(From the CFR transcript of the October 9 2007 Republican Presidential Nomination Debate):
(Click here to see the Youtube video).
Congressman Paul, I think you have questions and concerns about the bonanza in the hedge fund industry. Do you?
PAUL: Yes. I think this is not a consequence of free markets. What's happening is, there's transfer of wealth from the poor and the middle class to the wealthy.
PAUL: This comes about because of the monetary system that we have. When you inflate a currency or destroy a currency, the middle class gets wiped out.
So the people who get to use the money first which is created by the Federal Reserve system benefit. So the money gravitates to the banks and to Wall Street.
That's why you have more billionaires than ever before. Today, this country is in the middle of a recession for a lot of people. Michigan knows about it. Poor people know about it. The middle class knows about it. Wall Street doesn't know about it. Washington, D.C., doesn't know about it.
But it's because of the monetary system and the excessive spending. As long as we live beyond our means we are destined to live beneath our means.
And we have lived beyond our means because we are financing a foreign policy that is so extravagant and beyond what we can control, as well as the spending here at home.
And we're depending on the creation of money out of thin air, which is nothing more than debasement of the currency. It's counterfeit. And it is a natural, predictable consequence that you're going to have people benefit from it and other people suffer.
PAUL: So, if you want a healthy economy, you have to study monetary theory and figure out why it is that we're suffering. And everybody doesn't suffer equally, or this wouldn't be so bad.
It's always the poor people -- those who are on retired incomes -- that suffer the most. But the politicians and those who get to use the money first, like the military industrial complex, they make a lot of money and they benefit from it.
MATTHEWS: Thank you, Congressman.
BARTIROMO: Senator McCain, what about that? How are you going to win the middle class back?
Wall Street executives are making millions of dollars every year, paying tax rates of 15 percent, while the average guy out there is paying 30 percent in taxes.
Is this system fair?
MCCAIN: Everybody is paying taxes and wealth creates wealth. And the fact is that I would commend to your reading, Ron, "Wealth of Nations," because that's what this is all about.
Paul pointed out how rotten the current financial system was, and McCain basically suggested that he didn't know economics very well. He suggested that the hedge funds were doing well because of the free market, and that all of the wealth in the funds wa really being created, rather than being a monetary illusion.
And now I keep hearing - in particular from a recent Fox News special on the current economic problems - that John McCain is the voice in the wilderness because he noticed some problems with Fannie and Freddie? PLEASE.
This is as ridicuous as the claims that Bush was the hero who tried to prevent this - when he was at the forefront of the movement to eliminate down payments as an unfair barrier to home ownership.
That is all.