Ron Paul explains why we need to audit the Federal Reserve

Part 1:

Part 2:

Show: GoldSeek Radio
Date: June 13, 2009


Peter Spina: Welcome back, Dr. Paul.

Ron Paul: Thank you very much, good to be with you.

Peter Spina: Great to have you. I understand that the HR 1207 now has… this is exciting… 170 cosponsors?

Ron Paul: That bill HR 1207 as of today has 200, maybe it will go over 200 even on this very day. But, HR 1207 is the one that audits the Fed, which is the very important first step to expose to the American people what is actually going on. On the “Get Rid of The Fed” bill I just have one or two co-sponsors on there, they’re not quite ready for that. We haven’t worked on that. But we believe that opening up the books of the Fed under today’s condition is vital to the future direction of our monetary system.

Peter Spina: Is that the 604 bill by any chance?

Ron Paul: Yeah, I think that is it, I’ll have to double check but I’m pretty sure that sounds right. But that’s to abolish the Fed. [Actually, the End the Fed Bill is HR 833, while S 604 is the complementary bill of HR 1207 in the Senate]

Peter Spina: I understand you’ve garnered some support from both Republicans and Democrats.

Ron Paul: Up to about 45, 46 Democrats have cosponsored it, and some of the progressive Democrats who are honest people. They may come from a different direction politically but they are honest and they want honest government and they believe in open government. This would be a hard bill for anybody in the Congress not to vote for if it ever gets to the floor because under the conditions we have today and all the shenanigans that have gone on with the TARP funds and nobody knowing where the money went and what the Fed’s being doing and who they’ve being bailing out. If there is anything popular these days that is the American people want to know what’s happening and have transparency. So, the big goal now is to legislatively maneuver through this in the Congress so we can get a vote on it.

Peter Spina: Can you at least give a synopsis to our listeners regarding the legislation and the stated goals and what you hope to accomplish?

Ron Paul: The main thing is that it is an audit bill. But the process is this: the Fed was created in 1913 and it’s never been audited in the true sense of the word. They have token audits and they measure how many checks they clear and how many dollars are transferred around the country. But that’s sort of an academic exercise.

But there has always been some populists and others who, over the years, have asked for audits and in the 1970s we had some tough economic times. There was a demand for transparency. So in 1978 they passed a bill that was supposed to give us the authority to audit the Fed. They gave it to the GAO, the Government Accounting Office. But, when they passed the bill they very shrewdly, and this is something we have to look out for right now, they very shrewdly behind the scenes said, “Yes, you now can audit the Federal Reserve except for…” and then they listed all the exceptions, which were things like monetary policy, the deals they make with other central banks and all the secret hearings they hold. All the things that you need to know about what they are doing were excluded from the audit.

And what we do in this bill is we actually go back and we repeal those exceptions to the rule and then we require within one year that the GAO perform an audit. We believe then reform will come. Reform may come anyway, but it’s best that we know what they have been doing and why. Because I think the opposition, those who love the Fed, (maybe they’re even working on an international fiat currency) will be ready and willing to come up with an alternative system. So, we have to get a bill like this passed to show what kind of shenanigans they have been involved in and who are the special interests. And then maybe we can get a step towards sound money rather than just making these problems worse by allowing some UN agency or the IMF deal with this.

There is a movement, I’m sure you’re aware of it, where they would like to use thes special drawing rights, the SDRs under the IMF as the international reserve currency, which quite frankly would be a disaster and probably wouldn’t work.

Peter Spina: Sure, it would just be more of an end to our sovereignty. You rightly pointed out that back in 1913 the Federal Reserve came into being. It was in a late night Christmas session where most of the Congressman were at home for vacation at the time. You’ve pointed out in some of your previous writings here that it only took two decades for the Fed to bring about the Great Depression. They inflated away the value of our currency 96% since then. This is almost a reverse Robin Hood scenario where they’re stealing from the poor just to give to the rich via controlled inflation.

Ron Paul: And they’re supposed to be the guardian of the money, and yet they are the destroyers, they are the counterfeiters. In a moral sense they are equivalent to a counterfeiter. Maybe legally they out to be counterfeiters to.

Peter Spina: Do you think a lot of this is tied in with this almost ubiquitous Keynesian school of thought that has permeated academia and the government today?

Ron Paul: Oh yeah, they’re one and the same. It’s corporatism, inflationism and it’ss big government. Federal Reserve allows governments to grow and the bills be paid for in a very secretive, sinister way. The Congress doesn’t have to be responsible and collect revenues, so they can go and fight endless wars that shouldn’t be fought. They can go and develop the welfare state. And for a good while the members of Congress can be rewarded because they get to vote for all these special programs and they never have to pay the bills.

But ultimately it catches up to us and that’s what this crisis is all about. You know, they tax a lot but they can’t even raise taxes. As a matter of fact, tax revenues are going down. But they’re going down not for the right reasons but they’re going down because people are going broke borrowing. How long are they going to be able to continue to borrow from countries like China and Indonesia and Saudi Arabia? Eventually that will dry up. But they always resorted to just printing money and monetizing the debt. A lot of people can’t quite understand this and they can’t believe it either.

If government spends money and they issue a treasury bill and they sell it, the Federal Reserve can end up buying this and they bought it with money that they just created out of thin air with a computer. This actually bewilders a lot of people and because it seems so bizarre; because we were so rich and so productive and we were so trustworthy, so to speak, and we had such a strong military, they put a lot of trust in our system. It was an undeserved trust.

But I think what we’re seeing now is that we’re losing that trust and eventually a monetary reform will have to come. Let’s just hope we can wake up enough American people and let them understand that a commodity money is what we need, not just more paper money.

Peter Spina: That’s a great segway into what occurred last week. You may recall the head of the treasury Timothy Geithner was practically laughed off the stage by college students in China when he tried to bamboozle folks into thinking that all US bonds were safe. Even college students know something is wrong with the Fed and the treasury today and the market seems to agree, Dr. Paul. The greenback is crashing.

Ron Paul: You know, it’s neat. The young kids over in China knew what is going on and they laughed. The strongest group of people who come to my rallies are the young people. High school kids and college kids are coming and they know what’s going on and they haven’t been lulled to sleep like so many others. And they’re really excited about studying the Federal Reserve and almost every one of them comes to my office… I’ve probably had a dozen or so today that came in and said, “I want to know more about the Federal Reserve and is really shocking to learn it and reading about it.” So they’re starting to wake up but there is still our ways to go.

Peter Spina: You know, you have talked in the past how the Fed usurps the natural free market in the US and around the world by manipulating the price and the supply of money. I think it’s important that people get their minds around the idea that this was just not set originally by the Constitution. This is an artificial method which you’ve rightly called counterfeiting. Where does this ultimately lead?

Ron Paul: Well, many predicted that the financial system would collapse if there was too much inflation, too much debt. There was a big bubble and housing prices were too high and that would collapse. So the financial system has collapsed. That system was based on the dollar and really doesn’t exist in many ways today. But the dollar hasn’t collapsed. People still resorted to grabbing hold of dollars so there is still been some trust in the dollar itself, even though the system has crumbled. But you can’t create two trillion dollars of new money every year and think that you will be able to maintain trust in the dollar.

So I think it will end with a currency crisis where people will reject the dollar. One reason why it’s not going down as fast as some would think is that generally we only measure currencies against other currencies. And, quite frankly, those who understand our monetary policy wouldn’t necessarily say, “Oh, I got to sell the dollar; I want to get all my money in euros or all my money in yen” because they’re based on the same system.

But ultimately when trust is lost, and this has happened many, many times over the century, people want to go to things of real value. They want to hold something, and of course, those are the metals of gold and silver. So I think in the last ten years it’s been noticeable that more and more people are recognizing that there’s a monetary component of gold. For good many years people just sort of forgot about it and it was strictly a commodity and not so much money. But today people recognize that it’s money and you can’t repeal those laws. These are the laws of economics and free will. So I think we will have a dollar collapse and it won’t be measured in exactly the measurement against other currencies. It will be measured in prices.

I think we’re going to see a lot of high prices and then if your dollar is very weak you’re going to see high interest rates. That certainly won’t help the very, very weak economy we already have.

Peter Spina: That’s well said. The yellow metal did hold up quite well even in the 2008 credit crisis. Worldwide market crashed there and has rebounded quite well here as energy related investments. West Texas Intermediate Crude is doing well, so are the related stocks. And who can blame the markets and the investors when the Fed and the Treasury have the power to print trillions of dollars and give it away to their banking pals with very little transparency.

Ron Paul: Yeah, and that’s the big thing. Once we rein it in they will destroy the dollar and that is very, very serious business. That to me would be a lot worse than what we’ve already gone through. Some people describe it like we’re in the eye of a hurricane and we’ve just had the first wave, but I still think the second wave will be bigger because the odds of us here in the Congress coming to our senses and cutting back are zero.

Because you’ve heard it from the President and everybody else that under these conditions you have to spend more money. Deficits don’t matter. “More deficits and more inflation; don’t ever allow liquidation of bad debt.” But the government brought up today the supplemental bill which is yet to be passed, one of the solutions they’re offering will be for the government to give everybody that has an old car $4,500 for it. So if you want to do a good investment, go out and buy an old clunker, because it looks like the government will give you $4,500 to get it off the street, and that’s going to restore prosperity.

Peter Spina: I know, and not to mention, Dr. Paul, we each own about two shares of General Motors now.

Ron Paul: Yeah, there you go.

Peter Spina: You know, you’ve been very kind with your time today. I know folks have heard of Dr. Paul’s Campaign for Liberty and defending the American principles of liberty. If you’d like to navigate your browsers, could you give us that website?

Ron Paul: One of the best ones is to go to and there are about six websites listed, whether it’s the Congressional office or my campaign or the Campaign of Liberty. That’s a good place to start.

Peter Spina: Excellent, you can sign up there in less than 30 seconds. Thank you, Dr. Paul.

Ron Paul: Thank you.


  • Isn’t this the one where all the Dems reneged on their support when it came time to vote. They thought it was funny to toy with us. We have to teach them a lesson they will remember.