Congressman Ron Paul
GLENN: We go to Ron Paul now. Ron Paul is the author of End The Fed which I have to tell you, Ron, a couple of years ago, let’s say five years ago the people that were talking about the Federal Reserve were the geeks quite honestly. They were right, but they were geeks.
RON PAUL: Right.
GLENN: And now I think most Americans, while they don’t, still don’t understand the Fed, they at least now something’s not right here.
RON PAUL: There’s no doubt about it. I think that is reflected for the supportive for at least opening up the book, not so much to decide at the moment exactly what we should do with the Fed. But 75% of the American people now say that we, as a congress, have to at least, you know, have oversight, know what they’re doing, how do they create money, who gets the benefit, what’s the gimmick. And this has come about mainly because of the financial crisis, and I think this is all good, that people are paying attention to the Fed and it’s a very important issue.
GLENN: Ron, I haven’t read the book, and I apologize. I haven’t read the book yet, but do you cover in there the selling of our treasuries back to ourselves?
RON PAUL: Not directly. Indirectly I talk about that, the monetization of debt.
RON PAUL: That is that congress has the license to spend and they don’t have to be responsible, whether it’s domestic or international spending, for whatever the congress wants. But, you know, there’s a limited taxation, there’s a limited borrowing. Taxation, the people will rebel. Borrowing, our interest rates will go high, too high. So the Fed is there to accommodate anybody who wants to spend too much and unfortunately conservatives and liberals want to spend too much.
RON PAUL: So the Fed buys these treasury bills, but they create the money out of thin air and then the federal — then the treasury has to pay interest on those bills.
GLENN: Can we get Ben Bernanke at all on something like when he was testifying in front of congress and they said will you, will you monetize the debt, and he said no, we will not. They have, and I have the treasury bill numbers. They have sold our debt. I think it was, what, $5 or $7 billion, something like that. They sold our debt just recently. It sold to a third party. Seven days later we purchased it back. The Fed bought it back. So while they’re not directly monetizing, they are not selling it to themselves, they did suspiciously sell it to somebody to hold for five to seven days and then they just bought it back.
RON PAUL: Yeah, and that’s well known. They are called repurchase agreements. It’s all in the gimmickry and why they do it and when they do it. But overall they have promised when the crisis hit that they would buy up, which means monetizing $300 billion worth. And they are in the process. They are about finished with that. But when he was before the committee the last time, I brought that to his attention. I said, you are not going to monetize the debt. But then I pointed out that that very week he had bought $50 billion in one week. Last week they bought $48 billion of either housing securities or treasury debt. And I said, as soon as you use up that $300 billion that you promised you would buy, if you don’t, interest rates are going to skyrocket. There’s no way he’s going to quit buying debt because the foreigners are buying a lot less right now.
RON PAUL: They haven’t dumped it because it’s in their interest not to dump them on the markets, all the dollars, but they are buying less and the Fed is buying a lot more, and they are between a rock and a hard place. Pretty soon they’re going to have to admit they are monetizing debt and it’s not going to be good for the markets.
GLENN: What happens when Israel strikes Iran or Iran has the Earth rays and we know that they now have a nuclear weapon, what happens to our financial system at that point?
RON PAUL: I think the Chinese take over. If there’s a real panic and oil shoots up to a couple of hundred bucks, the Chinese will dump their dollars. Chinese are maneuvering for this. The more we threaten Iran, the stronger the Chinese influence gets because they’re using the dollars that they have earned from us and saved, they have a trillion, and they are starting to buy up assets in Iran and build plants and get involved in their energy. So the whole thing is back firing on us. We’re getting ready to put tougher sanctions on the Iranians and that will make things that much worse. It won’t help the dissidents in Iran. It’s going to cost us a lot of money, and there will be a bombing and that will be a big, big event. I think it will crash the dollar is what I think it would do.
GLENN: What does America look like after a crashed dollar?
RON PAUL: Not like it looks today. We think it was bad with the financial crisis. When you have a dollar crisis, the whole thing quits functioning. The checks bounce and literally the federal government’s checks bounce if you have — if inflation goes up —
GLENN: Wait, wait, wait, wait. Does that mean that all of your friends in Washington then just go away?
RON PAUL: Yeah, that might be a good part of it.
GLENN: That might be a good idea! I say we crash the dollar today if that’s the effect!
RON PAUL: I think we’re going to have a de facto Tenth Amendment, secession. People are just going to ignore the federal government because they won’t — and there’s, you know, a total loss of credibility. You know, this idea that Obama says that we’re going to have all this new medical care, we’re going to take care of everybody and it’s not going to cost us anything and we’re going to balance the budget and actually cut the deficit by giving people more services, all that does is build, you know, the lack of credibility and people just say that’s not believable. But no, it will continue that way. And the checks will keep coming. People will get their Social Security checks. But like this year, even though there’s been a lot of inflation that they don’t admit to, there’s no cost of living increases in the Social Security check. So the people who are dependent on fixed incomes or Social Security, their standard of living is going down right now and it will continue to go down. It will go down rapidly in the midst of a dollar crisis.
GLENN: John — I mean, Congressman Paul, the media and even Patrick Kennedy said this, we heard this from two people, Muammar Gaddafi and I believe the other one was Ahmadinejad that both spoke last week and they — we’re hearing it all the time that there’s going to be violence here in America, that people are targeting. Basically everyone is going to blame this on the right, any kind of violence. They are setting up any violence on those who are from the right or, you know, from the tea party movement. Are you concerned about this and what is happening in Washington where Nancy Pelosi comes out and says — you know, she starts to cry and, you know, says that she’s seen it before and we’re going to see it again?
RON PAUL: I think that there will be violence. I hope we don’t have to go through, you know, a very violent period of time, but that’s what happens too often when the government runs out of money and runs out of wealth, the people argue over, you know, a shrinking pie and, of course, the people who have to produce are sick and tired of producing.
GLENN: But I think what they’re saying is there would be — violence would come first.
RON PAUL: I think it will come after a dollar crisis. I think you are always going to have some violence but, you know, I lived through the Sixties and I was in the military during that time, and I know the Sixties were very rough and there was a lot of violence there. I don’t think next month we’re going to have anything like the violence we had in the Sixties, but potentially if we do have a dollar crisis and the whole system comes unglued, then I think there’s going to be a lot more violence, especially in the inner cities.
GLENN: I know I’ve asked you this before, and I’m really bad at time as well, and it’s an unfair question because, you know, if you hit a date and then it doesn’t happen, you know, then everybody’s like, he was saying — but do you have any concept sooner rather than later on dollar crash?
RON PAUL: No, and I do try to avoid picking dates. Economists don’t like to pick dates. They pick trends and they know what the consequences will be but so often the debate is emotional or some event, like you mentioned the event of bombing Iran. I don’t know when they will do it. I suspect they will. But if I knew next week they were going to do it, I would say that would be the big event, but —
GLENN: Well, I’ve talked to several people, you know, that I would say would be in the know and they said the outside date would be March. Sometime before now and March. March it’s a done deal. Everything’s hardened and everything’s done, and the Earth is risen by then. So it’s sometime between now and March that people think that —
RON PAUL: I wouldn’t be that precise but I would say there’s no foundation and that within the next several years something would happen which means it could happen in a month or it could happen in three or four years. But it’s going to happen. You just can’t do what we’re doing. If that were the case, Americans would never have to work again. All we would do — like we have been doing, we’ve been working less, our good jobs going overseas, we print money action we’re able to buy from overseas. But if we could do that forever, none of us would have to have jobs. It would just depend on borrowing from foreigners and printing money. But eventually the world
WILSON: Give up on it. Right now it’s in the interest of so many people to keep this dollar going that we haven’t had to suffer the consequences yet.
GLENN: You’re a doctor. How do you feel about the steps that we’re taking on the swine flu?
RON PAUL: I think it’s terrible. I don’t think this swine flu is necessarily all that dangerous, but I do recognize some flu is. The last thing I want is central economic planning dealing with personal medical matters. So this idea that everybody might have to take a flu shot I think is atrocious. It violates the principles of liberty and it’s not good medicine.
GLENN: I find it interesting that the same people that tell us that we will never stand between you and your doctor are now telling us that if your doctor says no, you don’t take the swine flu, you have to take it anyway.
RON PAUL: Oh, I know. It’s collectivism at its worst and it’s a very personal matter. That’s why I start with the basic principle that medical care is not a right and the federal government shouldn’t be involved and we should work in that direction rather than saying that everybody deserves medical care and the government is going to be the director and the distributor of medical care. So those are the two opposites, and I think we continuously go in the wrong direction and we’ve been doing that ever since the 1960s.
GLENN: Have you been following the bacteria itself to be able — the virus itself to be able to see that it is — I’m told that it is devolving, that it is actually not becoming more virulent; it’s becoming less virulent. And yet that’s not the impression you get from anybody.
RON PAUL: No, they scare tactic to try to frighten everybody into doing things, whether it’s foreign policy or domestic policy, economic policy. They want to scare everybody into accepting the role of government as being the caretaker and to take care of us. In 1976 we had a similar thing happen. Two of us, another doctor and myself, voted against the bill to inoculate everybody. Turned out that they gave shots to millions of people, and a lot more people died from the shot than from the flu because the flu turned out to be a fizzle and wasn’t much of a thing. But for political reasons, I think it was Ford at the time, wanted to grandstand and say, oh, we’ve got to take care of the people, everybody should be inoculated and we appropriated all this money, it wasn’t good medicine; it was lousy politics.
GLENN: Ron Paul, the name of the book is End The Fed. And it is out and available everybody where.
You gave a — you had a big day last Friday on this. What is the next event that people should be watching for on the Fed?
RON PAUL: Boy, you caught me off guard right now. I was just up into Minneapolis, we’ve been to Philadelphia and I’ve been around, but I don’t have one within the next week or so. Beck okay. Thank you very much.
RON PAUL: All right. Thanks for having me on.