Ron Paul on HR 1207, Auditing the Fed

In Monday’s interview with Rod Grams on the Jason Lewis Show, Ron Paul talks about recent bills in Congress, the Obama administration, the Federal Reserve, central banking and HR 1207.

Show: Jason Lewis Show
Host: Rod Grams
Date: June 29, 2009

Rod Grams: We got a special guest on the line with us tonight, and that is Congressman Ron Paul of Texas. Congressman, great to talk with you again. Thanks so much for taking time. I know you are always squeezed for time, but thanks for taking time for us tonight.

Ron Paul: Nice to be with you, thank you.

Rod Grams: I think you recently gave a speech at the Cato Institute dealing with the Federal Reserve and a bill that you have introduced, but before we get there I would like to ask you just a couple of quick questions. What do you think of the direction this Congress is going?

Ron Paul: Well, so far I think it is very bad news. I mean I can’t imagine that anybody with common sense would do what we are doing here in the Congress, at least the majority party. I guess the only good thing one could say about it is that it has almost completely unified the Republicans and they have at least awakened once again to their conservative ideals and they are opposing some of this stuff. I have complained that they didn’t do a very good job when they were in charge. At least, you know, I thought the Republican Party held up pretty good against this recent environmental bill and tax bill [cap and trade]. So I don’t know whether they will be doing as well with Medicare, but when it came the taxes and regulations and spending and deficits, I think we’re in big trouble.

Rod Grams: Well, even Thomas Jefferson said, “Any major type of change in policy should take a long time of debate and consideration.” But what this president and this Congress are trying to do in a very short period of time with healthcare and the energy bill and the water bill, and I’m sure you are aware of Congressman Oberstar’s water bill and all of these. These are major shifts in policy and government control and regulation.

Ron Paul: Yeah, and like it was pointed out during the debate on the environmental bill with 1,300 pages, and 300 pages were added in the middle of the night, nobody really studied it, but as you know – you’ve experienced this – some of this stuff comes down to “it’s rather late.” And you don’t get a chance to review it and it’s a mess and it’s out of control and people are panicking and all they resort to is more government rather than looking to try to figure out what the cause is. Maybe the government brought on these problems and it might mean to some of us that we need less government, not more government. But so far the worse the conditions are, the more government is being demanded and more that this administration is promoting.

Rod Grams: Why do you think the public is doing this, although surveys are showing that the public is getting really concerned on the direction. But to get us into this position they had to rely on a lot of the things that the President said that he was going to do, and that is provide more government.

Ron Paul: Yeah, and you know, everybody wants to be hopeful. I take a pretty independent stand when it comes to civil liberties and foreign policy, and Obama said some things during the campaign that I sort of liked. But Bush said the same things in the year 2000. I was hopeful that he didn’t want to police the world and get into nation building because Bill Clinton had done it. So I had been hopeful but even on those things that I agreed with what Obama was saying during the campaign, he’s not doing it. I mean, he’s not changing policies at all. But when it comes to the economic policy we shouldn’t be all that surprised, because you know, he never pretended he wasn’t a big government person and that he wouldn’t take advantage of the crisis that we have. And that to me is the tragedy.

Sometimes if those who believe in big government want to move it in that direction they’ll scare you and it will be artificial. This time it’s not artificial, there are lots of economic problems, but he is taking advantage of it and saying, “Yeah, what we need is more government. It’s time we need nationalized healthcare and this is the time we address all these environmental concerns,” which will only make the problems much worse.

Rod Grams: Yeah, and he wants redistribution of wealth, and that’s what is happening right now. I believe you were the lone vote against that defense authorization bill?

Ron Paul: No, there was a resolution dealing with Iran, that I thought was provoking things. As a matter of fact I was closer to Obama on that when he said, “Why don’t we sit back and let them deal with their problem over there.” But on the military appropriation bill I think there were about 18 of us or so that said, “We even have to look at our military expenditures, they’re too big too. If we didn’t have to police the world maybe we wouldn’t have to spend so much money.” And if anybody knows anything about history they would realize that if we spread ourselves too thin around the world, eventually we will bankrupt our country, which is something Osama Bin Laden wanted us to do, and that’s what the Soviets did. So I think we’re falling into a trap and there is no hesitation to spend on domestic affairs or foreign affairs. In spite of all these problems, there is not a bill that comes out that has any serious resistance to it.

Rod Grams: And I’m going to say that with all the support you have here in Minnesota I’m surprised you didn’t win our primaries. But I got to tell you, I got a young niece, who is in school down in Rochester and she was a very strong Ron Paul supporter. In fact, she even went to Iowa to work for you. So you have a lot of the young people, and she convinced me that you were a great candidate.

Ron Paul: Well, Minnesota and Minneapolis in particular have been very friendly and we hope we’ll be coming back there for a little rally in September to meet our friends again and to see if we can generate a little excitement.

Rod Grams: Well, you had Whitney’s vote, I know that for sure. Now, on the speech you gave at the Cato Institute dealing with economic issue, and that’s the Fed. And this is a long time passion of yours. This isn’t something new, you have worked on this and thought about this for a long time and you’ve introduced a bill dealing with this and what I’ve talked about; and that is the unchecked authority of the Federal Reserve.

Ron Paul: Yeah, they actually have more power and authority and influence and money than we do in the Congress. They can create trillions of dollars and manipulate interest rates and manipulate international policies to support governments and other central banks without our knowledge. So it is a very big issue.

The other day someone wrote an article on the internet saying, “Oh yeah, he’s been at it for a long time.” They dug out the bill in 1980 I had it introduced and I had a total of 18 co-sponsors. But now we have like 245 co-sponsors, 75 Democrats. Different people are more concerned, I think, in spite of our difference between moderates and liberals and conservatives. I think the American people want, and most members of Congress are agreeing that we need transparency, we need to know what we’re doing. These TARP funds, once they got out of control the American people really let us know that we have to have more knowledge about what is happening. So this sort of provided a fertile field for me on this Audit the Fed bill and I think that’s why it’s taken off.

Rod Grams: What would the audit show us? I mean, what are you trying to get at and if there was something, how would we correct it?

Ron Paul: Well, the main thing is that we don’t know what they’re doing and we have a right to know and we have an obligation in Congress to monitor them because they are a creature of the Congress. For decades, if not for the whole history of the Federal Reserve it’s always been argued, “Oh no, the Federal Reserve is independent, we don’t need to know, just let them go.” And as long as the markets were working reasonably well and there was prosperity and the Fed monetized debt for big spending overseas or big spending domestically, Conservatives and liberals sort of tolerated it all.

But now that the bubble has burst and there is a major problem and we know there’s a lot of shenanigans going on, we need to know what they do. They’re allowed to have agreements with other international banks, other governments, international financial organizations, and they don’t have to tell us anything about it. And if they create a trillion dollars or guarantee loans, they don’t have to tell us anything about it.

So this is why the bill isn’t all that controversial, I don’t think. All it’s doing is opening up the books to tell us what they’re doing. It doesn’t design foreign policy, it doesn’t say you can’t do this or can’t do that. But the Congress and the American people deserve to know what you’re doing in the financial system, who are your friends, who you guarantee loans to, and Bernanke not too long ago said, “Well, I can’t tell you that. That wouldn’t be productive for you to know exactly who we’re helping.”

Rod Grams: And it’s our money.

Ron Paul: Yeah, it’s our money, it’s our dollar. What I’ve always been concerned about is our dollar. The financial system has crashed around the world because we have a dollar reserve standard, but the dollar has held up reasonably well, and so far the people around the world are still taking dollars. But if we keep doing what we’re doing… you can’t double the money supply every year and think the dollar is going to hold up. The dollar will have to give way.

Rod Grams: Well, you got China even saying maybe we should have a new world currency, and if I’m not wrong I think Geithner even had one meeting and he kind of agreed with that. But, when you got Moody’s looking at our credit rating and we still got an AAA credit rating, but they’re questioning it, and that’s never happened to us. And as you said if you print more money you’re just diluting the strength of the dollar.

Ron Paul: Yeah, and that is the real concern that we all ought to have. A world currency isn’t all that bad if it’s out of the control of government and out of the control of somebody that can print the money… if it is paper money then it’s dangerous. We almost had a worldwide currency when the world was on a gold standard. But nobody can print gold and therefore it held all the currencies in check and there was a lot less inflation and yet the temptation to abuse even the gold standard was what brought it to its knees and destroyed the gold standard.

But gold is what I believe in, because the constitution said so, but it also restraints the growth of government. You can’t run up deficits because nobody is going to loan us that much money. You know, we tax to the hilt and then we can’t tax anymore. We borrow to the hilt and then we can’t borrow anymore. But then we send the bills to the Fed and they just out of thin air push a computer and they can just create billions of dollars out of thin air and accommodate those in Congress who get reelected by voting for more government.

Rod Grams: Now wasn’t this one of the first time the Fed actually hired lobbyists to keep this bill out?

Ron Paul: Yeah, and the interesting think about that is that the lobbyist they hired was the lobbyist for Enron. Wow, ought to tell the story. She’s hired to lobby the Congress against my bill. So she is lobbying against the American people. So the secret organization has all the money they want, they print the money when they want it and they hire a lobbyist against the American people to try to make sure that we don’t get a look at their books.

Rod Grams: So we’ve got a Federal agency that we’re paying that is lobbying against us taxpayers taking a look at what’s in their books.

Ron Paul: The secret is out now, and that’s what I think is so great. You know how the system works, even if I have like 245 co-sponsors, 75 Democrats, even if the powers-to-be stopped the movement of this bill, that will prove my point. Why would they go to this extreme? We’re not asking for any major change in policy, all we want to do is look at your books. And if they stop that, that will arouse even more suspicion in the American people and more demands that we get to the bottom of it.

Rod Grams: That’s what I was going to ask you; if you have 245 co-sponsors, are you going to see any action on this bill, and what would happen if there is no action, if it’s just tabled or put off?

Ron Paul: Well, that would depend on our organization and what I do, and if I do the right things to keep people energized. A lot of people right now are asking for a discharge petition but [members of the] party in charge don’t sign discharge petitions. I wouldn’t even ask them. So the discharge petition isn’t going to work. That’s not the only way you can force it to the floor. So that’s really essentially remote. But there’s a political way of playing this is. And the American people when it came… I mean our success so far is because of the fact that we went to the grassroots. I didn’t go to Nancy Pelosi and say, “Nancy, will you do this and that?.” No, we wouldn’t have gotten anywhere. But the fact is that the American people have gone to their members of Congress and said, “Sign on this bill,” this means that we have touched a nerve with the grassroots and it should encourage us all.

I get cynical about it and disgusted with the whole system. But if you know and understand it and go to the people and they get aroused enough, they can get the attention of the Congress. The whole problem is, do we have enough time to get them aroused on all the issues of spending and taxes and limited government and central foreign policy? That’s where the real challenge is.

Rod Grams: Now, do you advocate really getting rid of the Federal Reserve? Or do you think we can reform it or we can make some corrections? What’s your position and what are you asking in your bill?

Ron Paul: The bill doesn’t do anything other than look at the books. It doesn’t deal with getting rid of it. But I’ve introduced legislation that would get rid of the Federal Reserve entirely. But that is not the initial step. I myself wouldn’t say “get rid of the Federal Reserve tomorrow” because it would be chaotic. There’s a lot of dependency on the Fed, and it’s functioning to a degree. I think it’s dishonest, it’s counterfeit and very disruptive to the economy and it caused all the inflations and the bubbles and the recessions. So, I put all the blame on the Fed for so much of our suffering. But what I would do is legalize competition to the Fed, make sure that people can opt out of the system. The constitution says that only gold and silver should be legal tender. Today if you opt out and started using gold and silver as legal tender, you can be arrested for it. They don’t want any competition whatsoever, and so they say, “Oh no, if you use gold that’s counterfeiting the US currency.” Of course, the US currency is really counterfeiting the constitution. They’re the ones who are printing paper and saying it’s money. Yet the constitution was never repealed, it says only gold and silver can be legal tender.

Rod Grams: And you said that if we can look at this, unmask the bubble and have a look at their books we might have been able to avert this last big financial meltdown that we had?

Ron Paul: It would have been very, very helpful because people could have known what was going on. What we do need is a lot of understanding about central banking. The central bank is not authorized by our constitution and it’s the principle of central banking that has to be challenged. So we’re in better shape to get that understanding out to the grassroots than we were even if we were could have gotten the books open a few years ago. It would have been very helpful, but I don’t know whether it would have been enough to stop it because it is sort of like a drug addiction. When the economy depends on perpetual inflation… every time we’ve had a recession since we’ve had this dollar reserve standard we started in 1971, every recession the Fed did really turned up the money spigot and they were able to bail the system out.

This time it just didn’t work; the bubble got too big and it burst and they couldn’t stop it. But it’s real hard to withdraw from this dependency now and that’s still our problem. I think the proper economic policy is to quit printing money, run up no deficits, cut spending, encourage people to save, don’t buy up any of these worthless assets and let bankruptcy find its way. It would be very, very tough on the market and the economy and on the people for about a year; but then it would be over.

Rod Grams: That’s right.

Ron Paul: This way what we’re doing is we’re prolonging the agony just as we did in the Depression.

Rod Grams: Alright, I want to wish you all the best on your bill and thank you so much for taking the time. I know you’re always busy but we appreciate it. Thanks so much, Congressman Ron Paul.