Ron Paul on The Economy: Most People Recognize This As A Depression

Written by:
Jenny Woo
Published on:
Economy Depression

In Part I of Senior Correspondent Jenny Woo's sit down interview with Texas Republican Congressman Ron Paul, he discussed the reasons why online gambling should be legalized.  A number of states are now considering legalizing what has been valued as a $38 billion dollar industry.  The US economy needs all the help it can get.  Congressman and Economist, Ron Paul, insisted last year we were in a recession when everyone else appeared to be in self-denial.  Now he is using the "D" word.

JENNY:  You're a respected economist and you were saying there was a recession long before anyone actually got around to admitting it.  Do you think the economy is heading for a depression and what, in your opinion, needs to be done to stop the bleeding?  

CONGRESSMAN PAUL:  For some people, we're in a deep depression.  I imagine if you live in Detroit, you wouldn't have to argue about when the depression is going to start.  Government statistics on unemployment are always more optimistic then they really are; I think today they came out and unemployment is over 10% and that's getting pretty serious.  But others in the private sector who count all the people who have quit looking for work - it's probably 17 or 18%.  That's huge and the sentiment is so negative and the amount of welfare has been wiped of the books has been into the many many trillions of dollars so I would say that we are in a very very depressed condition - much worse than any recession we've had in a long time.  I think we have a long way to go because the proper policies have not been solid.  We're doing everything to prop up the bad system rather than allowing the debt to be liquidated and prices to fall.  For instance, there are too many houses around; there are 19 million houses unoccupied and still the prices are too high and they're working hard to try to keep these prices up.  But you want these prices to go down and people who have money to buy these houses so we can go back to building houses again.  However, if the government keep interfering with this liquidation of all of the mistakes made then it just takes that much longer.  So I think the economy is going to continue and eventually most people recognize this as a depression.

JENNY:  You've suggested that these "bad banks" should be allowed to fail.  Some have said that if AIG were allowed to go under, the entire financial system would collapse.  Is that a possibility or is this something we are just going to have to accept because if it doesn't happen now, it will sometime down the road with far worse consequences?

CONGRESSMAN PAUL:  Well no, I think if that they allowed it to fail - there was a lot a part of that AIG company that had good assets or still a lot of good customers but the derivatives were all bad.  Now the good customers in the AIG are trying to prop up all these derivatives, the derivatives need wiped off the books, the good insurance programs should be taken into another company; so I just think that what we're doing is guaranteeing that we're moving closer to a total collapse.  Instead of preventing the collapse, I think doing the wrong things takes us closer to it.

JENNY:  We are really interested in knowing more about your proposed legislation H.R. 1207 that would have the Fed get audited.  Tell us more about this and do you see enough support in both parties to get such a bill passed?

CONGRESSMAN PAUL:  Well this is what I'm encouraged with, we have probably about 26-27 co-sponsors now without a whole lot of effort and we're going to have a national effort to get more co-sponsors because we need to get a handle of things.  The Federal Reserve is completely out of control and under the law they don't have to tell us a thing.  They are the fourth branch of government and they have access to more funds than even the Congress because their funds are unlimited and they don't have to account for them.  So it's government totally out of control.  Most people now, Republicans or Democrats or any American citizen are furious when they hear that Treasury officials or Federal Reserve officials just say to the Congressman, "No, I'm not going to give you that information."  That's why I think this piece of legislation is very important.

JENNY:  I wanted to get your opinion on this Houston Chronicle report that says "Paul played a role in obtaining 22 earmarks worth $96.1 million, which led the Houston congressional delegation. ... His earmarks included repair projects to the Galveston Seawall damaged by Hurricane Ike and the Gulf Intercoastal Waterway."  You defend these earmark requests, saying you oppose Uncle Sam taking so much of our money, and until Sam can be stopped, you plan on grabbing a Texas-sized share for his district.  How are things going post-Hurricane Ike?  And I'm actually from Pensacola, so I know it must be rough dealing with the aftermath as we've been pretty hammered the past 10 years ourselves. 

CONGRESSMAN PAUL:  It's coming along slowly and they will recover.  The truth is is in my position is, I don't believe that the Federal Government should be involved.  In 1900, when they had a much worse hurricane, they built the seawall and they recovered and it was all done with local funds.  This whole issue of earmarks is pretty much misunderstood because my point on the earmarks is that we in the Congress should designate where the spending goes; because if we don't then the administration decides where it goes and then the members have to go and crawl to the administration and say, "Please come and do this.."  But I see it as a legal responsibility under the Constitution for the Congress to designate how the money be spent.  At the same time, I'm willing to say, "Look, if you took the money and you're going to have this bill, that my district should be considered as well."  So I'm very generous in those making those requests but when the time comes to vote for the package because it's part of the problem and it's excessive and it increases the deficit - I just vote against it.  In a way, I never vote for a so-called "earmark" because it doesn't save any money.  If you vote against it, it doesn't cut anything; it just transfers the power to the executive branch.  There's a lot of talk about "earmarks" and a lot of misunderstanding related to it.

JENNY:  What type of turn out do you expect later this month in St. Louis for the "Freedom Celebration"?  And what is going to be your main goal while you are out there?

CONGRESSMAN PAUL:  The main goal is the same as it's been with whatever I've done over the years and that is to promote the "Cause of Liberty".  Our organization is "Campaign for Liberty" ( and it's a continuation of the Presidential Campaign.  It's going to be interesting because I always lean towards pessimism and concern and "Oh, nobody's going to show up."  I did that the whole campaign and then I'd walk in and we'd see large crowds.  So the staff is very optimistic that we're going to have a nice turnout with all the students.  It will be a rally along with having a some entertainment and there will be instruction booths, academically with economic lectures and then also instructions on how to be practically in organizing campaigns.  It's going to start Friday (March 27th) and go until Sunday (March 29th) morning; we're hoping it's a success and we're working hard at it.

JENNY:  Thank you so much for taking time out of your busy schedule to sit down with me once again.  I really appreciate it.

CONGRESSMAN PAUL:  Okay, thanks Jenny. 

Jenny Woo, Senior International Correspondent         

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