dollars every quarter, go to the treasury to reduce debts, or will Secretary Geithner just re-spend it in utter disregard of the law and the Constitution?

Joining me now to discuss all of this is one America’s last great defenders of freedom and personal liberty, Congressman Ron Paul joins us from our nation’s capital. Congressman Paul, welcome back to Freedom Watch.

Ron Paul: Thank you, Judge. Nice to be with you.

Judge Andrew Napolitano: So, no surprise the government now is sitting on many billions of dollars which is money paid back by AIG and by banks from TARP. And it doesn’t want to put that money in the treasury bank accounts, it wants to re-spend it. The last time I looked at the Constitution, it said the Congress decides how tax dollars are spent, not the treasury secretary. What are we to make of this?

Ron Paul: Well, what we make of it is that it’s getting further out of control. If they get away with this, it would just further expand this notion. Because it’s been done in some other areas, you know, in the drug war, they confiscate certain things and turn them over to different people without it going through the treasury.

So this is another example that reminds you of what Mises always said, that if you create one intervention, you get 2 to 3 more problems. And it was the interventions of the bailouts that created these problems of who gets the money and how and why. But your point about the money coming back from these guys usually making money of us anyway, they wouldn’t have made anything, they would have been broke and been in bankruptcy. Though they are making money, and they say it’s coming back, and they want to put it in a slush fund. I mean, that’s just further removal of the Congress from this responsibility, and I consider that one of the major problems we face; is that Congress has too often reneged on its responsibility and has allowed the executive branch and the judicial system that get out of control.

Judge Andrew Napolitano: One of your own liberal democrat colleagues referred to this whole TARP thing as “Bait and Switch”. I mean, Hank Paulson and President Bush came to the Congress in the fall of 2008 saying, “We have to buy toxic mortgage assets, and we need 700 billion with which to do it”. The Congress gave the then secretary Paulson a blank check. They didn’t buy a single toxic mortgage asset! They force-fed it to banks that didn’t want it, and they bailed out banks and insulated them against the consequences of their own bad management. Don’t bailouts like this encourage banks and corporations to be reckless, because they believe that somehow somewhere the government will provide a safety net?

Ron Paul: Yes, it’s called moral hazard, and there was plenty of that around for a long, long time because the guarantees have always been there, either direct or implied. You know, the Fannie Mae and Freddie Mac was implied, there were a lot of guarantees. So this is even to make it worse, even in the bailout, there were no restrictions. So we have guaranteed that the problems will continue and they will not be cleaned up. And that’s why we should make sure that we return to the marketplace.

And as you point out, the role of government ought to be to enforce contracts; that’s one responsibility of the federal government to guarantee that contracts are carried out. But this whole idea that they have abused the contracts and violated the contracts means that there is no rule of law. If a few private individuals had done this without government sanction, you know, they usually go to jail because it’s considered fraud. And yet now, we are participants in that. We in the Congress and the executive branch, and it’s not a very good sign for the future of this country unless we get to the bottom of this and understand what’s really going on.

Judge Andrew Napolitano: One of the reasons I suggest for this is illegal is because of the fraud involved. We now know that Tim Geithner’s lawyer, when [Geithner] was the head of the New York Fed, basically said to AIG, “Hey AIG, don’t tell anybody that you owe a lot of money that Goldman Sachs. And for heaven’s sakes, don’t tell anybody that you agreed to pay Goldman Sachs a 100 cents on the dollar. If that word gets out, if the Congress hears about that, this deal will collapse”.

Now you know, Congressman Paul and everybody in Washington now knows, if you mislead the government on a simple form to buy a $1,000 dollars savings fund, you can be prosecuted. Here you have government lawyers telling the recipients of a 185 million dollars to mislead the Congress on the forms in order to acquire that. Why isn’t anybody being prosecuted?

Ron Paul: You know, it’s the sort that reminds me of the Enron scandal. They committed fraud and the SEC bailed, you know, to prevent this problem. But it was caught by the state, and the state prosecuted these individuals under fraud laws. They were prosecuted. But you know, under our system of our banking system of examination, you know, it has to go back to even not having any information from the discount window what the Fed does. They say, “Oh, we know this. This will expose the dangers and the weaknesses of the system”. So the Federal Reserve and our secretary of the treasury come in and they hide the factors. If you had free market insurance on these deposits, these kinds of things would be made available because you would be rated by these agencies. And it wouldn’t be all banks together, but individual banks could get into trouble. But the whole purpose of the market would be to allow us to know what’s going on and they’re doing exactly the opposite here. The government is participating not only in fraud, but in hiding the information that the individual investors, lenders and borrowers should have access to.

Judge Andrew Napolitano: Congressman Paul, what will happen to the average American if the dollar collapses and the value of it goes down to significantly less than the value we accept it is worth today.

Ron Paul: Well, it all depends on how fast and when and what we do. But if it collapse entirely then you’re going to have total collapse of the system and chaos. I hope we wake up before then, but in the meantime everybody gets a lot poorer. And this is always going on now; who gets poorer the fastest. Right now Wall Street… a lot of them and Goldman Sachs haven’t got poorer, but the American people are getting poorer all the time. They don’t have more purchasing power every month. And they don’t have better jobs; they’re still losing their jobs.

So we are going to continue. As the dollar depreciates, people get poorer because we’re paying back debt. And this is what Austrian economics teaches. They say that if you destroy a currency, you destroy the middle class. This is why it’s so dangerous politically, you know, whether you look at Germany or South America or Central America or Mexico, the middle class always gets wiped out and it introduces the possibility of political chaos. And that’s why it’s so dangerous.

Judge Andrew Napolitano: Before I let you go, Congressman Paul, two days ago I spoke to your son, Rand Paul. It now looks like there may be another Paul in the United States Congress. He’s doing pretty well so far in Kentucky. Chip off the old block?

Ron Paul: Well, he’s doing pretty good. I was over the other day I was very impressed with how things are going. I was asking him whether I had to call him senator or not when he wins, and he said, no, I wouldn’t have to keep calling him senator just as long I wouldn’t keep calling him Randy all the time.

Judge Andrew Napolitano: Yeah, one last thing: the Tea Parties; do you still see that as a base from which anger at the government and frustration at its trampling of the constitutional liberties can be challenged into a political response?

Ron Paul: Yes, and it’s very disorganized and it’s not a monolith but I think it’s all healthy because they don’t come into that organization as part of the Republican Party or the Democratic Party. A lot of them would like to take it over and control it. But they’re not going to be able to. I think this represents the people who are disgruntled with the current status quo, the government as it is, the monetary system and the tax system. So to me it is very, very healthy. But you’re not going to be able to go and visit ten Tea Parties and find out that they all believe in the same thing. But I think it’s very, very healthy and we have to sort it out and make sure the message being that they are unhappy with the federal government in particular, and that a much more freedom-oriented philosophy is what we need and hopefully that will be the dominant theme of the Tea Party movement.

Judge Andrew Napolitano: Congressman Ron Paul, as always, the highlight of my week. Thanks for joining us on Freedom Watch.

Ron Paul: Thank you, Judge.

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Spending Freeze Not Likely

by Ron Paul

Last week politicians in Washington made a few things clear about how they really feel about the state of the union. First, they are beginning to hear the growing discontent with the size and scope of government and the broken promises that keep piling up. Certain events in Massachusetts recently made that statement loud, clear and unavoidable. In the face of those events, the powers that be made the determination that some populist rhetoric was in order, and the idea of a spending freeze in Washington was proposed, albeit with several caveats. These caveats to the proposed spending freeze ensure that we are not at any real risk of actually doing anything about spending.

First of all is timing. It wouldn’t go into effect until 2011, which allows plenty of time to increase spending levels quite a bit before they are frozen. If the administration really understood and cared about our spending problems they would not freeze spending a year from now, but cut spending immediately and significantly. But, spending cuts almost never happen in Washington, and they are not likely now or a year from now – if the politicians have anything to say about it.

The second caveat is the huge areas of the budget that are shielded from this freeze. The entire State Department budget is exempt, as are all entitlements, all military industrial spending and almost all foreign aid. Fully 7/8 of federal spending is excluded from this freeze, and some areas to be frozen were actually set to decrease, which means a freeze actually guarantees a higher level of spending.

Especially insulting is the idea that in spite of our own fiscal problems at home, taxpayer dollars will continue to be sent overseas in the form of foreign aid where it often does more harm than good. When need is demonstrated to Americans and they can afford it, they can be counted on for a tremendous outpouring of private, voluntary charity to worthy aid organizations, as we recently saw in Haiti. By contrast, government-to-government aid is taken from the poor by force and too often enriches the corrupt. It is counterproductive and wasteful. But the idea of eliminating, freezing, or reducing foreign aid is not up for serious debate any time soon.

The third caveat is what is included in the freeze that would make it politically impossible to pass Congress, for example air traffic controllers salaries, education, farm subsidies and national parks.

I do not necessarily want a cut in spending in this country – I just want to change who does the spending. The spending should be done by the people who earn the money, if they choose, and on what they choose, without any government interference. That is what makes the economy work. Politicians should stick to the very limited roles given them by the constitution instead of allocating such a sizeable portion of our capital and intervening through regulations and tax policy. But because politicians have disregarded the constitution, and the people have no idea what rule they will break next, there is already a very real spending freeze underway in this economy, by the people. If government would stick only to what it was authorized to do, and leave the rest to the people, most of these problems would resolve themselves.

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Show: Joe Scarborough Radio Show
Host: Dylan Ratigan
Date: 01/26/2010

Transcript

Dylan Ratigan: I want to welcome Dr. Paul to the program. Congressman, its Dylan Ratigan, surprising you here for Joe Scarborough. But I appreciate you making some time for him this morning anyway.

Ron Paul: Well, thank you. Thank you for having me.

Dylan Ratigan: Walk us through your view of how you sort of differentiate what the structural problems in America are, and how you would address them?

Ron Paul: I think the basic flaw is that they think there are two sets of economic laws. If you or I get into trouble and we spend too much and have too much debt, and then we lose our jobs, we have to pull back. We have to quit spending, we have to pay down our debt, we have to work twice as hard and get back on our feet again.

Now if government does this, if they spend too much, borrow too much, print too much and have too much inflation, government is too big, it’s a burden, they say that the problem is we don’t have enough. So they apply different economic laws and the Keynesians come up with this silly notion that everything depends on consumer expenditures, regardless of how much debt there is.

But the market is smarter than that. The market says there’s a limit to debt, even or maybe especially for governments, because it may end differently. It may end up with runaway inflation or a weak economy. But it always ends, that debt eventually has to be liquidated, and they’re pretending they don’t have to liquidate debt. So everything we’ve done in Washington today is to transfer the debt…

Dylan Ratigan: Yep.

Ron Paul: …from the people who caused the problem to the innocent people, and this just prolongs the agony.

Dylan Ratigan: What struck me, Congressman, is that the only people who seem to not truly understand that are those who are in leadership in our government. And I say that relative to the voter and look at the Scott Brown election and the rest of it. The only people that seem willing to fire somebody for exactly what you just described, basically this wealth transfer and risk transfer where the wealth is transferred to those who created the risk. They kept the wealth, they still have it, and then they transferred the risk to the American people and the future American generations. And the American people, it was all done in plain sight; we can all see it. And yet they’re pretending that it’s… I don’t know… 1890 and there is no Internet and there’s no infrastructure so nobody can see what’s happened.

Are you concerned that because the voter quite honestly understands this better, I think, than most politicians are willing to give them credit for, that we’re just going to see, forget anti-Democrat or anti-GOP or whatever it might be in a given month or week, but just a fundamentally anti-incumbent wave from the voter until they see politicians who actually work to establish the rule of the law for investment and lending, encourage innovation, and hard work?

Ron Paul: I think that’s the case and the one thing is the people in Washington are slow learners. They isolate themselves from the public. They pretend to pay attention to the public, but they don’t really listen or understand, I think they’re mixed up on their economic policies. But the middle-class, typically, is the one that suffers the most when governments overspend and over-inflate. And it isn’t like it’s just been a year or so. I know we did everything from the fall of 2008, it’s been going on longer than that. I think the onset of the downturn for the middle class came years ago when the NASDAQ bubble burst. It was sort of held together with the housing bubble. But, you know, real wages haven’t gone up, investments for the average person have not gone up. If you just bought and held, you’re down 20% to 25%.

Dylan Ratigan: Worst decade ever.

Ron Paul: Right. So the middle class is very much aware of this and then all of a sudden they see the problems with AIG and Goldman Sachs and they say, “What a rip off we’re getting”. And the real problem that I see is we haven’t really felt the pain yet. And they’re pretending that we’ve turned the bend and the numbers look better, the numbers look better for Wall Street, but Main Street and the unemployment figures; there’s no improvement yet. So I think it’s going to get much, much worse. And then, you know, the big concern is, how do we bring about the transition.

Dylan Ratigan: Right. And that’s my concern, Congressman. I’ll just reset for everybody so they know who we’re talking to. We’re listening and we’re talking to Congressman Ron Paul. How do we avoid the unrest that is possible? I mean when you got 20% unemployment and a political body that serves the interests of those that control it, as opposed to the interests to the future of this country, that’s a precarious position to be in.

Ron Paul: Yes, it is. And the reaction in economic terms when you have a real disaster might be similar to the reaction to 9/11 on international policy. The people said, “Well, we need to be taken care of. The sole purpose of the government is to make us safe. We will give up our liberties to be safe. We won’t look at the causes, but we will be dependent on the government to further protect us.” So there is the contest now between sound economics and self reliance and sound money versus the people who say, “Take care of us. And even if you have to have law and order, I mean we have to be taken care of, we have to be made safe.” And the only thing that I know from doing this over the years, is to try to receive them with a better idea because I think that’s the only thing that does work.

Dylan Ratigan: So the president walks into the room and says, “Dr. Paul, I’m going to go with a spending freeze on discretionary spending. You’ve seen the proposal. Your response and a better alternative as you see that as what?”.

Ron Paul: Well, I think I’d freeze it too. But I’ll freeze every single penny and I’d have done it a long time ago. But even a freeze isn’t enough, you need to cut. You need to cut spending and this freeze is a political stunt. It doesn’t happen for a year, it’s not very much. It’s only 1/5th of the budget, and the Congress has to deal with this and the big spenders are already screaming about it. So that’s not going to happen.

Dylan Ratigan: And it’s the laziest thing. I mean if you were to look at how to deal with the termite problem, the structural problem, the fact that you do not have not only the reality nor the sense of fair play, and that those who have custody of other people’s money have exploited that position to extract wealth as opposed to honor that position by being great lenders and investors for capitalism. How do you fix that?

Ron Paul: First you have to have sound money. You can’t have a Federal Reserve system that supposedly creates capital. You don’t create capital by a computer, you create capital by people working hard and limiting their spending so that they can have savings. But for decades now we have depended on the Federal Reserve to substitute savings with just money out of thin air. And that doesn’t work. You’d have to stop completely all the bailouts and you’d have to be willing to accept the fact that bankruptcy is good when it needs to be done. Not transferring debt to innocent people, but bailout shouldn’t be permitted.

And also, we have to get to the point where the people make the decisions; not the government. The government keeps claiming these stimulus packages creates more jobs, saying, “Oh, it saves this certain number of jobs”. Well, how do they really know and even if they did, you might say, “Well, if we would have taken that trillion dollars and allowed it to be put into pockets of the American people, maybe it would have created good jobs, productive jobs, and building for the future.” But to take money or print money and give it to the government to make these decisions; government s aren’t capable of making these economic decisions. They’re always political. I mean, they’re always pressured by the special interest. The most simple way I can put this is we ought to restore our confidence that freedom works and that a free markets work and we should have sound money. But the big problem is a lot of people don’t understand that. They think the Federal Reserve is part of capitalism. It has nothing to do with capitalism.

Dylan Ratigan: But isn’t that the key thing? In other words, people look at the liberal rule making that’s advocated for the innovative portions of our economy, whether it’s science and engineering, technology, or some of the creative professions from fashion to lipstick; I don’t care. And they mix up the liberal potential of that side, in other words, the liberal rule making that is beneficial to the innovative side and have assigned that same language to the custodial portion of our economy, which is the banking system, and have made it such that the custodians of other people’s money suddenly are given these liberal rules to hide the money, to take risks, hide risks. They don’t have to disclose anything. That’s not the kind of de-regulations that I don’t think anybody was thinking about.

Ron Paul: I think a good example of that is AIG and Goldman Sachs. The Federal Reserve was doing something and the information like we had about the imbalances with Goldman Sachs should have been out there so investors could make a decision. But when the Federal Reserve got hold of it, and they wanted to do the bailout, that’s their argument against my auditing bill, “Oh, we don’t want the people to know that the banks are in trouble”. What if the SEC, what if you had a company and it was bad and you didn’t want to your stocks to go down so you go to the SEC, and you say, “Look, this would be bad for me.” So the SEC helps you cover up the information. But, you know, the SEC when they find this out, people went to prison under fraud laws, under ENRON. But the Federal Reserve does exactly the opposite. They protect the bad investments. So you would have to change the whole nature around. The market is a pretty good regulator.

Dylan Ratigan: If it has information. If the consumer is well informed, they tend to make good decisions. As does a vigilant voter who’s well informed; they tend to make good decisions. But when the government conspires with portions of our economy to withhold information that’s in the self interest of those pieces at the expense of everybody else, I think the voters get pissed off, with all due respect.

Ron Paul: Yeah, and you know, I have to give the people some credit right now, because transparency is a very good word for the average person. But Washington still doesn’t like it. Just look at the support we got for the bill to try to get more transparency of the Fed. I mean, this is not just conservative or Republican, there are libertarians, conservatives, progressives. Everybody across the spectrum is in support of more transparency. I think that’s very healthy. And the more we can see, the less you get away with the backroom deals and the bribes in DC, the less you get away with hiding risks, whether it was ENRON hiding risks or AIG and Goldman Sachs hidings risks. The more we’re able to see, the more real the prices are, the more the buyer takes advantage of the digital revolution and forces the seller to deliver quality or go out of business, which last we checked, was why we’re here, yes?

Ron Paul: Yes, that is it. And when we hide that information it makes it very difficult for the investors to make decisions and savers to make decisions and purchasers to make decisions. So it’s a great item and that’s what a society is all about. But today we have a government that protects government secrecy in almost everything it does. Look at what it’s done to undermine our privacy; whether it’s financial privacy, medical privacy, all types of security, our Internet, our phones and everything else. I mean, it can be looked into rather easily today in this atmosphere in which we live.

Dylan Ratigan: Yeah. Listen, Dr. Paul, I can’t tell you what a pleasure it is everytime I get to talk to you. Thank you so much for the time this morning.

Ron Paul: Thanks for having me.

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Show: CNN Newsroom
Channel: CNN
Date: 1/27/2010

News Anchor: We’ll go to Capitol Hill where Congressman Ron Paul joins us now. Congressman, thanks for being with us.

Ron Paul: Thank you.

News Anchor: We have been talking extensively this week at CNN. First of all, we’ve been undergoing a stimulus project. We’re going through the stimulus bill, 57,000 projects, and seeing where the money is spent, whether it’s created jobs. You haven’t liked the stimulus bill from the beginning, from the first day it was even talked about.

Ron Paul: Right.

News Anchor: Let’s look at it a year later. What, in your opinion, has it done to the economy?

Ron Paul: Well, it’s hurt the economy because even if you argue, as the administration does, that is has saved some jobs, we don’t know which jobs were lost or which jobs could have been created if the people were controlling the expenditures, if the capital was delivered by individuals rather than by the government.

So could have had a lot of jobs created, but we don’t know that. For the government to take a lot of money out of the economy and try to stimulate the economy where it doesn’t want stimulated, it’s not a surprise that we’re not having growth. So I think they’re on a failed policy, and how long are they going to keep interest rates at 0% before they think, “Well, maybe we’re on the wrong track. Maybe it’s not working”.

News Anchor: What’s the right tract, congressman? What would you do? Because right now the White House is looking at perhaps a shift in direction, or at least communicating one. What’s the right tract for them?

Ron Paul: Well, I think the market should decide interest rates so that we go back to saving and the government quits wasting money, spending, running up deficits. Because if you had higher interest rates, we would start saving again and we would pay down our debt and then people would make market decisions.

Maybe they would invest and the prices of the house come down low enough and the market is liquidated, then we go back to building houses and producing jobs again. But we don’t need more debt, and what we’re doing is borrowing more money.

News Anchor: Fair enough, but let’s talk about this. The stimulus bill is above 800 billion dollars, according to the congressional budget office now. It was 787 billion dollars, they added 75 billion dollars. But really, I’ve been looking at the government’s interventions since the beginning of this crisis: somewhere above 4 trillion dollars. And a lot of that is money that the Federal Reserve put into the housing agencies to keep mortgage rates low. And that’s why we have 5% rates for a 30-year fixed mortgage. Isn’t that better for recovery than raising interest rates? Isn’t it better that we got low mortgage prices?

Ron Paul: It delays the recovery because the liquidation of the bad debt isn’t liquidated, it’s propped up. The people end up buying these securities and these derivatives of securities, and they’re propping up a very bad system. So you want the prices of houses to come down faster and more dramatically, they should have been at this price a year ago. And now people are starting to buy these houses when they’re so desperately cheap. And that’s what you want.

But we do everything in Washington to prevent the correction. But when something is sick, you want to correct it. But governments can’t do that because it doesn’t appeal to the politicians not to do anything. They have to do something so they try to have a correction, but they prevent the correction. We want the market to correct, and the sooner the government gets out of the business of allocating credit and creating money out of thin air, capital has to come from hard work and savings. The rest of this is nonsense. It has nothing to do with capital.

News Anchor: Okay. So what do you want to hear from the president tonight if you wanted him to go a little further in your direction? What would you want to hear from him?

Ron Paul: Well, next year we would not just pretend we’re freezing something a year from now and we know that’s not going to happen. But the country is not quite ready for free markets, so it’s not likely to happen. But what should be said is we’re cutting back on spending. We’re going to get rid of a lot of programs, we’re going to cut our militarism around the world by 50%. And we’re going to go back to free markets and individual liberties and property rights and rule of law and bankruptcies occur, and liquidate debt and get the correction over with.

Before the Great Depression we used to allow corrections to occur. But since the Great Depression we are compelled to re-inflate all the time, because we’re destined to have the destruction of the dollar. That’s my biggest concern. So I would say, “Obama, don’t perpetuate this idea that printing money is a solution.” And they’ll say, “Oh, yeah. You’re right Ron, you’re right about this. But we’ll do that later on. But right now there’s a crisis.” But the crisis was brought on by too much spending, too much borrowing and too much printing and too low interest rates. That’s exactly what we’re doing. You can’t solve the problem by doing exactly the same thing. So I don’t see the recovery coming very soon.

News Anchor: Congressman Paul. Good to talk to you, thank you very much for joining us today.

Ron Paul: Thank you.

News Anchor: Congressman Ron Paul joining us.

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