Transcript

Chris Martenson: We have reached an important milestone with these Peak Prosperity podcasts. Today's marks our one-hundredth interview, and I can't think of a better person to mark this achievement than today's guest. It is my great honor to welcome Dr. Ron Paul as my guest. Until the beginning of this year, Dr. Paul served as a member of the U.S. House of Representatives, beginning his first term of office in 1976. He ran for the office of U.S. President three times, most recently in the 2012 Republican primaries. Dr. Paul also had a long career as an OB/GYN, over which he delivered over 4,000 babies. Ron Paul is a leading voice for limited constitutional government, low taxes, free markets, sound money, civil liberty, and non-interventionist foreign policies. I have long wanted to discuss our national situation with him, and I am delighted and honored that he agreed to be our guest today. Dr. Paul, thank you so much for joining us.

Ron Paul: Good to be with you, Chris.

Chris Martenson: Let's begin with the state of the economy. From my perspective, we have an imprudent and unsustainable monetary policy, which is creating all sorts of malinvestments and dangerous asset bubbles everywhere. Add to that a broken fiscal policy that has made America far too dependent on borrowed money, present company excluded. D.C. seems incapable of understanding the scope of the issues, let alone enacting steps to address them. Wall Street pursues moral hazard with impunity. What am I missing here? Do you see things differently?

Ron Paul: I see them differently in some ways. I think the analysis is correct, but I see Washington as being different, in a sense that I don't expect anything else because they are reflecting what I consider “prevailing attitudes.” And the prevailing attitudes for the last 50 or 60 years, especially since the 1930s, has been spending and deficits and printing money is the way to go. These people actually believe that World War II ended the Depression. They have no idea that the Federal Reserve had something to do with the inflation of the 1920s and the Depression of the 1930s, and the wars that are being fought, so they operate with deep conviction.

You take a guy like Paul Krugman, or even Bernanke, and they believe it like a religion that spending is good no matter what the spending is on. And that the deficits don't matter; deficits are not a burden. And even though we have this national debt and we have a foreign debt, they don't consider that so bad, as long as people will spend money. And if the people won't spend any money, the government has this moral obligation to do it.

And we see it; you and I and others see what the results are. It's miserable. People are getting poorer. Since the recession/depression hit in 2007, the middle class has shrunk. They're probably 50% down on their income. Yet the wealthy are getting wealthier. So, it is a mess. It reflects a bad attitude about economics. It has been ingrained in our system, and that is what Washington is all about.

But where I am encouraged is outside of Washington. You get a better perspective from people like you who talk about this and get people to look at their investments. I think this is beneficial, because a lot of people are realizing this whole system is deeply flawed, and they are looking elsewhere. And that is why I talk a lot about free markets, and property rights, and Austrian economics, and getting rid of the Fed. All these things are now up for grabs. A lot of people, especially the young people, are looking at this. So, for this reason, I am a bit encouraged by what might come out of this. But I think we are going to go through the ringer. I think it going to get much, much worse. It is bad enough already, but there is no way that we can step back.

The one thing I am convinced of, after having spent so much time in Washington, is that this will not be a gradual recovery from this disaster that we have. We are not going to elect enough people and have enough courage to vote the right way; there is too much demagoguing and too much misunderstanding. The people would revolt, but the collapse will come. It is going to hit the dollar, and then we are going to have our opportunity. So, the more people who are protected intellectually as well as financially, the better off we will be in rebuilding what we will need to do in the near future.

Chris Martenson: That's exactly the work that we are engaging in out here, as one of many organizations, as you mentioned, who have seen the light, who understand the real risks. I have noted a very pronounced, what I will call a “generational gap,” and I sympathize with both sides. Boomers desperately want to preserve the status quo because they have paid into it, they have invested in it, they have saved into that system. They have everything to gain by preserving the status quo. But young people look at the same situation and say they have nothing to gain from preserving the status quo. That is, they get saddled with huge debts, a crumbling infrastructure, and no loyalty with companies and the government anymore, it seems. How do we close that gap up?

Ron Paul: Well, reality will set in, and I think that is what is happening. The young people that are leaving college right now, they have a degree that is not earning them a good job. Some of them are going to work at McDonald's. And then they have this huge debt. So, it is a failed system. And they wonder what is wrong. Maybe government needs to give them more money. We need to bail them out. I heard Krugman say the other day, what we need to do is put more people on food stamps because it is a net benefit to put more people on food stamps – not be more productive and not save money and not invest and not have free markets and sound money. No, put more people on food stamps, they will spend the money, increase demand, and the world will be perfect again.

So I think the young people are waking up, but just think – about five, six years ago, how many people even talked about the Federal Reserve? I mean, even though it is nothing to really brag about, we ended up getting Audit the Fed bill passed twice in the House of Representatives. Just getting it to the floor is pretty amazing. I had worked on that for 30 years, and there has always been somebody around complaining about the Fed and why we should know more about the Fed. Yet, now it has shifted. I can go to the college campuses and get a good reception when I go hard on both the income tax and the Federal Reserve, so attitudes are changing. I think young people are realizing that they are getting a bad rap, and I think we have to turn that into a positive.

Chris Martenson: I totally agree. I want to turn back to Bernanke for a second, because you have exchanged words with the man a few times. I've seen many of those exchanges. So, what I am interested in is, you mentioned before that people in D.C. and people who are supportive of the whole D.C. culture really believe in the narrative that they have told themselves that deficits do not matter, things like that. You have exchanged blunt words with Chairman Bernanke and the Federal Reserve monetary policies. Do you really think that he and the Federal Reserve Board are really aware of the risks that you have raised, or do they actually believe what they are saying?

Ron Paul: I think they believe it less strongly than they used to believe. But they are protecting themselves because they will never admit, “I screwed up.” “I worked in college for 30 years.” “I did my dissertation.” “This is my religious belief.” And I put that in quotes. “This is what I deeply believe.” So, what are they going to say when the whole thing comes down on their head? It was not their fault. It was right now they are starting to say, well, it is a fiscal problem now. The Congress just won't spend enough money. Oh, they raise taxes, and taxes are too high. So, they will dismiss the blame away from them and not think it is monetary policy. But it is really both. You cannot have deficits without the Fed – and I have accused Bernanke as well as Greenspan, as they were the facilitators; they are the ones who run up the debt.

What if the Fed could not buy government debt? What a different world it would be. Everybody said this would be a disastrous to the economy, but what if people accommodated this? What if there was a dependency on saving? What if we did have a market rate of interest? And what if that resulted in less bubbles? All of a sudden, the world would be a different place. But no; they believe it, but they are protecting themselves now by willing us to blame somebody else. That won't ever be the Federal Reserve; it is going to be some politician that did not vote to spend enough money and run up the deficit faster.

Chris Martenson: Dr. Paul, if I had taken you ten years ago and fast-forwarded you to today and showed you that the Federal Reserve was monetizing about half of all the federal debt, would you believe me?

Ron Paul: I probably would have been skeptical, but in many ways, some of the predictions early on that I read about even in the 1969s and the 1970s – I remember looking at this, and they say when you have a system like this, every time there is a slump – which you can predict will come – it will always require more spending, and more deficits, and more inflation to come out of that recession until the whole thing falls apart. And this has been so true. So, yes, it looks huge, but right now, they claim we have an end of recession. Most of us do not really believe that, but then say this so-called recovery ends and we really take another big dip. The only thing they can even do is spend more and more money.

That is the only tool they have. So, for that reason, I am not shocked at the numbers. I guess I am more surprised that the whole thing holds together so long. Because when you look at this, and you look at the foreign debt, and the national debt it is so outrageous, and there is still confidence in the dollar, the world – they do not have a good currency, so the best they can come up with is the dollar, but even the dollar is less popular than it used to be. It is being held a lot less now as reserve currency, but we can still buy oil, and we can still buy our stuff from China, and they take our currency. But what amazes me is that it holds together. So I think monetizing debt and spending and deficit is going to get much, much worse until the world rejects the dollar. And there will be a rejection here at home, and prices will soar, and eventually interest rates will break loose and they will start rising.

Chris Martenson: With that final date with destiny and the world turns away from the dollar, what is it that they turn towards?

Ron Paul: Well, they’ve pressed me a few times on TV over the years about that, and I say, well, one thing is, I don't think the euro is going to replace the dollar. And that certainly looks like it is the case. You are not going to go to yen, and you are not going to go to special drawing rights, the IMF cannot come up with a paper currency. No, when people become frightened, they look for things of real value, and I don't think they can repeal the laws of economics that says that for 6,000 years metals have been beneficial. They will go to monetary metals, gold and silver, and they will buy other things, such as buying property. But no matter what we have, whether we have our gold coins or we have our property, if we have an authoritarian government, that is our greatest threat.

So, I would like to think that there is no perfect protection, other than shrinking the size and scope and power of government, so that we can be left alone and take care of ourselves. But I do not think there is another paper currency that they are going to go to, unless we are pleasantly surprised and a Far Eastern country or group of countries might back their currency with gold. And who knows; that would be very good, because certainly the Western civilization and the Western countries are on the down slope, where in the Far East they are still doing well. Can you imagine what would happen if China and a few other countries go together and say we are going to buy up the gold and we are going to defend our currency? That could change the world rather quickly.

Chris Martenson: Well, they might be smart like a fox over there, because certainly China's gold purchases have just been extraordinary over the past several quarters and ever since they opened up gold ownership to their private citizens. So, one of the things I am tracking is a very pronounced, from West to East, flow of gold; East including India. So, it looks like the real wealth of the world is already tilted and rolling from one of the side of the table to the other.

Ron Paul: Yes. It has been going on – do you remember – I am sure you recall when the British sold their gold…

Chris Martenson: Oh, yeah.

Ron Paul: …a bunch of gold, at $300 an ounce, and I remember Bernanke – no, it was Greenspan – I asked him about it when it was happening it was in the news. I said, the British are selling their gold right now, and they are getting three hundred dollars. I said, that does not sound very smart, does it? He said – he was sort of indignant – they know what they are doing. They were smart enough to know what they were doing, but now we look back, and they were selling at three hundred, and I think it is a little bit higher right now.

Chris Martenson: I want to turn quickly now to something where you mentioned – which is very serious to me – this idea that one of the larger threats we can have is the idea that the government is going to do everything for us and the government has subsumed for itself into being our ultimate saviour and protector of all things, even promising to make us safe in all moments. The problem is, we have to trade away our civil liberties for our "security" there – and I have got air quotes up when I am saying that.

I know this is a big concern to you. I know you know the players in the Capitol who are making the decisions. I was very interested to see what happened in Boston. What should we take from that event, but also the larger trend of our civil liberties and our privacies just being cut? Every week, it seems like I read about some new encroachment.

Ron Paul: Well, we have choice. We can look at it and we can say, this was atrocious; it was martial law; it was overkill; it is a totally un-American to do what they did, and we can put our foot down and say, no more of this; the Feds should stay out and the state should do a better job. Or the other way that we might look at it – and I am afraid it could happen – is, oh, okay, it was necessary; we do need to be safe and accept this. And I think it is up for grabs. I remember so many times after 9/11, fighting for civil liberties was very, very difficult. And I have individuals in the street, some constituents, come up and say, I know we have to give up some of our freedoms to be safe. And they do not have the right understanding that governments are not there to make us safe. It sounds like a wonderful thing, but you cannot have a policeman in our house every day. To make us safe, they cannot physically do it, and if they try to do it, it is a sacrifice of liberty.

So, if we accept the role of government, not to protect our liberties but to make us safe physically, that means we have to give up the privacy of our homes and we have to endorse pre-emptive war. And also, if you want to be safe and secure materially, you have to have a welfare state, which bankrupts the country. So, those are the attitudes that have to be changed. And what we have to do is, we have to develop a whole new generation. I do get encouraged by a lot of young people who realize that government has failed. This is the wonderful news! The IRS is failing, the government is failing, the wars are failing. So we have to have something else, and that is why we have to work so hard to present the case for self-reliance, not only because we are freer, but we are richer, too.

I always said I would opt for a free society if I could just do what I want, and nobody would mess around with me, and I had my freedom. I said, even if I had lot less money, that is what I want. But you never have to make that choice. If you demand your freedom, accept your freedom. And if you assume responsibility, believe it or not, we are all going to be better off for it. The country will be richer, and it will be safer, and it is going to be more peaceful. But we have to be convinced, and the majority have to be convinced to go along with those who will lead us in that direction and say, liberty is worth everything it is made up to be, and we can all be better off with it.

Chris Martenson: This is the heart of the topic for me, here, because a lot of the people I talk to are hungry for liberty. They are ready, willing, and able to assume a responsibility for their personal outcome. We have a large percentage of non-affiliated and independent voters who listen to this podcast. They are all hungry to have better agency in influencing our elected leaders to focus on these issues of economic stewardship, sound money, civil liberty, freedom. What advice do you have to offer them? How can they make a difference? Is it all inside the political sphere, or is it time to go grassroots on this whole thing?

Ron Paul: Well, if you start and think, the politics are the answers, then it won't work. The people in politics are the reflection of attitudes. So, it is getting people's attitudes to change, and when those attitudes have changed, the government will be changed. But, too often, the people accept these things without realizing how dangerous it is that government is going to take care of us and how they cannot possibly do it. And we had a taste of this in our early history. There was a lot of self-reliance, and the really sad part right now is there is a pretty good work ethic in this country, but often times there are individuals who are begging and pleading for a better life. They come into our country and they get blamed for all the problems that we have and they end up working hard – and others, because of the welfare state, are too content to accept the welfare and not accept the responsibility of taking care of one's self.

Chris Martenson: Well, excellent. So, a final question here: I know your last term as a U.S. House of Representative ended this year. In April, you founded the Ron Paul Institute for Peace and Prosperity – love the title. You also publish a regular newsletter called, Ron Paul's Freedom Report. What are the ways in which those who are interested in following your work and your new post-Congressional career can do so?

Ron Paul: Right now, the easiest way, if they want to use the telephone, is 1-800-RON-PAUL, and you can find out a whole lot. The other thing is, there are several web pages, but the one that is the most active right now is Campaign for Liberty. Campaign for Liberty is a group that I have in Alexandria. It is a grassroots effort. Through those two efforts, you can find out where all the other web sites are.

Chris Martenson: Well, fantastic. I think I will have an opportunity to meet you in Phoenix. I am presenting at the Casey Research Conference there this year, as well. So, hopefully I can run into you there. I want to thank you so much for your time, and most importantly, for all the work you are currently doing and all the work you have done in service for freedom. Thank you.

Ron Paul: Thank you, Chris.