Dr. Ron Paul has long been a leading voice for limited constitutional government, low taxes, free markets, sound money, civil liberty, and non-interventionist foreign policies.
His last term in the U.S. House of Representatives ended earlier this year, so we caught up with the former Congressman to get his latest perspective on how successfully our national leadership is dealing with America's economic challenges.
In Dr. Paul's assessment, Washington is too committed to deficit spending and the debt-based economy - both operationally and philosophically - to expect it to embrace a more fiscally-responsible model without a forcing crisis (which he believes is coming):
[T]hey believe it like a religion that spending is good no matter what the spending is on. And that the deficits don't matter; deficits are not a burden. And even though we have this national debt and we have a foreign debt, they don't consider that so bad, as long as people will spend money. And if the people won't spend any money, the government has this moral obligation to do it.
I don't expect anything else because they are reflecting what I consider "prevailing attitudes." And the prevailing attitudes for the last 50 or 60 years, especially since the 1930s, has been spending and deficits and printing money is the way to go.
But where I am encouraged is outside of Washington. You get a better perspective from people like you who talk about this and get people to look at their investments. I think this is beneficial, because a lot of people are realizing this whole system is deeply flawed, and they are looking elsewhere. And that is why I talk a lot about free markets, and property rights, and Austrian economics, and getting rid of the Fed. All these things are now up for grabs. A lot of people, especially the young people, are looking at this. So, for this reason, I am a bit encouraged by what might come out of this.
But I think we are going to go through the wringer. I think it's going to get much, much worse. It is bad enough already, but there is no way that we can step back.
The one thing I am convinced of, after having spent so much time in Washington, is that this will not be a gradual recovery from this disaster that we have. We are not going to elect enough people and have enough courage to vote the right way; there is too much demagoguing and too much misunderstanding. The people would revolt, but the collapse will come. It is going to hit the dollar, and then we are going to have our opportunity.
So, the more people who are protected intellectually as well as financially, the better off we will be in rebuilding what we will need to do in the near future.
Dr Paul continues to be vocal about the destructive role the Federal Reserve's loose and interventionist monetary policies are having in enabling the mal-investment in the system:
What if the Fed could not buy government debt? What a different world it would be. Everybody said this would be a disastrous to the economy but what if people accommodated with this?
What if there was a dependency on saving? What if we did have a market rate of interest? And what if that resulted in less bubbles? All of a sudden the world would be a different place.
But no...The only thing they can even do is spend more and more money. That is the only tool they have.
So, for that reason, I am not shocked at the numbers. I guess I am more surprised that the whole thing holds together so long. Because when you look at this, and you look at the foreign debt, and the national debt it is so outrageous, and there is still confidence in the dollar, the world - they do not have a good currency, so the best they can come up with is the dollar, but even the dollar is less popular than it used to be. It is being held a lot less now as reserve currency, but we can still buy oil, and we can still buy our stuff from China, and they take our currency.
But what amazes me is that it holds together. So I think monetizing debt and spending and deficit is going to get much, much worse until the world rejects the dollar. And there will be a rejection here at home, and prices will soar, and eventually interest rates will break loose and they will start rising.
He continues to view precious metals as prudent to hold in advance of this currency crisis. But in the long run, he sees civil agitation for smaller government as our best strategy:
I don't think the euro is going to replace the dollar. And that certainly looks like it is the case. You are not going to go to yen, and you are not going to go to special drawing rights...
No, when people become frightened, they look for things of real value, and I don't think they can repeal the laws of economics that says that for 6,000 years metals have been beneficial. They will go to monetary metals, gold and silver, and they will buy other things, such as buying property. But no matter what we have, whether we have our gold coins or we have our property, if we have an authoritarian government, that is our greatest threat.
So, I would like to think that there is no perfect protection, other than shrinking the size and scope and power of government, so that we can be left alone and take care of ourselves.
Click the play button below to listen to Chris' interview with Dr. Ron Paul (19m:37s):
Click here to read the full transcript