Remarks in Arden Hills, Minnesota Following the Nevada Caucuses

[remarks joined in progress]

...Therefore, instead of thinking cutting government spending by $1 trillion is a detriment, it's a blessing. It's a help. It would be spent -- the money would be spent more wisely. And the allocation of credit would be the same thing.

Today, the Federal Reserve does everything to say that they will allocate credit to their friends in the bubble formation and to their friends when the bubble bursts and they need their bailout. At the same time individuals, middle class people, people who don't want to speculate in the stock market and they want to assume responsibility and save money.

So, what do they do? They put their money in a C.D. And Bernanke literally laughs at people and says, well, the fact they only get 1 percent or 2 percent, that's unfortunate. But we have to take care of those of those who are going to stimulate the economy and give the money to the bankers.

So, what we need -- the allocation of credit should come from the marketplace. And people should be encouraged to save, but there's no encouragement today. What do they do? They take money and say, we are going to take care of the elderly when they retire and we're going to have Social Security benefits. At the same time, they were wishing for and they deliberately debase the currency, which is a moral and economic issue.

So the people receiving benefits right now, are they keeping up with the cost of living? No. They're losing. But if you ask Bernanke and crew over there, they say, oh, no, inflation is only 1 percent or 2 percent. Don't worry about it.

But what if your inflation is 6 percent or 8 percent? Somebody's stealing from you. It's theft. The Founders called it counterfeiting. [applause]

But because the government is too big, we have to ask a couple of questions. We have to ask, what should the role of government be? Should it be to operate an entitlement system?

A lot of people in this country have come to believe that entitlements is equivalent to having a right. And we should sort that all out. You have a right to your life in a natural way. You don't get your life or your liberties from the government. You get them in a natural way.

And we should say that the entitlement system is not a moral right. Entitlement means the government is going to give you something for free. Oh, the government can give you free education, free food, free housing, free medical care.

But where is the government -- where is the government getting -- they never produced a thing. The only thing government can do is steal it from productive individuals and give it to another one. It's totally destructive. [applause]

Where we have a right to our own life and should have the right to the products of our labor, you don't have a right to your neighbor's wealth. You can't go in and steal from your neighbor just because they have more than you do. [applause]

But you shouldn't have the right to send a politician or a congressman to go into your neighbor's house and take what they have because you want it. It's not right. It's not fair. And it doesn't work. [applause]

But if we want to give those who want the redistribution of wealth, you know, the benefit of the doubt many of them are well- motivated. They really care about the poor and they don't understand economics. They don't understand how government destroys the production of wealth. So, they really want to help people.

And take for instance the housing. Well, it's nice -- everybody should have a house even if they can't afford it, you know? So, they devised a system, print a lot of money and pass out the money and have you know affirmative action programs, you force banks to give loans to people who don't qualify and then give special benefits to organizations like Fannie Mae and Freddie Mac where their executives make hundreds of millions of dollars. And then everybody will get a house.

And the number of people who had houses actually went up. But also, there were a lot of people making a lot of money on this, the people who were churning the credit, the people in the mortgage markets, the people in the building trades, the people that got into the derivatives business. And they were doing great and the houses kept going up in prices. It's like a perpetual money machine.

How could it ever go wrong? The people could keep borrowing against the rising prices.

Except for one thing -- the Austrian free markets knew exactly what was going on. They understood it clearly and say it will not last. This is an artificial bubble created by the Federal Reserve and the U.S. Congress and it would collapse and it did. [applause]

A characteristic of systematic debasement of a currency if that's all you are dealing with is just a debasement of a currency and devaluations the middle class suffers, the wealthy benefits because there's a transfer of wealth. The people in the middle class get to use the money last when it has less value and the prices go up and they pay the inflation tax.

But to the people who get the money first -- the government, the politicians who get to use it, big business and big banks and the military industrial complex, they get to use the money first, so they have an advantage.

But what happens when the bubble collapses? Because they are so in charge, because the special interests have so much charge of the monetary system and the system of our foreign policy, they will yell and scream and they say there's a depression coming, there's a depression coming, and we need bailout. If you don't do this, we'll have a depression.

And they were right about one thing, there would have been a depression for the rich people. They would have gone bankrupt. And instead, they got the bailouts and we got the bankruptcy. [booing]

So the middle class bore the burden of assuming the debt and the big banks got bailed out. But it's still in process. They still want to do this. The only limiting factor right now is the fact that there's going to be an economic limit to how much -- how many dollars can be printed.

We are -- we did in the bailout, you know, the Congress appropriated $1 trillion. That's getting to be a fair sum of money.

But the Fed was involved with $15 trillion or $16 trillion of churning credit and bailing out their friends, domestic and international -- international governments and banks. And they're still in a position to do this and they're behind the scenes promising Europe, well, we'll be there. The dollar will take care of it.

The dollar is -- and our credit is devalued once already. It's getting ready to devalue again. And people are starting to wake up and say, you can't keep printing money and spending money on our own debt and think you can bail out the world -- no more than we can be the policeman of the world, we can't be the financial caretaker of the world either. [applause]

So, we have to be prepared for what's happening and, fortunately, the people in this country are steering. And this election is changing a tone. It's the first time in 100-year history of the Federal Reserve that the Federal Reserve has become an issue in this campaign. [applause]

But if we reject the notion of the failed policy of the entitlement welfare state which we are in the midst and people are realizing it's failing. Even those on the receiving end are getting pretty worried, too, because they know this can't continue.

But we also have to ask our question about the foreign policy. The Constitution is rather clear. The president is the commander-in-chief and we should have a strong national defense. We should defend our country. We should have -- you know, protection of national security. And that is a precise function that we should have.

But that is one area where we don't have to worry very much right now because we have the strongest military in the history of the world. There's no power in the world even if they all got together, we are so powerful because we have more weaponry than everybody else put together. So, we are not going to be attacked. Nobody is on the verge of invading us.

And yet what are we doing? We have distorted things by distorting our defense, because not only do we allow our presidents to go to war, we're allowing our presidents to go to war under NATO and U.N. resolutions. That's wrong. [booing]

But what we have to do is decide that how much engagement we should have around the world. I think we should have plenty. It should be engagement with trade and friendship and travel and expressing of ideas. [applause]

I always find it interesting that those who will challenge our views on nonintervention in foreign policy will say, oh, you guys are a bunch of isolationists.

Actually, it's the opposite of isolation. We don't want to build fences and borders and terrorists and all this. They usually are the ones who want to put on the sanctions and the terrorists. And then they call us the isolationists.

Matter of fact, I don't know if you have listened to the debates, I have been very explicit about who the real isolationists are. It's the ones who are resisting our efforts to open up diplomatic relationships and trade with Cuba. That's what we need to be doing.

[remarks continue but no additional transcript is available]