US presidential hopeful Ron Paul slams stimulus package, Fed rate cuts

LBO
Monday January 28, 2008

Republican presidential hopeful Ron Paul has slammed a US economic stimulus package based on tax-refunds and called for fiscal prudence and less Federal Reserve money printing, which caused the current turmoil in the first place.

Talking to Fox News television Paul asked where the money for the tax refunds - the cornerstone of the Bush administration stimulus package - was coming from.

"Where is the money coming from? We don't have any money over here in Washington," Paul told Fox News' Your World with Neil Cavuto.

"We have consumed everything we have gotten. So, we either have to borrow it from China or we print the money, which is inflationary. So, I'm opposed to that."

Paul says Federal Reserve moves to cut rates would further hurt the US dollar. Paul, a congressmen representing Texas, is also on the House Financial Services Committee and the Joint Economic Committee. He is a strong advocate of sound monetary policy.

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The sub-prime bubble he points out was caused by rates as low as one percent maintained by the Fed under Alan Greenspan which led to reckless lending and a property bubble. Now the Fed was giving its own 'stimulus' by cutting rates.

"This is a bit of a fiction, too, because the problem comes from artificially low interest rates," he pointed out.

"And we can't solve the problems of a weak dollar by printing more dollars."

"So, I think the dollar is still going to remain under attack, because you can't solve the problem of too much credit stimulus by more credit stimulus, because it will just lead to a weaker dollar. And I think they [Fed] are between a rock and a hard place."

Paul says the world is losing confidence in the US dollar as a reserve currency.

He is calling for reforms of the Federal Reserve and long-term changes to promote savings in the United States. Paul says taxes on interest discourages saving and the creation of 'real' capital.

"Then we resort to creating pseudo-capital at the Federal Reserve. And I think that's where our number one problem is," he said.

"And that is where the business cycle originates. And, as long as we have artificial booms, we're going to have these very real busts."

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