Interview by: Yahoo! Finance’s Tech Ticker
Date: July 15, 2009
While the politicians here in Washington and
the pundits across the country are debating the state of the economy and
whether or not we need a second stimulus, Texas Congressman Ron Paul
is taking a contrarian view, as he
often does, about what the government should and shouldn’t be doing for
If you had won the presidency, and obviously you ran for the presidency,
what would you be doing differently than what President Obama has done,
specifically with regard to how he’s handled the economic crisis?
Ron Paul: I would have done a lot less.
Aaron Task: A lot less?
Ron Paul: I would have allowed the bankruptcies to occur.
We allow Lehman to go bankrupt so it helps Goldman Sachs. And then we bail out
AIG that bails out Goldman Sachs. The people that were overextended shouldn’t
be bailed out, debt should be liquidated. The sooner the debt is liquidated the
better, the faster the prices come down. To really understand the issue you
need to understand 1921. The recession, depression that came after World War I
one year along because we didn’t believe in all this intervention. Hoover
messed things up and Roosevelt compounded it because they believed the
government had to prop up prices, especially price of labor. It didn’t work.
Aaron Task: If you had been President again, what role
would you give the Federal government to help the estimated 16 million
uninsured Americans and the millions of American families who are at risk of
losing their homes right now?
Well, first you have to stop the inflation
and you have to deregulate, then you give tax credits to the people who take
care of themselves or to the doctors who provide the care. And in a transition,
and I talked about this in the campaign, in a transition because we have so
many people so dependent on government, say the elderly. You know, my ideal
society isn’t going to arrive in a week or two. We’re in a four year
So my argument is that you can do that; you can take care of people but
never with a deficit, never by expanding the spending. It would be by cutting
spending and I would cut money oversees. I’d cut hundreds and hundreds of
billions of dollars of this maintaining our empire around the world. Bring that
money home, take care of the people who are dependent and then work for the day
where we can trust freedom once again and understand how free markets actually
Aaron Task: In the past you’ve lobbied that the U.S. should
be out of the U.N. entirely and we should disengage. People look at that and
say you want us to disengage from the world. Isn’t the U.S. a force of good in
Ron Paul: No, I think it’s the opposite. I want to really
been engaged. These people who talk about free trade and engagement around the
world have given us sanctions against Cuba for 40 years. So, I’m the one that
wants to trade and travel and deal with Cuba. And same way with Iran. I want to
be engaged. I would say move the navy away from there and talk to them and say,
“Look, let’s start off with a soccer game or something.”
Aaron Task: Right.
Ron Paul: Let’s break the ice, let’s talk to people. Let’s not threaten.
What we have in foreign policy is we have two polices. One: we threaten and if
they do our bidding we give them a lot of money. If they don’t we bomb them.
And I say just talk to them and don’t threaten them and this whole idea that
North Korea is a threat to the United States or the Iranians are going to drop
a bomb is sort of like the argument that we had to go into Iraq because Saddam
Hussein was going to bomb Washington DC. I mean it’s nothing more than war
propaganda to build up the military industrial complex.
Aaron Task: Alright, turning back to the economy, what is
your sense of the state of the U.S. economy right now? How optimistic or
pessimistic are you?
Ron Paul: Very pessimistic. I think we might be through a
third of it and nobody knows how long it will last. Correction is good. We want
to correct problems. But they won’t allow that correction. The more we do to
interfere with the correction the longer it will last. The Depression actually
ended after World War 2. The war did not end the Depression. I remember the war
and we lived in very depressed conditions… wage and price controls and people
didn’t have automobiles. It was very depressing. It took that long to liquidate
all the debt and bad investment. Finally then the people came back and they got
jobs and they weren’t in debt and we went back to work again. The one good
thing that is happening right now is that people are starting to save money.
The government is frantic, they say, “You don’t want to save money, we want you
to borrow more money and buy stuff.”
Aaron Task: Right, government says we want you to spend.
Republican: The government wants you to borrow more money and buy stuff.
Well no, they don’t need to buy stuff, they need to save money and pay down
debt and then we’ll go back to work. And the faster that happens the better it
is for us.
Aaron Task: Right, so obviously hindsight is 20-20. But who
do you blame, if anybody, for the housing bubble, the boom and bust we just
went through? Is it more the Fed, is it Wall Street, is it the American home
owners who bought more houses than they could afford, or your Democratic
colleague Barney Frank who a lot of people say it was people like him who
pushed low-income housing and people couldn’t afford it.
Ron Paul: One person.
Aaron Task: One person? [in disbelief and I am sure he expecting Ron Paul to say some democrat who is alive! ED]
Ron Paul: Keynes. Keynes did it because he came into vogue
into the 1920s and the 1930s and believe believed it and they’ve been living by
this and Nixon put the rubber stamp on for all Republicans, “We’re all Keynesians
now, we all have been, we believe in deficit financing, printing press money,”
and that created the bubble. So it’s an intellectual fight. Keynes has lost
this and people are starting to recognize that the system doesn’t work. So now
the underground thought process right now… the thinking goes now on the
Internet and elsewhere is Austrian economics. They have the answers to our
Aaron Task: Right, but it seems that Keynes is making a
comeback, at least here in Washington DC more recently.
Ron Paul: That’s the last hurrah, it’s not working, that’s
like saying, “Well we’ve had these two stimulus packages, that’s all Keynes. We
need one more.” People are laughing at that.
Aaron Task: What is your sense of the political appetite
right now for another stimulus package? Do you think we’re going to see the
Ron Paul: Yea, they will and it might get passed and it
might be passed and they’ll probably wait till next month when the economy has
a few more bad statistics and unemployment’s 11%, and they will frantically
pass more money and continue to do the things that created the problem in the