Ron Paul: We Are Witnessing The Wealthy Get Wealthier, The Poor Get Poorer, And The Middle Class Being Wiped Out

RON PAUL: I’m not surprised, but the markets were certainly surprised yesterday, but I think it's a major admission by Bernanke that things aren’t good. The fact that he’s doing this and all the markets anticipated, well maybe the economy hasn't improved. He’s literally saying we're in bad shape, but the markets didn't interpret it that way. The markets are reflecting just that easy money going into stocks. It doesn't help those 99% or at least a large middle class and the poor, it won't help them one bit. They’re still going to have trouble getting jobs, so there's a lot of disconnect here. but I think it was a very, very bad, you know, announcement yesterday that the economy is a lot worse off and I think in time it will prove to be the case.


KATTY KAY: Aren’t we in the situation where if the fed cut this stimulus money we might be worse off?

RON PAUL: It can't get worse. To continue to destroy our currency is always bad. Always bad. It always destroys the middle class and the wealthy get wealthier. This is the prediction of Austrian economics for 100 years. This is exactly what we're witnessing, those predictions that the wealthy get wealthier, the poor get poorer, and the middle class gets wiped out. So, no. All inflation is bad, and this idea that the fed can create money out of thin air to satisfy special interests and the politicians who like to spend money, it always leads to trouble, except on the surface a lot of people feel good about it. During the bubble phase, a lot of middle class people felt good about it. They were buying houses, and house prices were going up, so the inevitable bust came, the wealthy got bailed out and the average person lost a job and lost their house. So it's never good even if you feel good for a while. Right now, only the rich are feeling good and the poor aren't doing well, and the middle class is getting much poorer.

HAROLD FORD: What’s the most important thing that can be done in the short term to help raise middle class income, and what's the most important thing long term, government-business combination can be done?

RON PAUL: Short term it's really very tough. You know, if you wanted to say on the short term and if you wanted to intervene and had to intervene, you should have given the money to the poor people and let them pay off their mortgages. Don’t bail out the rich, which I wouldn't have advised. But on the short term you could do that.

Long term, you have to decide whether you want a few men, maybe women, involved in secretly deciding what the interest rates should be. The interest rate -- if people don't understand how important the interest rate is, they can't solve this problem. For the middle class or anybody. You have to have savings, you have to have interest rates, that's the message to the business community, but we don't have interest rates other than what's dictated by a few people. And they are always wrong. You know, they are always wrong and always will mislead, and that's why even yesterday is more misleading us on what's really happening.

BRIAN SHACTMAN: So you’ve got an artificial manipulation of rates? And we know your opinion about the Federal Reserve. But, if you could pull the levers right now, because you can't go cold turkey, right? Specifically how would you get to the point where you could adjust it to a more normal assessment of what the rates [should be]?

RON PAUL: The cold turkey argument has merit to it because it would be tough…

SHACTMAN: It would be a real shock to the short term system.

RON PAUL: The alternative is a calamity like the bankruptcy of a whole country, like a city can go bankrupt, like a Detroit. So you're not really comparing, you know, an easing down and a smooth transition or having a really tough thing to cut back. So, there is no easy. There’s no political answer. It’s addiction. The people are addicted to spending. Politicians are addicted. The markets are addicted. And there's no chance they will wean us off. This is what Bernanke was saying. The politicians aren’t going to balance the budget this year.

What we've been taught for 100 years is it's stupid to balance the budget because what you want to do is you want people to spend money and borrow money and print money. That’s the thing we've been taught for a long time.

SHACTMAN: No one really believes in a populous that we can go bankrupt so it's a reality they don't assess when they look at the economy, they don't believe it can happen.