Ron Paul Weighs In On The Financial Catastrophe
MICHEL MARTIN, host:
I'm Michel Martin and this is Tell Me More from NPR News. We're going to continue with out conversation about the Bush administration's 700 billion dollar bailout plan for the nation's financial institutions. There were losses on the markets overnight indicating growing skepticism about the plan. One of the most skeptical voices is that of Ron Paul, Republican congressman from Texas and until recently, a candidate for the Republican nomination in the 2008 presidential race. He's also on the financial services committee, he joins us now by phone. Welcome. Thank you for speaking with us.
Representative RON PAUL (Congressman, Texas): Thank you. Nice to be with you.
MARTIN: What's your biggest concern about the administration's proposal?
Representative PAUL: Well, I think they're doing the wrong thing and it's going to cost too much money. And besides, we don't have any money. We're flat out broke. So they're trying to prop up prices, which I think is the worst thing they should do. Things have been overly inflated due to our monetary system. And the market's demanding that there's a correction. And they're fighting it now. They have illiquid assets, they call them but that means they're not worth anything and they're dumping them on the taxpayer.
MARTIN: The argument is that the alternatives are all worse. That's what the president says, that's what the Federal Reserve chairman says is that however painful this is in the short run, it's worse to do nothing. What do you say about that?
Representative PAUL: No. I just disagree with it because although they might get a little reprieve, ultimately what they're doing is destroying the dollar, they're inflating the currency that is, since we don't have the money, they'll create this money and credit out of thin air which devalues the currency and which inevitably leads to inflation. And that's the tax and that's why the poor and the middle class eventually get wiped out when a country does this to their currency.
MARTIN: What about those who say that they're already going to get wiped out? People are already losing their homes, we have a historically higher - at least on the modern age - historically high foreclosure rate that people's entire pensions in the form of their 401K case savings are being wiped out.
Representative PAUL: Well, that is true. That is in everybody. That's the people who have benefit in the past. If you bought a house at 100,000 dollars, went up to 150,000 dollars and you thought you were rich and borrowed the additional 50, sometimes people borrowed more than the house is worth, they lived beyond their needs and now their going to be forced to live beneath their means. Both people who speculated on Wall Street as well as the individuals who are benefiting that this is the deception of inflation, people think they're wealthy when they're really not. And the market demands are corrections who the market gets out of whack. And the source of the problem comes from the Federal Reserve system that distorts the economy by artificially fixing interest rates.
MARTIN: So what do you recommend right now when the president is saying, Congress needs to act right now. In fact, he wants Congress to vote by the end of the week and your recommendation is what? That Congress just say no.
Representative PAUL: Correct the mistakes that were made and I mean it's price fixing of interest rates that was wrong. They should quit doing that. Then they should quit trying to fix the price of houses. They're trying to prop prices up and they did that in the Depression, they prolonged the Depression. So what they're doing now instead of making things worse by not doing anything, they're making things worse by bailing it our because they're trying to keep housing prices at a certain level and they don't even know what the level is. There is too many houses so you want the market to adjust, you want the prices to come down so people can afford to buy these houses once again. But you should lower taxes, quit spending, bring our troops home so we can save billions of dollars, admit that we've lived beyond our means, remove the authority from the Federal Reserve to print money out of thin air. And actually, the less regulation on the economy - we need market regulations, we don't need more regulations by the federal government and that's what they're introducing. They're (unintelligible) introducing socialism and dictatorship because this new bill they're talking about will exempt any challenge in the court so they're talking about authoritarian dictatorship where the corporations are going to be in bed with the government and that's a form of fascism. So I think we're moving in a very dangerous direction.
MARTIN: Who do you think is responsible for the circumstances we are now in?
Representative PAUL: Well, there's not one person if the whole philosophy which came out of the 20th century really came out of the notion that we should have a central bank starting in 1913, which caused a lot of trouble and the Federal Reserve brought on the Depression and then they accepted the idea that free markets still work and the gold doesn't work. And it just built on this. You take Fannie Mae and Freddie Mac, those ideas were started in the '30s but they never self destructed until just recently, until the inflation got out of control, we couldn't keep up with the production, now we're too much in debt and we've over inflated and the adjustment has to come. So it's a philosophy.
MARTIN: Well, there are those who argue that the core of this crisis is this whole subprime mortgage mess and there are individuals who are accountable for that. For example, the FBI's investigating whether fraud was a part of selling these mortgages to people who really had no business having them and that all of this institutions were complicit in pushing these vehicles on people who shouldn't have them and then repackaging them and selling them when they knew that they had no underlying value or should have known that they had no underlying value. Doesn't that suggest that there are specific individuals who then should be held accountable and if so, how should they be?
Representative PAUL: Absolutely Enron a very good example of how that should be taken care of. Enron when it failed, anti fraud laws in Houston took care of them and the market took care of the prices and it was corrected before they pass (unintelligible), that made just more regulations but fraud has to be dealt with. The debate fraud is the Federal Reserve, who's counterfeiting the money. I mean, if you or I did it, we'd go to prison but we allow the politicians to spend endlessly and let the Federal Reserve create money which is counterfeit and that's the great fraud that we have to deal with. This is petty fraud but it has to be dealt with too and that's what should happen. We should this anti fraud laws like we did in Houston and should be local, it shouldn't be, you know, this SEC type stuff, this is like a pre-emptive strike and a regulation. And now, they're going to try to fix the prices and say you're not allowed a short sale. They're blaming symptoms....
MARTIN: But why should it be local? Forgive me. Why should it be local, this is sort of an international financial system now. How could you regulate that locally when these banks make loans across the country?
Representative PAUL: Well, we did it in Houston. That's how Enron was taken care of. It wasn't federal law that came in and said that they were committing fraud, we did it under Texas law and they were held accountable and put in prison. And that's the way our system is supposed to work. I mean, if you want international law or a national law, you have to change our constitution. And it's this whole idea that we don't do things more locally that allows this thing to become national and international. The whole monetary system is international. I mean, in essence, we have had the privilege of turning the money for the world, we are the reserve currency in the world and that has created the bubble. The financial worldwide bubble. This is just not national, this is international because we don't keep things local or national and we don't have a national standard of money. So this is very, very big but it's not a lack of regulation or lack of internationalism, it's too much of that.
MARTIN: Forgive me congressman, I just need to interrupt just briefly to say, if you're just joining us this is Tell Me More from NPR News. I'm speaking with Texas congressman, Ron Paul. He's a Republican, he also is a former candidate for the Republican nomination for president. Congressman, I asked your colleague, your Democratic colleague Gregory Meeks this question, I think it's fair to ask you as well. You received significant campaign contributions from the securities industry, they're not your top campaign contributor by any means but you do - you receive this cycle alone, several hundred thousand dollars from this industry. If you think that there are - you...
Representative PAUL: From where...
MARTIN: The securities and investment industries.
Representative PAUL: Well, you mean somebody who invests in stocks, they sent me money?
MARTIN: No. The securities industries, people associated with the industries.
Representative PAUL: Like whom? I wouldn't have any idea. It's irrelevant as far as I'm concerned.
MARTIN: Well, that's my question, is it?
Representative PAUL: Of course it is because nobody influences my vote. A lobbyist doesn't come to my door. If somebody sends the money, either sending it because he believed in the free market, they believe that the Federal Reserve is out of control and they believe deficits are bad and they hate the foreign policy if they happen to be in the securities industry, that means somebody, you know everybody in the securities are not bad people.
MARTIN: We know.
Representative PAUL: (unintelligible) idea lie to those things because they know they can't influence me. And you know, they don't come - they come to me for one reason, to defend freedom.
MARTIN: Well finally, so we have only a couple of minutes left. You've been generous with your time. The president, as we've said is pressing for a quick vote in Congress. What is your response going to be?
Representative PAUL: They're just trying to panic the Congress and they're doing something very bad and that's the way they do it up here. And they, I mean we may vote on it today, tomorrow, the next day and we don't even know what the bill is and it's probably one of the biggest pieces of legislation in our entire history. There's no idea that it will be exempt from review in the courts. And they're going to rush it through. We probably see the bill like tonight or tomorrow and then both the next day and they'll be limited upon the debate and here we're talking about 700 billion. Just think, they said the war would cost 50 billion and now it's up to it'll probably be a trillion or more. So you can imagine 700 billion is going to cost probably into the trillions. As they said, prescription drug program would be 500 billion, it's going to be another trillion. You know, it just goes up and up so it's all through deceptions or the fastest they do it, the more they can get away with and the more our freedoms are under attack.
MARTIN: So is it fair to say that you will not be supporting the president's plan no matter what?
Representative PAUL: There is no way that this would be a proper function of government to do what they do and they need to do exactly the opposite of what they are doing. And they don't need to try to prop up prices, they don't need to take illiquid assets which means assets that has no value and then dump them on to taxpayer. When they say they have to do this to protect Main Street and the 401Ks, that's just a cover for bailing out Wall Street and trying to prop up the system that does not work. And they will not address the subject of the Federal Reserve being the culprit. Without the Federal Reserve, you cannot have these kind of bubbles.
MARTIN: Congressman Ron Paul, Republican of Texas. Until recently he's a candidate for the Republican nomination in the 2008 presidential race. He also serves on the Financial Services Committee in the House. He was kind enough to join us now by phone. Congressman Paul, thank you so much for speaking with us.
Representative. PAUL: Thank you.
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