Patricia Sheridan's Breakfast With ... Ron Paul

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U.S. Rep Ron Paul, a Republican from Texas, is well known for his libertarian views on government and his disapproval of the policies of the Federal Reserve. A native of Green Tree, the 75-year-old graduated from the former Dormont High School and left to attend Gettysburg College. He went on to Duke University School of Medicine, was a flight surgeon in the Air Force, and specialized in obstetrics and gynecology in Texas. He ran for U.S. president twice and believes in a free-market system and the principles of Austrian economics. His son, Rand Paul, an ophthalmologist, shares many of his conservative views and is a junior U.S. senator from Kentucky. The elder Dr. Paul has written several books; his latest, "Liberty Defined: 50 Essential Issues that Affect Our Freedom," is due out next month.

Growing up in Pittsburgh, how did you resist becoming a Democrat?

I kidded one time about how many people were in the Congress who were born and raised in Pittsburgh and were all Republican. I said, "I guess to be a Republican you have to move away." [Laughing.] I don't think we could have been elected in Pittsburgh. We do have some Republicans, more so than before. I was raised in a Republican family.

I understand you got into politics in the 1970s to change the direction the country was heading. How frustrated are you?

PG audio

My honest answer is I really don't feel frustration. I explain it as (and it usually gets a chuckle) I have very low expectations. So I don't think I'm going to change the world. Never dreamed I would. I make a point here or there and am really surprised the last few years how much attention we've gotten, you know, with the free market views and the hard money system that I talk about. I thought I'd be going to Congress to leave a record and maybe a few suggestions.

We had high inflation in the late '70s and early '80s, the dot-com bubble in the '90s and recently the housing bubble.

There's been a message sent to Washington this last election, so the people are starting to wake up. But there is a lot of mixed understanding. Certainly there is a strong sentiment now that government has messed up. The Federal Reserve also messed up, and they're part of the problem. The people are waking up, but we still have a long way to go. There's going to be no easy changing of direction.

Now that you are chairman of the House Domestic Monetary Policy Subcommittee, do you feel you are in a position to expose and disarm the Federal Reserve?

I wish the answer would be, "Oh, yeah, easy. Now I'm in this position and I have clout." But I am going to be reserved on the results until we see them. I think I can win in a way, regardless. I think I'll be stiffed on getting a true audit of the Fed. The Fed is more powerful than I am, and they were able to squelch it before. I mean, they stiffed the Freedom of Information Act. It doesn't diminish my desire to pursue it because even if I don't get the audit, it just proves my point. They lose either way. But they're on the defensive now, and that is very good. I mean, who ever heard of a Federal Reserve board chairman going on "60 Minutes" and hiring press agents and lobbyists and having press conferences? They've never done that before.

If there's nothing to hide ...

There are a lot of people who want this hidden. There's a lot of people making money today. And yet the people aren't getting their jobs back. Wall Street is getting their jobs back, and the banks are making money again. The bad stuff was bought up by the Fed. Today what's underpinning this whole revolution going on has been the spread of Austrian Free Market Economics, which is something I've been promoting for 30-some years. In the past it's just sort of been anti-Fed, but we have more clout with our arguments. The free market economists like [Ludwig von] Mises and [Friedrich] Hayek, they've explained this so well. They made the predictions. Sometimes I get credit for making predictions like "there's a housing bubble" [before it was recognized]. But I don't get credit for that. Common sense tells you that. We expected this to happen and [recession] is happening, and I don't think they can pull us out of the problem. So the longer they prop it up, the more attention will be given to the Federal Reserve System.

In all of this do you see yourself as a rebel?

I'm rebellious against what we have, but I feel like I am opposing those who have rebelled and rejected and ignored our Constitution. Why should people challenge me for wanting to balance a budget and be serious about it? Why should we be the rebels and the radicals for wanting to have sound money and not allowing people to print it? We are in constant wars. We have constant economic crisis. There are no new jobs created in the last 10 years. They are still short many, many hundreds of thousands of jobs as they pump all this money in. They're a total failure, and I think they are spoofing us when they say there's no inflation. Everybody knows prices are going up.

Speaking of inflation, housing prices skyrocketed but are not being allowed to fall to a natural bottom.

It was huge. They've said they have achieved price stability. The pricing structure is so crucial. That's the whole theme of the free market. People who make mistakes have to suffer those consequences. What we've done now is interfere, as you indicate. Do they allow housing prices to go back where they should be? They've messed them up for decades. No, they keep propping prices up. But the even more important price that they mess around with is the price of money. The interest rate. As long as you interfere with the interest rates, it will create bubbles and prevent the correction that you need to happen. It's artificial. Give us all the information ... the chairman of the Federal Reserve hasn't the vaguest idea what the correct interest rate is or what the correct money supply should be. It's absolutely bewildering that people have accepted this.

The longer you serve, do you worry about becoming more institutionalized and caught up in all the crazy?

I would say every day I've ever spent in Congress, I've found myself drifting farther and farther away. It probably has to do with my conviction that we've been going in the wrong direction. The economic policy is wrong. I think most people in Washington care. They don't want people unemployed. They don't want inflation, but the policies they design actually make people poor and unemployed. They give us inflation.

In an interview I did with [TV consumer reporter and investigative journalist] John Stossel, he said you are often [unfairly] depicted as a nut by the mainstream media. Do you agree with that?

Yeah, but I don't think it's as bad as it used to be. It was bad for 20 years. It wasn't necessarily they made an opinion. They just totally ignored me. It was total silence. Then for a while when they paid attention, they started to laugh. They pay more attention now, and they are responding and they're being more defensive. So I think we are making inroads. I think in philosophical terms not political terms. You have to change ideas and people's understanding. I'm a strong optimist long term. But, I think we are going to have a much worse crisis [short term]. The young people I talk to who come to my office believe in this country and they believe in freedom

Perhaps it's when they get their first paycheck and see all the taxes taken out and if they invest, their dividends are taxed and savings are taxed.

When I talked to them I say, "Do you expect to get much out of your Social Security payments?" They say, "No, we don't expect anything." My position is that I would let you get out. Save your own money and take care of yourself and get rid of the income tax as well. Your life is your life. If you mess it up, you have to be responsible for it. But if you take care of yourself you earn some money, you ought to have a right to keep it. It's more appealing now because I think they are seeing the failure of government.

What kind of toll did running for the presidency take on you, other than financial? And would you do it again?

I haven't decided that. I'm still pondering it. It's really a tough job [running for president] because you are gone all the time. It was stressful, but the stressfulness and the tiring aspect of traveling (the TSA and that sort of thing) was compensated and encouraged by the young people. I mean, they understood about the Federal Reserve and Austrian economics, and they were sick and tired of the Patriot Act. So that would energize me.

Would your wife be on board if you decided to run again?

Yeah, I think so, probably so. [Laughing.] She hasn't said otherwise.

Patricia Sheridan: or 412-263-2613.


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