The key moment in the debate

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The MSM has missed the most important exchange in the debate even though it happened at the beginning.

Giuliani, the candidate of the corporate state elite, defends the corporate state while Ron Paul attacks it. The MSM ignored Ron’s brilliant analysis because they are too shallow to understand what he said.

Mr. Matthews: Mayor Giuliani, the private equity firms are making billions of dollars. I guess it’s a mystery to me — and you can explain it, as a New Yorker — where these billions of dollars come from; where were they before; and is there any downside to this amazing bonanza in the hedge fund and the private equity firms?

Mr. Giuliani: Well, I mean the market is a wonderful thing.

Mr. Giuliani: I mean, the free market is our — one of our greatest assets.

And the leading Democratic candidate once said that the unfettered free market is the most destructive force in modern America. I mean, just get an idea of where the philosophy comes from.

The free market is the asset that has allowed us to — the sky’s the limit. The reality is, that what we have to do is look at the fundamentals. A president can’t be a economic forecaster. A president’s not going to be any better an economic forecaster than you are a baseball forecaster — and I’m not a particularly baseball forecaster this afternoon.

(LAUGHTER)

So the reality is a president has to work on the fundamentals. What are the fundamentals?

Keep taxes low. Keep regulations moderate. Keep spending under control.

Mr. Giuliani: That’s an area where we need a lot of help.

And make sure you do something about legal reform so that our legal system doesn’t — it’s 2.2% of our GDP now, is spent on all these frivolous lawsuits. It’s double any other industrialized nation.

If we don’t get control of that, that’s another way in which we’re going to eat up our future.

So we got a prospect on the Democratic side of overspending, overtaxing, over-regulating, and over-suing, and I think you need a Republican alternative to that, which is an emphasis on the pillars of growth that I mentioned.

Mr. Matthews: Just to test your forecasting ability, Mr. Mayor, will Torre keep his job?

(LAUGHTER)

Mr. Giuliani: God willing.

Mr. Matthews: OK.

Mr. Giuliani: Joe Torre is the best manager in the history of the Yankees, at least in the modern era. So — and he’s my friend.

Mr. Matthews: OK.

Congressman Paul, I think you have questions and concerns about the bonanza in the hedge fund industry. Do you?

Mr. 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.

Mr. 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.

Mr. 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.

Transcript via WSJ

8:02 am on October 10, 2007