Ron Paul is not a fan of Janet Yellen, the newly confirmed Chair of the Federal Reserve, but he told The Daily Caller Monday she is nowhere near as flawed as the system she is about to take over.
“She’s worse than average,” the former Texas congressman told The Daily Caller in a phone interview shortly after the Senate voted 56-26 to confirm Yellen’s nomination, “but I don’t dwell on that at all.”
“It was never the chairman himself, herself that’s the problem,” Paul said. “It’s the whole system.”
Paul has been criticizing the central bank for years, calling both for an audit of the Fed and for its total abolition. Paul a long-serving Republican member of Congress and 1988 presidential candidate on the Libertarian Party ticket, is a proponent of Austrian Economics, which focuses on the relativity of value and the impossibility of centrally planning a complex and dynamic economy.
“I put a lot of blame on the problems that we have, the booms and the busts and the unemployment and this recession that we can’t get out of –– it’s all due to the monetary system,” Paul said, saying they were “living in this dream world” to assume that one body could set interest rates. “And the head of the Federal Reserve just is the symbolic head of a deeply flawed system that should’ve never been created.”
“I think they’re living a pipe dream and it’s going to soon be very apparent what terrible shape our economy is in,” he said.
Yellen will hasten that revelation, Paul said, explaining that the reason he sees her as “a little bit worse than average” is “because she is probably going to be more excessive in creating money.”
“But what can she do?” Paul said. “They’ve taken the interest rates down to zero, the only tool they have is printing money, creating money out of thin air, so there’s nothing left. And she believes in even doing more of it.”
Paul’s son, Kentucky Sen. Rand Paul, has in some ways taken up his father’s mantle in congress. The younger Paul introduced the ‘Audit the Fed’ bill in the Senate and pushed Senate Majority Leader Harry Reid to bring it to the floor, promising to delay Yellen’s confirmation vote if he did not acquiesce. Reid refused.
The elder Paul said bringing that bill to the floor would “be the first step in the right direction that they’re serious about finding out what’s happening,” but he was emphatically pessimistic about its prospects.
“They’ll never allow that to happen. I mean I had it pass twice in the House, but even if the Senate passed it due to public pressure … the president would veto it,” he said. “So it’s not going to happen.”
There is no chance whatsoever that congress will dig itself out of this hole, Paul said.
“Sure, they could do it,” he said, “but they’re not.”
“The congress could spend less money and borrow less money and live within their means. Instead say, ‘well that’s a good idea, what we should do is, you know, systematically within the next two years wean ourselves off our monetary inflation,” Paul said.
But the former congressman described congress’s spending habits as an “addiction” and said it is a habit his former colleagues are unlikely to kick until it becomes unworkable.
“But there’s no chance, no chance at all, that that would happen because too many people have been conditioned and are addicted to the steady flow of money, and for psychological reasons, they would see this as a real threat,” he said. “It probably would set the markets back a bit, but it would correct it.”
“But that’s not gonna happen. They’re going to continue to do this until the crisis gets a lot worse than it is today. And there’s going to be no significant recovery,” he said, calling the talk of a recovery a “pretense.”
Paul described a conception that it is cruel to suggest the government should cut spending.
“If you come up and say, ‘make corrections, let’s wean ourselves off,’” Paul said, the response is something like, “‘Oh, you don’t care about people. You’re inhumane. You have to take care of people and turn the whole country into Detroit.’”
“Detroit,” Paul said, “is the logical conclusion of living beyond our means, and they did it to a greater degree than other states. Compare Detroit and Michigan to Texas. There is a difference. Overall the policy of the Fed is the biggest problem that we face because it encourages governments to spend.”
Republicans and Democrats, he said, “argue and fuss, but they really don’t argue about the big issues.” And congress, he said, will not do anything to change what he sees as a bad habit until something dramatic happens. “And that would be when the world rejects the dollar,” Paul said, something he predicted Yellen would “be a little bit faster on” making come to pass.
Still, after all that negativity, all the dire predictions, and pessimism about the prospects of the reforms he believes are truly necessary to help the country, Paul said he is “optimistic.”
“It’s just amazing that there can be confidence in a system like this,” he said of the Fed. “But so far so good. As long as the people trust the politicians and trust the government, the system will limp along.”
“But that’s where people should be waking up because all the polls now show that people don’t trust the government anymore, they don’t trust the congress, they don’t trust the president, they don’t believe the government, and they’re speaking out against the wars,” Paul went on. “So we have some very positive things going on in the area of waking up the people.
“And that’s why, as bad as I think it is, I’m rather optimistic about what’s happening,” Paul said, citing the engagement of college students whom he spoke to, and his surprise that they understood the Federal Reserve and wanted to know more about it.
“So,” he concluded, “hopefully we’ll get the ‘Audit the Fed’ bill, but as long as people are talking about it, it’s gonna do a lot of good.”