Ron Paul on Freedom Watch: “We can’t allow the Fed to cause inflation and have the people suffer the consequences”

This afternoon, Ron Paul joined Daniel Hannan, Nick Gillespie, John Stossel and Shelly Roche for an insightful discussion about the Federal Reserve, health care, and other political and economic developments.

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Channel: Fox News Strategy Room
Show: Freedom Watch
Host: Judge Andrew Napolitano
Date: 6/10/2009

Transcript of Ron Paul’s appearance (starts at 1:46)

Judge Andrew Napolitano: But right now, it’s my great pleasure to introduce one of America’s greatest defenders of freedom and liberty anywhere on the planet, certainly the greatest in the Congress, my good friend, Congressman Ron Paul, who joins us as usual at this hour live from the Cannon Rotunda in our nation’s Capitol. Congressman Paul, welcome back to Freedom Watch.

Ron Paul: Thank you, Judge. It’s good to be with you.

Judge Andrew Napolitano: Thank you. I suppose it’s a sign of success when your enemies start firing back. We learned just a few minutes ago that the Federal Reserve has hired a lobbyist, a former employee of the Clinton administration to try to dissuade members of Congress from signing on to your bill now known throughout the country as HR 1207, which would mandate an audit of the Fed. So how many people have sigined on to the bill? How close are you to getting a majority in the Congress? And what is the Fed worried about?

Ron Paul: Well, they’re worried about being exposed and that is, of course, a big threat to them but it would be a blessing to the American people. We have 209 co-sponsors, which means we need nine more to have 50 percent of the Congress which would be an absolute majority and so far, the lobbyist hasn’t gotten anybody to take their name off the bill, so that’s doing pretty good.

But now, I think they’ll do whatever to pull out all of their stops to stop this piece of legislation from passing one way or the other. But, you know, I’ve decided that it’s still an uphill struggle, but what we are doing is very, very important. Well, I’ve decided we win either way. If we don’t get it passed like we want, maybe that will be bigger news than anything. “How did that happened? Why didn’t they allow us to audit the Fed? What really do they have?”

So I think we’ve got them where we need them because no matter what, the American people are going to hear about this and they’re going to be wondering, “What is it that the Federal Reserve is up to and why do they have this power to create money out of thin air and pass it out with no oversight of the US Congress?”

That to me should be big news.

Judge Andrew Napolitano: Fox Business Network who is basically a free market person is not a big government or left wing loon has argued with me on the air as recently as 20 minutes ago over the merits of your bill and, of course, you know my view is identical to yours.

Stewart’s argument is that the Fed would go out of business if people knew about the holes in its accounting. I argued that’s not such a bad thing, but what do you think would actually happen politically in this country if we learned of the nature and extent of the insidious and secret things that this Central Bank has been doing?

Ron Paul: Well, it may be chaotic because people may lose confidence in the Federal Reserve and they don’t deserve the confidence they have and it might cause some serious problems, but it would also mean that if the Federal Reserve is deeply flawed, not only in how they operate to the benefit of some special groups, but it’s also deeply flawed in being able to manage the whole entire economy and now the world economy essentially. It means that it would lead to a serious discussion about the nature of money.

And this goes on periodically over the centuries about how governments get control of money, how they become the official counterfeiter, how they destroy the value of gold coins, how they clip coins that got looped in metals or print paper and now they just use computers. It would bring that on and that’s coming on anyway.

Even if the Fed doesn’t get examined and we don’t get rid of the Fed, the chaos will come and we will be forcing in that discussion. Now, if we do things more calmly, and this should be the argument of those who said don’t expose it, it will be chaotic, is that there’s a way to avoid all that. Just legalize competition. Allow us to use gold and silver as legal tender. You try that now. If you start minting gold coins and using gold coins in exchange, you’re going to get arrested. They don’t like anybody tampering with this monopoly power that Central Banks hold.

Judge Andrew Napolitano: I haven’t looked at the names of your co-sponsors. I honestly haven’t, but I’m willing to guess that in both Houses of Congress, the House of Representatives and the Senate, no one from the leadership of either party is on those lists. If I am right in that guess, why is that so?

Ron Paul: No, well, I don’t think there’s any Democratic leadership position, maybe some sub-committee chairman and we have 50 Democrats. But on the Republican side, you have to give them credit, they’re coming around. Boehner signed on yesterday and Spencer Bachus has signed on and he’s been willing to help me get this thing through and I do talk with Barney Frank and he is for transparency. He’s not for the type of money I want, but there’s a lot of sentiment, mainly because they’re getting pressure from at home.

It’s just so logical that Congress should have knowledge about what the Fed is doing. So I guess half of what you said is true, but […] I’m going to work on the assumption that political pressure from home will cause some of the leadership even on the Democratic side to go along what we need. But what they could do though is if they know this is overwhelming and nobody can pass it, they might even say, “Oh, let’s vote on it on suspension and then everybody gets to vote and I voted for Ron Paul’s audit bill,” and then stop it after that. Stop it maybe in the Senate. You see, it’s not moving in the Senate and they might stop it in the Senate or if the Senate passed something, put it in the conference, and then will water it down.

There will be a lot of scare tactics and that is what the lobbyists will do. They’ll scare people. Just like they did after the crash last fall, they just scared people, “If you don’t vote for this bailout, I mean, the whole economy will be destroyed forever” and they scared people into voting for it, so that’s what we have to face yet.

Judge Andrew Napolitano: We all know how the government uses fear to get done what it wants, whether it’s the PATRIOT Act destroying the First, Fourth, and Fifth Amendments.

Ron Paul: Right.

Judge Andrew Napolitano: Or whether it’s the Obama administration destroying freedom of contract. They’ll always use fear and, of course, fear was, as you say, the motivation for the TARP legislation last September. On 60 Minutes on Sunday night, which was a repeat, so we heard the conversation before, two interesting points came to mind and as I was listening to it, I was thinking of what I would ask you about on Sunday.

One was an actual acknowledgment from Chairman Bernanke that when they want to give member banks money, they don’t wire funds or send a check or deliver a truck full of cash, they merely add some zeros to an account in a computer and what we have for generations called fiat money, literally the Latin “let it be”, just because we say it should be. We finally have an admission from the Chairman that that’s how they do it. I want you to comment on that.

I also want you to comment on this. He boasted during this interview about the validity of the stress tests that the Fed administered to the top 19 bank holding companies in America. Question, could the Fed itself… could the Federal Reserve Bank itself have passed any one of those stress tests?

Ron Paul: No, and that’s why they don’t want the audit. They can’t pass it, so they don’t want that exposure. So that’s one of the main reasons why they’re going to fight it. But like you say about adding on zeros, it’s gotten easier and easier to create money and that’s why the bubble got bigger than ever and the world trusted the dollar, but economic law is more powerful than all the central bankers and all the politicians in the world. Economic law eventually rules and that, of course, is the reason why empires end. For economic reasons more than military reasons.

The Soviet system ended for economic reasons. Our system will end the same way. The big question is what can we salvage? Can we salvage the Republic in the narrowest sense? You know, the Republic of the United States, you know, a much more local thing rather than a world empire. Now, it would be a very, very good. So some good things could come from this, but we allow the Central Bank to just add zeros when their friends need to get a big bonus or a big bailout or big retirement benefit and walk away and then the people suffer the consequences of having the higher prices, the inflationary pressures and the loss of jobs, that won’t go and that’s what I think this excitement is all about.

Judge Andrew Napolitano: Interesting criminal case, but it’s actually a form of theft, which, of course, the Fifth Amendment expressly prohibits the Federal government or any of its instruments from doing.

Switching gears to another subject that I know you’re passionate about because I read your statement on the floor of the House, I think, last week, healthcare.

You’re just talking about salvaging freedom. Will we be able to salvage any freedom of choice from the healthcare proposals that the President is trying to get through Congress, he says and hopes before the August recess? Or is it inevitable that healthcare in this country and you know more about this than most because you’re also a physician, that healthcare in this country will look like Medicare or worse like the British system.

Ron Paul: Well, hopefully, it’s not inevitable or we all should go home or pack our bags, but it doesn’t look good. The Republicans weren’t good on medical care. They expanded it, you know, with prescription drugs and corporate medicine and drug companies all have advantages and they contributed significantly if they weren’t the creators of managed care.

But there was always a good position of the Republicans and that was the medical savings accounts allowing individuals to opt out if they wanted to.

Now, the odds have gone against us on that. With the new administration, I would say, it’s going to be tough to maintain that and that’s an important principle. As bad as things are in Washington, if you allow people to opt out… take for instance, what if the Federal government clamped down, which some of them would like to and made sure there would be no private schools and no home schooling. That to me would be devastating, and that is the crack in the door for us to restore liberty to the country to allow people to get out of the educational system and we need to do the same thing in the monetary system as well, and we certainly ought to protect the right of the individual to make a choice and get out of the medical system, but unfortunately it doesn’t look like that’s going to happen.

But once again, the limitation may well be the economics of it all because where are they going to get these trillions of dollars when they won’t cut anything, and they are expanding. All these overseas expenditures, it’s just… as a matter of fact, the sooner we realize that we are a bankrupt nation, I think the better we will be, and not that I want to suffer the consequences of bankruptcy – as a matter of fact, we wouldn’t have to suffer so much – but if it’s going to come, the sooner the better. Get it over with and let’s do the right thing rather than thinking that all we need is a secret Federal Reserve that can add on zeros when banks need money.

Judge Andrew Napolitano: About three or four months ago, an old athletic injury from my thinner, more athletic days flared up in my knee and I went to the orthopedic surgeon of my choice, the best knee surgeon in New York City. The MRI revealed a torn meniscus. He repaired it orthoscopically at the best facility around here. My insurance company paid the bill. I didn’t need the permission of a bureaucrat. I had the choice to whom to go, where to have it done and when to have it done.

Am I likely to have… is anyone likely to have that kind of freedom under the President’s program?

Ron Paul: No way, and a lot of them will think, “Well, we should be more like Canada because they provide free care for everybody.” But it’s hardly free, there’s always a cost. If you were in Canada, you probably wouldn’t even have your MRI by now unless you came down to the States, unless somebody give you the MRI.

But we’re far from a perfect system. As a matter of fact, I have a lot of complaints about the current system. Even though it has served you well and it has served many others well, the complaints about the system have been government created; managed care, mandates, HMOs, and PPOs and drug companies influence and collection of medical records at the national level.

Under Obama, everything that happened with you recently would be recorded in Washington, DC and would be reviewed and there would be more phone calls, even if they try to maintain that much of freedom where you can go to your own doctor. It would be monitored in Washington. That would be a real tragedy.

Even though I haven’t been in medicine for a few years, I ended up not putting very much stuff in my medical records because it seems like I never could protect them for my patients, so the people just won’t keep good records if they think they’re controversial.

You know, you have a bad disease and it’s socially unacceptable or negative, you’ll not going to put that on the medical record because the government is going to know about it.

Judge Andrew Napolitano: On the law or at least, isn’t here some kind of a financial incentive and something that the Congress passed about three or four months ago, I seem to recall this, about an incentive to hospitals to digitize and, of course, once digitized, privacy is gone forever.

Ron Paul: Yeah, that was passed early on. There’s always an incentive and it’s voluntary. You know, in the beginning, everything is voluntary, but then once you get hooked into it, you volunteer and then they give you some money and then they say, “Well, you do it this way now or we’ll take your money away.” So yes, they’re always moving along. They have actually on one of the bills, made it so that the centralization of these records has already been passed even though we don’t even have the new plans that Obama has for medical care.

Judge Andrew Napolitano: Ron Paul, it’s always a pleasure. Until next Wednesday on Freedom Watch. Thank you so much for joining us.

Ron Paul: Thanks a lot.