Here is a new interview with Ron Paul from National Review Online, in which he talks about his new role as the chairman of the Subcommittee on Domestic Monetary Policy, where he will keep an eye on the Federal Reserve.
Before two or three years ago, this could have never happened. It was only because of the crisis that the Austrian economists predicted came about, and people said, “Hey, maybe these guys are on to something.” I think that helped me get the job, because I’m really not mainstream in the House here. But now people are looking for alternative answers.
The Fed will end because the system we have is not viable. All printing-money systems always end. So my goal in the book as well as in the committee is to expose the Fed for what they do, how important it is economically, why they don’t achieve what they pretend to achieve, and why they need to have more transparency. I would just like to legalize competition, legalize the Constitution, and allow people to use gold and silver as legal tender. And then if people don’t like the paper money, they can start using gold and silver in savings accounts or spending or whatever. Today if you do that, you go to prison.
Not many people think there’s going to be a wave of Communism in the world in the near future, because the collapse of the Soviet Union was a major historical event that proved that radical socialism does not work. And I think what we’re witnessing now is the conclusion that Keynesianism doesn’t work either, that the money, inflationism, corporatism, regulatory systems run wild, spending, and deficits — all that stuff is failing. And that means that now people are looking to the Austrian school that says we should have sound money and balanced budgets and no government regulation of interest rates or regulation of the money supply.
I see the arbitrary regulations of government as a major cause of our problems. Many people ask me, “If you’re not for regulations, how do you control things?” Well, in the marketplace, there are a lot of market regulations — and you don’t have the moral hazard of a government guarantee. If you mess up, you go bankrupt. In free-market banking, for instance, the directors who set up the bank would be personally liable if it went bankrupt. Can you imagine how much more cautious they would be? They wouldn’t be making all these wild loans and responding to the regulators saying you must make certain bad loans to people who don’t qualify.
So far, we’re doing exactly the wrong thing. We had the recession come because of too much spending, too much debt, too much taxing, and too much regulation. And so we’re trying to solve the problem by spending like crazy, regulating like crazy, printing money like crazy, and taxing. And then they wonder why things are getting worse.
Nobody wants to make interest rates very high, deliberately. But the low interest rate misleads the businessman and makes him think there’s been a lot of savings, and therefore it’s proper to have more capital investments. And that’s why they overbuild in various areas. And these moneys flow into the various areas — sometimes into asset bubbles, sometimes into housing, sometimes in raw property or whatever. They help create bubbles that have to pop at some point. I want market interest rates. We don’t have enough confidence or understanding of how the market works in this country to set interest rates, and thinking we do is how we’ve gotten ourselves into trouble.
It’s wrong to deliberately devalue the currency, because prices go up and if your purchasing power goes down, then somebody is stealing from you. So to me, it’s theft. And they should never be allowed to do that. And the responsibility of government is to guarantee the value of currency. The Founders understood it clearly, they had had runaway inflation of the continental dollars, that’s why they said you cannot admit bills of credit, no paper money — we totally ignored that and it’s one of the major reasons we’re in the mess we’re in.
Inflation goes from the middle class to the wealthy, and it is a tax, and the people don’t know about it. It’s invisible. That’s why they get away with it. Eventually the people wake up, and then it’s too late, and you get rampant inflation. Bernanke brags that he can turn off inflation in 15 minutes. He can’t. There’s so much money out there, which is going back into use — commodities are going up. This idea that there is no inflation is absurd. One thing they do is they want everyone to talk about inflation as the CPI. Austrians say that inflation is when you increase the money supply — sometimes some prices go up, sometimes it starts out in land, but eventually it can be everything.
My first step is to expose the Fed for what they’re doing, because they do it in secret. People say that “Congress will politicize the Fed.” Well, how could they get more political? When they help out their buddies at Goldman Sachs, that’s pretty political.
The welfare state encourages our people not to work, and so then we need workers. And when immigrant workers come in, there are welfare benefits, education, and Medicare for those who come who are not legal. If there wasn’t that, I’d be pretty generous with illegal immigration.
I want immigration to be legal, but I would argue that there should be no federal mandates to provide services for illegal immigrants. Maybe immigrants would go back, then, to their families, on their own. I think it’s virtually impossible to send back 12 million people, but I don’t think we should give them citizenship.
As long as the American people encourage Congress to have a military-industrial complex, we’re going to further bankrupt us. But I believe we cannot deal with the budget deficit without dealing with the excesses of the military.