The Carroll Standard

Ron Paul: Fed Creating New Money Out Of Thin Air

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Rep. Ron Paul (R-TX) appeared on Bloomberg Television’s “Street Smart” and told hosts Trish Regan and Adam Johnson that “the country should have panicked over what the Fed is saying that we have lost control and the only thing we have left is massively creating new money out of thin air, which has not worked before, and is not going to work this time.”

RON PAUL: “It should not surprise anybody, but it is still astounding. To me, it is so astounding that it does not collapse the markets. [Bernanke] said, ‘We are in very big trouble. We are going to do something unprecedented and we believe it will not hurt the dollar.’ And yet the stocks, they say ‘we love this stuff.’ But the dollar didn’t do so well today and the real value of the dollar is measured against gold, and gold skyrocketed from its very low to its highest. It means we are weakening the dollar. We are trying to liquidate our debt through inflation. The consequence of what the Fed is doing is a lot more than just CPI. It has to do with malinvestment and people doing the wrong things at the wrong time. Believe me, there is plenty of that. The one thing that Bernanke has not achieved and it frustrates him, I can tell—is he gets no economic growth. He doesn’t do anything with the unemployment numbers. I think the country should have panicked over what the Fed is saying that we have lost control and the only thing we have left is massively creating new money out of thin air, which has not worked before, and is not going to work this time.”

Ron Paul on whether Bernanke should be pulling back liquidity and raising interest rates right now instead: “Liquidity should be determined by the market. I don’t think he should raise rates. He should just get out of rigging rates. The system is so biased. It helps the bankers who get free money and then they buy government debt. What about the people who are frightened, they do not like the stock market and they are frugal and want to take care of themselves? What do they get—1% on a CD? That is unfair. It’s bad economics. You want to let the market determine interest rates and let it sort it out. People get so nervous, because we have lived so long with a Keynesian economic model of fixing interest rates and intervening in the market.”