Ron Paul in 2011 CNBC GOP Primary debate in Rochester MI

On Budget & Economy: Let Italy fail; or we face 10-year recession

PAUL: No, you have to let it liquidate. We've took 40 years to build up this worldwide debt. We're in a debt crisis never seen before in our history. The sovereign debt of this world is equal to the GDP, as ours is in this country. If you prop it up, you'll do exactly what we did in the depression, prolong the agony. If you do prop it up, you do what Japan has done for 20 years. So, yes, you want to liquidate the debt. The debt is unsustainable. And this bubble was predictable, because 40 years ago we had no restraints whatsoever on the monetary authorities, we had no restraints on the spending. And if you keep bailing people out and prop it up, you just prolong the agony, as we're doing in the housing bubble. We don't allow the market to determine what these mortgages are worth. If you don't liquidate this and clear the market, you're going to perpetuate this for a decade or two more.

On Budget & Economy: Let market determine interest rate, instead of Fed price-fix

A: If you want to get the economy going again, you have to get rid of price-fixing. And the most significant price-fixing that goes on, that gave us the bubble, destroyed the economy, and is preventing us fro coming out [of the recession], is the price-fixing of the Federal Reserve, manipulating interest rates way below market rates. You have to have the market determine interest rates if you want a healthy, viable economy.

Q: So you think the economy would be stronger if interest rates were higher right now?

A: You would have more incentive. You would take care of the elderly. They get cheated. They get nothing for their CDs. Why cheat them and give the banks loans at zero percent? And then they loan it back to the government at 3%. They are ripping us off at the expense of those on fixed incomes.

Q: Even though higher interest rates would make it much more expensive to borrow, mortgages.

A: What you want is the market to determine this.

On Budget & Economy: Go after crony capitalism; defend real capitalism

PAUL: I haven't analyzed it enough to call him a crony or not. But there is a lot of crony capitalism going on in this country. And that has to be distinguished from real capitalism, because this "Occupation" stuff on Wall Street, if you're going after crony capitalism, I'm all for it. Those are the people who benefit from contracts from government, benefits from all of the bailouts. They don't deserve compassion, they deserve taxation, or they deserve to have all their benefits removed. But crony capitalism isn't when somebody makes money and they produce a product. That is very important. We have to distinguish the two. And unfortunately, I think some people mix that. But this, to me, is so vital, that we recognize what capitalism is versus crony capitalism. When you have crony capitalism, and that's why we're facing this crisis today.

On Education: Student loan program is a total failure and unconstitutional

PAUL: Well, I think you proved that the policy of student loans is a total failure. I mean, a trillion dollars of debt? And what have they gotten? A poorer education and costs that have skyrocketed because of inflation, and they don't have jobs. There's nothing more dramatically failing than that program. There's no authority in the Constitution for the federal government to be dealing with education. We should get rid of the loan programs. We should get rid of the Department of Education and give tax credits, if you have to, to help people.

Q: But how do they pay for it? How do they now pay for college?

PAUL: The way you pay for cellphones and computers. You have the marketplace there. There's competition. Quality goes up. The price goes down.

On Tax Reform: Tax code is the symptom; spending is the problem

A: Eventually they go into the private sector. Then don't all leave immediately when the plan goes into effect. But what my plan does is it addresses taxes in a little different way. We are talking about the tax code. But that's the consequence, that's the symptom. The disease is spending. Every time you spend, spending is a tax. We tax the people, we borrow, and then we print the money and the prices go up, and that is a tax. So you have to address the subject of spending. That is the tax. That is the reason I go after the spending. I propose in the first year cut $1 trillion out of the budget in 5 departments. Now the other thing is that you must do if you want to get the economy going and going again is you have to get rid of price-fixing. And the most significant price-fixing that goes on, that gave us the bubble and destroyed the economy, is the price-fixing of the Federal Reserve.