Fox News Channel "Your World" Interview - Transcript

Interview

MS. GLICK: To Washington now. The Fed chief on the hot seat again, getting grilled on everything from high energy prices to bailouts and whether the Fed is simply throwing money at the problem.

REP. PAUL: (From videotape.) You're probably the biggest taxer in the country. You're a bigger taxer than the Congress.

MS. GLICK: With me now is the guy who made that comment, former presidential candidate Ron Paul.

Congressman, thank you so much for joining me. You were pretty excited about the fact that you think the Fed is the biggest taxer right now, inflation killing us, the dollar declining. What do we do from here?

REP. PAUL: Well, we stop the inflation. And Mr. Bernanke admitted, he conceded that inflation was a tax. He wasn't quite ready to take all the blame for the inflation, but I also prefaced that question by saying that almost all economists recognize that inflation is a monetary phenomenon. When you create a lot of new money out of thin air, you devalue the currency and prices go up. So if people are complaining about high prices they're paying a tax, and he acknowledged that.

But he quickly wanted to deflect that by saying, well, prices of oil go up for other reasons. But the point is is everybody feels like they're short of money, but they're really not. They're short of value. And now we're trying to solve this financial crisis by bailing out everybody, the Fed to create money and the Congress appropriate more money.

MS. GLICK: Congressman, let me ask you this. I mean, you and I have talked about this before. I mean, let's be realistic about this. If we're all putting the discount window to Fannie, to Freddie, to every broker or dealer and the commercial banks already have access to it and the printing presses are in overdrive, we're going to continue to knock the U.S. dollar down. So what do we do to deal with this overinflated prices? I mean, clearly, oil in the past two days is helping us.

REP. PAUL: Yeah, that is temporary. We need a new monetary system. We need to restrain the Federal Reserve from its power to create money out of thin air. And that's why linkage to a commodity is so important. But it's a congressional responsibility, too. The Congress likes the Fed because they spend money and then they expect the Fed to monetize it, so this is ongoing.

But it is really a reflection of what we think the role of government ought to be. If we think we have to be the policemen of the world and run the welfare state and run up deficits and then monetize our debt, I'll tell you what, we can't solve the problem. And that, of course, is what I've been preaching for a good many years that we need to restrain the government. We need to have --

MS. GLICK: Congressman, let me jump in here because I don't have much more time with you. Look, there's all this talk about housing bills, whether they be the Senate or you in the House with Barney Frank getting something done. Are we actually going to see something happen as early as next week? Or is this a conversation that we're going to be having one month from now?

REP. PAUL: No, it's going to happen. I thought it could have happened tomorrow, but it's been postponed. So it's on the verge of doing it. And the politicians won't have the courage to do what is right because --

MS. GLICK: Is it good enough?

REP. PAUL: Oh, no, it's going to make -- it will temporarily maybe make people feel better, but it's sort of like giving a shot of drugs to a drug addict. He feels better, but the patient gets sicker, and that's what's happening to the economy. We will get sicker, we won't get better by another shot of inflation.

MS. GLICK: All right. Congressman Ron Paul, I hate to leave it there but I will. But I applaud you for getting aggressive there during the testimony today. Thanks so much for joining us.

REP. PAUL: Thank you.

END.

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