Ron Paul: 6,000 years of history shows ‘gold is money, paper money fails’

Retired Texas Republican Congressman Ron Paul spoke with Bloomberg Television on Friday to discuss the United States dollar, protectionism, Treasury Secretary Jack Lew and how gold is real money compared to paper money.

‘Accusatory’

The host first asked Dr. Paul if he believes the U.S. is in a currency war. The three-time presidential candidate responded that the U.S. is in a currency war and has been for decades, even under the Bretton Woods system, but it has now accelerated and transformed into a “vicious war.”

“As long as money isn’t backed by anything and isn’t dictated by the market, governments always compete with their currencies. They did it even under Bretton Woods; they had to suspend Bretton Woods one time to reassess it,” explained Paul. “It was also predictable that Bretton Woods would break down and the pseudo-gold standard would end and it did. Now we’re in an age of competing fiat currencies.”

Paul argued that this is a form of protectionism and the monetary system that is in place at the present time always leads to trade imbalances and prompts people to export more than they import. However, according to the bestselling author, it’s “artificial and it isn’t an answer.”

He noted that the U.S. shouldn’t be accusatory to Asian nations, including China and Japan, because of their monetary policies, such as weakening their currencies. Paul pegged the question: “What have we been doing? Zero percent interest rates and buying all this debt every month, $85 billion, I mean it’s horrendous.”

Jack Lew

The former libertarian-leaning representative was asked about the new Treasury Secretary Jack Lew. He didn’t comment directly on Lew, but noted that the U.S. doesn’t “need an intervener.” Instead, the country needs a Treasury Secretary who will have a strong dollar policy as opposed to a directive of devaluing a currency.

“It is then that you hurt savers and cost of living goes up. This only damages the middle class and the poor no matter what welfare programmes you have because they lose purchasing power,” said Paul.

When the interviewer asked if he thinks the Obama administration is purposely trying to devalue the dollar, Paul responded that he does believe so, but it’s not something President Barack Obama or his administration would admit.

“They accept a different philosophy completely from the sound money people or the Austrian economists,” Paul stated. “They believe debt is not a big problem – just listen to Paul Krugman: debt is not a problem, you worry too much, what you have to have is spending and just print more money and everybody would spend money, we’d be all right.”

Paul cited Zimbabwe as an example of a country that inflated their money so bad that they actually to resort to different currencies.

Gold

The host commented that the gold standard did not save the U.S. from a financial crisis.

This led Paul to retort that the gold standard maintains the value of money over several years. Paul conceded that there were defects in the gold standard, especially during the wars, but now the world understands much more about monetary policy and there could be improvements in the future.

“History shows that 6,000 years of history is gold is always money and paper money always fails,” concluded Paul. “If you think we need a wiser Federal Reserve, central economic planning for the manipulation of credit, or a better Treasury Secretary, I reject that.”

Leave a Reply