Download the interview as an MP3 file here (17:53 minutes).
Show: Lew Rockwell Show
Lew Rockwell: Boy, it is so great to have as our guest this morning Dr. Ron Paul, Congressman from Texas, great champion of liberty and of sound money, of Austrian economics, the man who turned the country on its ear during the presidential election, built a movement that is continuing to grow. He’s got a book coming out called “End the Fed” and as we know there’s a huge movement about that.
But Ron, before we talk about monetary questions and the Federal Reserve, tell me about secession. You’ve been in the news a lot recently on that subject.
Ron Paul: Yes, and it wasn’t like I went out of my way and volunteered to get into that little debate, because obviously there is still a lot of controversy with that. You know, when our governor brought that up here in Texas, it made a lot of news and there were a couple of factors there. One, I think he did that for political reasons and he isn’t really identified with a really strong states’-rights position. But, I think he was doing a little bit pandering because he’s in a tight race with Hutchinson. And actually it probably helped him politically which has driven the Liberals nuts because they think, “How could possibly independence from the federal government be a political plus?”
So then they start throwing words around at anybody who could even think about that it is treasonous and un-American. That’s what annoyed me and I thought, “I’m going to make a statement. This is just terrible that they take a good principle and turn it into something evil, especially since so many of us understand that it is the principle of secession that allowed us to form our own country”. So, I made that statement but I’ve gotten some grief over it. But I think one of my best arguments to neutralize some of them has been this argument that we have voluntarily joined the United Nations. We pay the most of any other country but we’re outgunned and outnumbered and even those who like the United Nations don’t like us to be having run rough shot over it. And I think even those who want us to be in the United Nations aren’t quite willing to say, “Oh no, we never have the right to leave the United Nations”.
And I think the principle is similar, you know. If we joined something voluntarily we ought to have the right to leave it. But, I guess I’m a little bit surprised that I wasn’t blasted more than I was on the issue, because I thought CNN gave me a credible interview and didn’t made fun it. Maybe they were more so than I realized. But I thought the chance I had to explain it was reasonable where they asked questions. I know the comedy shows mocked it and made fun of it. But nevertheless I hope I was able to get a few people to start thinking about that principle.
Lew Rockwell: Well, it seemed to me that CNN was curious more than wanting to go after you. And I think that’s true of a lot of people, it’s not a hate crime to mention this principle. So I think it was all very much to the good that the subject came up. That whatever Perry’s motives are, I’m sure you’re right that it was just purely politics.
Ron Paul: Numbers are so important and I keep thinking that we who have been arguing this case for freedom for a long time have never had much credibility with the media. But the number that I think was most impressive was “6 million dollars in one day”. You know, raising that money on the Internet caught the attention of all the politicians and the media that there must be support out there. All of a sudden you gain credibility, you might have been saying something for 30 years and nobody paid any attention. But the fact that there was a lot more support than they ever dreamed got their attention and now on different issues. Whether it has to do with secession or piracy or the Federal Reserve and I think that to me it has been the greatest benefit I’ve seeing in the last couple of years is that there is more credibility for the principles of liberty and at least we can talk about it more than ever before.
Lew Rockwell: Well Ron, for more than 30 years you’ve been a serious student of monetary economics, of the Federal Reserve, the history of business cycles, and I must say you’ve been a very accurate prophet as to what the various policies of the Fed and the Treasury would bring about. You’ve served on the relevant Congressional committees. So what the heck is happening? We have this vast expansion money supply by Bernanke and company. We have the public-private partnerships in banking, rip-offs by the power elite, as usual. What’s going on?
Ron Paul: Well, what I told Bernanke one day, or one of the people testifying, was that this was the big one. We were fully anticipating, you know, a big correction for a long time. I think it really is and although they have been able to prop up the system ever since 1971 after we lost the last link to gold, the Keynesian philosophy seemed to be working: spend more money, borrow more money, print more money and maybe you can re-inflate the bubble. But this time it’s not happening which is what Austrian economics teaches that eventually it can’t happen, that confidence will be lost and so now they’re desperate.
They’re still convinced of their theories, they’re absolutely convinced that if you print enough and borrow enough and anytime they talk about it they always say, “Well, we should be fiscal conservatives, but in time we’ll take care of this.” But for now they almost always threaten you and say, “don’t save money!” The government can’t save money, the government can’t quit spending and now they say individuals should go out and spend money. That’s the exact opposite of what any one of us would have to do if we were responsible for ourselves. If we got ourselves into trouble and owed too much money and were threatened with bankruptcy, we would have to cut back, work harder, save money, pay off debt and then we could get back on our feet again.
The principle applies to a country as well. If you resort to borrowing and inflating, eventually not only do you bring the financial system down which has already happened, that’s only one half of it. The second half will be the collapse of the confidence in the dollar and that I believe will come. I think the dollar was the foundation of the financial system for these past 35+ years and that was a house of cards, it’s collapsed. There’s still enough trust in the dollar but that is the foundation but it’s nothing more than sand and it will collapse because you just can’t create double the money supply in 12 months and think it won’t lose value.
So, people keep asking, “Well, what are you watching for? You’re going to watch for the dollar go to down in value on the international exchange markets?” Well, not necessarily. I understand a little bit about this and what’s been going on, but I never rushed out to buy yens and buy euros and even now I’m not even sure the people who used to go and buy Swiss francs are going to be any better off, because everybody is in debt together. So I think what people have to watch for will be prices going up and what the price of gold is.
Lew Rockwell: Ron, you mentioned that when Richard Nixon closed the gold window and severed the final tie between the dollar and gold on August 15th, 1971. I remember so clearly I was driving in the square in Hillsdale, Michigan and I felt like a bolt of lightning had hit my car when I heard that news. I couldn’t believe it. And so I know it had a big effect on you. Didn’t it lead you into your public career?
Ron Paul: Yes, and of course many of those announcements came, you know, on the weekends and August 15th was a Sunday night. Not only did they close the gold window and defaulted on that promise, but they also put a 10% import tax on everything that came into the country and put on wage and price control. I mean the monetary stuff was pretty bad but what really struck me was what happened on the next Monday when I attended a little legislator’s council in our local chamber of commerce. And the chamber of commerce came out for it, and I felt, “What’s going on in here?”
Not only that, the stock market went up. It went up the most in one day ever. It went up like 34 points and percentage wise that was a big jump. I felt “either I’m crazy or the world is crazy because this is not good news”. And, of course, those of us who had been concerned won that argument because look at what happened during the 1970s.
But I did get interested in public policy through economics and especially monetary policy and that was a strong motivation. Of course that sort of developed into my deep concern for personal liberty and a lot of interest in foreign policy and monetary policy and debt. But when you think about it, it all comes together on this. I think if you defend liberty, you want a sensible foreign policy, you want the government to act sensibly and if you believe in liberty and markets and honesty, then you can’t believe in a Federal Reserve System, you can’t believe in this system of counterfeiting.
So over the years I’ve tried my best to understand it and simplify it so that people would say, “You know, that makes sense and it really isn’t that complicated”. And now that all the bad ideas have come to fruition and we see so many problems, at least they’re looking, they’re asking questions. Just this last week I had 2 or 3 guys on the floor come sit and talk to me and ask me, “What do you do with your money? Where do you invest it? Do you buy gold? Isn’t gold too high right now? It’s $900, you can’t buy gold”.
It’s interesting and it reminds me of what Leonard Reed used to talk about a lot. He would say that you ought to learn your material the best you can and eventually they will come and ask you questions and that is good. They’ll listen to your answers if they ask the question. But if you sort of push yourself too aggressively on somebody then you’ve really turned them off. So I’m delighted that people now at least ask questions.
And Lew, just recently I had one member come to me a couple of months ago and he sounded so sincere about learning more about the Fed. He asked, “What one book would you read?” I said, “Well, in order to understand the business cycle, one of the books that impressed me the most was Murray’s book on the Great Depression”. [Murray Rothbard - America's Great Depression (pdf | paperback)]
So low and behold he came to me this week and told me he got the book and says, “I’m reading it now for the second time”. He was just really fascinated with that and I always consider that he was probably just sort of a mainstream Republican. And so many members are like that. Some of our supporters will paint everybody as evil and monstrous, but I see them as people who are just sort of molded by current events and current thinking and with what they’ve learnt in college. But if there is reason for them to look for different answers and they get a little bit of guidance, I think many of them will change their opinion.
And I sense that that is coming about just because what the government’s been doing is such a failure. And that’s where I think the young people are so alert to this. They see the failures of government and they’re more honest with themselves in saying, “Hey, this sounds like a bunch of baloney. I don’t believe that stuff”, and then when they hear a little bit about how the market really works and you’ve seen it and heard it and recognized how people are reacting on the campuses. But you had a lot of responsibility for that and have changed people’s mind.
The other day I stopped on my way to Wake Forrest on my way to Washington where 1,300 young people turned up. The loudest cheers came when I talked about Mises and the gold standard and the Federal Reserve. They knew Austrian economics, they know these terms and interesting enough also, Lew, also Patina Graves [sp?] was there listening, so that was pretty fascinating too.
Lew Rockwell: She’s a great lady and Ron, you mentioned of course correctly the link between the Fed and foreign policy and certainly the horrendous wars of the 20th century that killed so many millions of people never could have been fought without central banking. Bush never could have fought his Iraq war without the printing press. So they’ve got the printing press, they’re taking about Iran, they’re talking about Pakistan. I mean, do we face another war? Is Obama going to take us into yet another war?
Ron Paul: You know, I think what you say is absolutely true and that is what you see. Conservatives and liberals spend too much money even on war and then there is debt, and the Fed is required to buy that debt and monetize it and cause the inflation. But right now there’s something even more going on and that’s why this audit of the Fed is so important. And that is they’re involved in foreign affairs too. It is the foreign operations, foreign discussions, foreign agreements that are absolutely prohibited from being becoming known to the Congress. They do not have any obligations to tell us one thing about it.
So, we now know that they’re involved in the last year or so of extending credits, guarantees and direct credits, to the tune of 2 or 3 or 4 trillion dollars. We don’t even know. But these go to central banks, they probably go to big corporations and other things that we don’t even see. So they’re involved directly in foreign policy as well as subsidizing the foreign policy that Republicans and Democrats promote out in the open and they monetize it, so it is really a big thing. That’s why I am convinced that if we ever get the audit of the Fed… matter of fact, I think this week we jumped up and about 18 more people joined, we’re up to about 86 people who have asked for the audit. So, if we get the audit and get the books open, the people will be very open to dealing with the subject in a serious manner of true monetary reform.
Lew Rockwell: Ron, this is of course your great bill to audit the fed and you have been talking about this during your whole public career. But it is something that reaches in the cliché across the aisle because people like Wright Patman and Henry Gonzales, (you knew Henry Gonzales) were for this. And I think you have Democratic support in this as well, don’t you?
Ron Paul: Yeah. You know, when we re-districted here in Texas they took Lloyd Doggett who had all of Austin essentially and he had no problems getting re-elected. So the Republicans cherrymandered him in a district that stretches about 300 miles long from Austin down into the valley and they made it like 60-70% Hispanic. The Republicans’ goal was to just get rid of Doggett and have a Hispanic in. They knew the Republicans couldn’t win. So they did that but Doggett worked very, very hard to his credit and he’s a liberal but he’s a pretty honest, straight-forward liberal. This organization called Campaign for Liberty who is doing a little bit of work on this subject sent out petitions. They got more petitions in Doggett’s district than any place else and he is now on the bill.
Lew Rockwell: Wow.
Ron Paul: But even before that became known I had talked to Loyd because he is friendly and I know him and he’s honest and he was very open to it, saying, “Let me study it” and he was sympathetic but that’s part of that old Texas populism that exists and it’s still there. You know, I’m sure the Wright Patman district stretched over into that area. And I think on the delegation I have more than 50% of all the Congressmen from Texas, which is pretty, and we’re going to get more the way things are moving.
Lew Rockwell: Amazing, pretty amazing. Well, Ron Paul you’re the shingling light of liberty in Washington and we all appreciate you, millions of Americans do. And it’s an honor to have you on the show and thanks for all that you do and thanks for all that you’re going to do.
Ron Paul: Thank you, good to be with you today.