Interview: Ron Paul – Hey Fed! it’s The Free Market, Stupid, Pt II
Mandeville, LA – Exclusive Transcript – “In 1971 it happened, and that’s when I started speaking out [about the Fed.] Really nobody listened. There were a lot of seeds planted about sound money, especially by Murray and others, and Mises. They talked about this. There was no audience out there. I would go to campuses, when I first went into Congress, and I would get 20 or 30 people come out and maybe convert one or two.” Check out today’s transcript for the rest…
Continue Mike Church Show Transcript, See Pt I of this Transcript here
Mike: On that same line, let’s just talk about Mises for a moment because I know you’re a student of Austrian economics. He’s certainly one of the fathers of that. One of the things that I find most fascinating about Ludwig Von Mises and just the title of the book Human Action, is that if you read that book, you come to understand something I’ve heard you talk about hundreds and hundreds and hundreds of times, which is that in a real free market — this includes a free market for government services as well — human action helps us manage our resources. Humans will react to supply and demand. Like Tom Woods like to say, the price mechanism is the greatest mechanism in the history of man for man to be able to care for himself, for his subsistence. Has the general government, with the Federal Reserve in cahoots, removed most of our human action and our price mechanism response system?
Paul: Yeah. Adam Smith talked about the invisible hand of people making decisions and ironing these problems out. I say the invisible hand was removed and we’ve ended up with an iron fist of government and the iron fist of the Federal Reserve. Mises really, really emphasized the importance of the cost of money, which is the interest rate. Socialism, he predicted, would fail. He knew that the Soviet system would fail before it hardly even got off its starting blocks. If you don’t have a pricing system, which is made up by these millions of millions of people with supply and demand, then you have to have a bureaucrat. Believe me, the bureaucrats and politicians have no idea what is the best form of energy or the best way to deliver medical care. It has to be done by people making these personal decisions, and that is why Mises emphasized this element of human action. It’s the actions of individuals. But he also emphasized very much that there is a subjective element in this. He talked about the subjective theory of value. Just because you think and I think something should be very valuable, if the people don’t want it, even though on long term our projections may be right, on the short term it may be that the emotions can misprice things. Right now, the value of our dollar is grossly distorted from my viewpoint, and I anticipate it to go down. But immediately right now, subjectively thinking, there are enough people out there who are buying into this that there’s no other place to go, that around the world you can’t buy enough Swiss francs. There’s an element of subjectivity where there’s value placed in it. Ultimately interest rates and the price of things are crucial in the marketplace to tell the entrepreneur what to do. Under those circumstances, you have to have rewards and penalties. If you don’t anticipate correctly and you don’t know what the consumer wants, you should fail and you should never be bailed out. But if you’re successful and you’re rewarded with profits, you should be allowed to keep them. That’s how the market system works. But because of envy and greed and different things that come into this equation, people, especially from the far left, they get very envious and can’t stand the idea that somebody like an industrialist is making a lot of money. They despise people like this. To me it’s just envy because they think they know better how to redistribute wealth, which is the great fallacy.
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Mike: Let’s follow up on one previous question, one thing you said. You said interest rates rise and the politician has to back off. Bernanke and his pals at the Federal Reserve and at the Treasury Department have made sure interest rates, not only have they not risen, they’ve actually gone backwards, and this has been going on for six years now. Is the bubble that’s being inflated now bigger and more dangerous than the one that blew up in 2007 / 2008?
Paul: I think so, and it’s the bond bubble and the dollar bubble. It’s way distorted. Greenspan, ironically, who used to follow Austrian economics and the gold standard, he should be blamed the most, and everybody else who went along with it. Even after the bubble burst, people said: It’s all Bernanke’s fault because he kept interest rates too low too long, which is a pretty good statement and he obviously did. It was one recession in our recent history that came about not because the Fed decided to tighten but because they finally exhausted his efforts to keep the economy going by printing money and finally the market rejected this thing so there was a correction. The correction comes about in a different manner. The only thing the Fed has ever had over these 100 years when the economy goes down is they have to juice it up by more money and lower interest rates so people will start doing things. Early in the destruction of a currency, that sort of works. In this case, when it happened, and this is about the time Bernanke came in, this was an unusual recession. It was a big recession. They won’t call it a depression but I really believe it is. The only tool they had was to lower interest rates. So Greenspan too low too long, but what does Bernanke do? He takes it to -1 percent, the real interest rate. He lowered it even further, and they think that’s going to solve the problem. Yes, about all it did was they saved the hides of those people on Wall Street. It looks like this January’s numbers are starting to show that maybe their bubble on Wall Street is not going to continue very much longer.
Mike: Two final questions for you. Question one: Your son, Senator Rand Paul, and you were feted in the New York Times on Sunday last. It was an obvious attempt to try to make sure that all of the sins of the past — not that I think you sinned — but all the sins of the past are up in front of the public’s minds and [mocking] “No one can forget that Paul was associated with the Mises Institute and Rothbard and this guy Tom Woods who wrote this book about nullification, and everybody knows that’s about slavery and defending this, that and the other.” It’s obvious that your son has made an impact, and there are people that are very, very afraid of him. Give son Rand Paul a grade. How is he doing so far, in your estimation?
Paul: Do you think if I give him a grade I’ll be objective? I will give him an A.
Mike:Are there things that he is doing that you sit back in the rocking chair you told me you were not going to let them put you into and go: Man, I wish I would have thought of that.
Paul: In some ways, but I also recognize, as he does, that we are two different people, even though if you give us a list of things there would be agreement. How you approach things and what you emphasize and the tone you use and the exclamation, it has to be a little bit different. He’s admitted on TV quite frequently that yeah, we agree, but he wants to reach more people. You can’t argue that case. My circumstances from the early ‘70s on was there weren’t so many out there. I was happy to talk to 30 people and convert three. It’s a different world today. That’s what the amazing thing was that came out of our presidential campaigns. It’s quite a bit different now for him. I think basically the message is the same, and that is that government is the problem and it will never be the solution. He’s continued to work hard on auditing the Fed, and we have to keep doing that. Even though I would like to get rid of the Fed and they don’t deserve to exist, just a clean audit to let the people know what they’ve been doing and who their buddies are, that would be — I just wish we had an Edward Snowden for the Fed, really give us the details. We know a little bit more than ever before with the prodding we did after the collapse in ’08. We did get some information but we don’t know all the details.
Mike: I would just say, as a personal aside, I think the most encouraging thing about Senator Paul is that he is living proof that with the right rearing and education, we can have a generation of actual statesmen. I think he has become a very good statesman. You and Carol did a marvelous job in getting him to the point where he could actually act upon and is in front of the world with international cameras and he’s being a statesman. That’s not easy to do. You’re right, his mannerism and the way he conducts himself, that’s impressive to me. So good job. Second question: What is Ron Paul up to these days? People are jonesing to know. Television, homeschooling, give us an update.
Paul: Same old stuff. I’ve had one goal. I’ve been getting involved in speaking out, which was the purpose in the early ‘70s, not to be in Congress, but that was the vehicle. I was a little bit surprised I ever went to Congress, let alone go twice and stay a few years. My goal has always been emphasizing the importance of liberty. It is that item that makes all the difference in the world. If you understand what true personal liberty is all about, you will have less war, more peace, and more prosperity. It’s the best system that we have, which means that government has to be drastically reduced, and the whole concept of government has to change. That’s always been my goal, whether in or out of office. In between the two presidential campaigns, we had the Campaign for Liberty, which we still have. That’s important to reach a lot of people. I have a free foundation, which is educational, and Daniel McAdams works with that. That’s the Institute for Peace and Prosperity for foreign policy. I’ll continue to work on monetary policy. The Ron Paul Channel on the internet, I’m going to continue to do that. That keeps growing in numbers and we’re reaching more people. Those things are going to continue. Of course, you mentioned the homeschooling, which is a long-term project, but it’s growing every day. Of course, Tom Woods and Gary North are very much involved in that. Tom is such a workhorse. He’s doing a lot of videos. I need people like that because, quite frankly, it would be hard for me to sit down and know exactly what a lecture, in that length of time — he does hundreds of them. It’s going to be something that’s going to be around for a while. Long term, that’s probably one of the most important things we’re doing. I’m hoping that will be successful.
End Mike Church Show Transcript