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Show: King World News
Eric King: This is King World News, I’m Eric King, and you’re about to hear a tremendous interview with Congressman Ron Paul, author of the Audit The Fed bill and a champion of freedom in this country. Remember to go to our homepage at www.KingWorldNews.com for more interviews. This week we also have popular financial blogger, Mike Shedlock, known as Mish, as well as Rick Rule, one of the most street smart pros in the resource sector.
Joining us now is Congressman Ron Paul, a champion of freedom and the Constitution, and the originator of the Audit The Fed bill. Congressman Paul, I believe like you that the Fed is immoral and needs to be abolished, and we’ll get to that in just a minute. But first talk to listeners about the importance of the need to audit the Federal Reserve to know exactly what they are up to, please.
Ron Paul: I think that is the first step; the American people need to know exactly what the Fed does. And we’ve been denied this information from the very beginning. The Federal Reserve was started in 1913 and has never really been audited. One time they tried to change the law in 1978, but it did more harm than good because it excluded all the important issues that should not be audited. Once again, we’re in a crisis and the bill becomes more appropriate. We have 307 co-sponsors on it, and I believe this is the first step to find out who gets the benefits, who gets the loans, why and what kind of agreements they have around the world, and then go from there. Of course, I would end the Fed, but others would do other things. It seems like a large coalition of both liberals and conservatives agree that the Federal Reserve should be exposed and we should know what they’re doing.
Eric King: Regarding the HR 1207 bill, the Federal Reserve stated that it would make interest rates skyrocket and the dollar would de-value significantly if the audit took place. Did that not strike you as a strange way to react to an audit?
Ron Paul: Yeah, they’re trying to build up fear. What they’re implying is all of a sudden we’re going to have control of monetary policy, which the bill exclusively does not do. That is not the intent because I realized how controversial that would be, and besides, although Barnie Frank is working with me to some degree, he and I wouldn’t agree on monetary policy. But we do agree on transparency and that we should know about it. So the Fed chairman comes back and says, “Oh, with you guys looking over our shoulders we’re going to be pressured not to be lenient with the monetary spigots and you’ll put pressure on us.” But if anything, political pressure – they want lower interest rates, that means there is political pressure on the Fed already. I mean, they accommodate the President, they accommodate the elections, and of course they accommodate the banks, that’s political pressure, they accommodate Goldman Sachs, that’s political pressure. But for him to say that all of a sudden if this bill were to be passed it would raise interest rates, I think he’s striking out and trying to scare the people.
Eric King: A centralized money printing central bank benefits the elite few at the expense of everyone else. When do you think the Fed will be abolished, in what time frame? I know I’m asking you to speculate here, Congressman Paul, but what are your thoughts on that?
Ron Paul: I’m not optimistic that it’s going to be coming soon through legislation. We could pass the bill next week and repeal the Federal Reserve Act which was written in 1913. But that’s not likely to happen, it scares a lot of people and I even argue that if you want to get rid of the Fed under these conditions, you should phase it out. But it’s more likely to end because it quits working, and when they totally destroy the dollar if we have a runaway inflation, and the dollar goes to near zero or something, the Fed will just be out of business because nobody will trust them anymore and something will have to be done; they’ll have to be revived. And I have no guess when that is going to happen.
If we continue to do what we’re doing, which is spending and printing money, eventually people will lose trust in the dollar. Not tomorrow or next week, but it could be next year or two or three or four years, for all we know. Because we’re not hesitant one bit in Washington to back off any spending and any borrowing which puts the pressure on the Fed to monetize the debt and to print this money. But even if we get our audit bill passed there is going to be a lot of resistance to it. If we pass it in the House the bill has got to go through the Senate, the President is still going to have to sign it. Then it’s going to go to the court, just like right now the courts ruled in favor of Bloomberg, looking at some of these records under the Freedom of Information Act. But the Federal Reserve is really, really fighting that hard. And unfortunately the courts, over our history, have always ruled in favor of the government and central banking, and always against sound money.
Eric King: You made this statement in a recent interview: “Fraud is a significant problem, but the government is committing the fraud”, and that was in relation to a different topic that I am about to bring up. But here’s one of the problems I have right now, Congressman Paul: banks’ balance sheets are phony, the books are cooked and the government is encouraging this activity. It’s encouraging and aiding and abating this fraud. And it would otherwise be criminal fraud with regards to the banks accounting in an attempt to hide from the rest of the world the fact that that our banking system is issolvent. Why is our government encouraging this criminal fraud in the name of national security, probably, within the banking system to manufacture a stock market rally. And why has our government become so corrupt do you think?
Ron Paul: Well, I guess they yield to the temptation. Some of them believe through their economic education that this is quite proper Keynesian economics that actually teaches that you should have a government that prints money – which is counterfeit – and you should have fractional reserve banking because it stimulates the economy. And Congress literally creates programs like Medicare and Social Security, and they’re not really funded and yet they pretend that they’re funding it. If a private person did that, they could go to prison. If you printed money you would be a counterfeiter and you could go to prison. But the government gets away with this. So, once the government embarks on this, their friends participate and when they get into trouble, what happens? I mean, the government comes to their rescue and bails out their friends, and the people who are not on the inside tend to lose; they might go bankrupt. But somebody like Goldman Sachs benefits, and some of the people who thought they were getting a great deal not putting any money down lose their houses. So it’s a corrupt system based on the notion that our government can do things that they’re not really able to do. At the same time, I put so much back to the corruption of money, and their inconsistency in their definition of not following what we were told to do, which is to make gold and silver legal tender.
Eric King: You brought up the bailouts there for a minute. What about the bailouts that took place in this country? I know you voted against them, but how immoral is it that those bailouts took place and that in some cases former treasury secretary Paulson, was acting as a wrecking machine saving some firms to the benefit of Goldman Sachs, such as AIG, but then allowing others to go under, such as Lehman Brothers, which Goldman Sachs was the primary beneficiary of Lehman Brothers’ failure. And he had to get an ethics waiver from the White House in order to do that. What are your thoughts on that, Congressman Paul?
Ron Paul: I think that there are two parts of it. First: when government takes the money I think it’s an immoral act, you know, either through taxation or deceitfully through the printing of money. So just that act is bad. But then, when they start passing out the favors, passing out either contracts or bailouts, it becomes even more corrupt. And of course, when the people realize what is going on, they get rather angry about this and I think that’s what is happening. But they’re directing their attention in the right direction, that is up towards Washington, and fortunately they’re looking at what the Fed does and what the treasury has done. The two are contagious, once we start on this people figure out, “Oh well, that’s the way the system works, we better do our very best to get what we can while the going is good.”
Eric King: What about the mountains of debt that the United States has accumulated? Before the Depression started I think the debt to GDP ratio was roughly 260% and I think this time Soros is saying on the cycle it will be 550%. But, Rob […] is unquestionably one of the great minds in the financial world today, and also a libertarian, calculated our nation’s debt to GDP, including corporate, household, Social Security and Medicare, etc, and came up with a staggering debt to GDP of 850%. And that doesn’t include the off balance sheet stuff or second quarter bench, and stated also that he has never met anyone who owed over 8 times their annual income where the outcome was graceful or smooth.
Ron Paul: If anybody wanted to look at one key factor about where our problems come from, I would say it is debt that represents the growth of government. It’s too bad they didn’t put it in the Constitution, it was unconstitutional to borrow money. But they debated it and talked about it but then they allowed the government to borrow money. And this, to me, is the real problem because this debt won’t be paid for, so the debt eventually gets liquidated. People keep asking, “Oh well, who’s going to have to pay this debt?” Well, it gets liquidated, our grandchildren won’t end up paying for this. If it lasts for a while, like it has already, another generation may suffer. But the debt gets liquidated and when it is discovered that they can’t pay it, they can always send you money. You know, if you own treasury bills they can always send you money or they can always send you a check from Social Security. But what they can’t do is maintain the value. So if you have a 10% inflation rate on prices, you know, the debt is going down 10%. So if there is a 10 trillion dollar national debt, that comes down to 9 trillion dollars of real purchasing power. So the debt is being liquidated, but that’s evil. That’s evil because it’s punishing the people. And they talk about the advantages of having a weaker dollar. There are no advantage to anybody to say, “Oh well, I have money in the bank”. And the government has a policy of deliberately taking the purchasing power away. It’s a tax. Debt represents the need to destroy the money because that’s how they will liquidated the debt.
Eric King: You have consistently voted to lower or abolish federal taxes, spending and regulations and used your House seat to actively promote the return of government to its proper constitutional levels. Talk to listeners about excessive taxation and income tax because you made a comment in a recent interview, which I thought was fascinating, that eventually as the dollar fades the people will just stop sending in their taxes. I suppose that is what you were saying, and that is what happened in Russia, correct?
Ron Paul: Yeah, it happens at times of war or emergencies. Sending the taxes in doesn’t matter because the government doesn’t send anything back, and what they send back to you has no value. I think it is going to be sort of a de facto nullification, you know, a nullification of federal laws by the states. It was something which was debated in our early years, but then it sort of lost the argument. But I think that’s what’s going to happen: the states might not secede from the union literally, but just quit participating because the federal government will lose credibility. And that can’t be all that bad.
Also I think what is closely related to this is that when governments fail, whether it’s the legislative branch or the judicial branch or the executive branch, and the people just keep getting stuck with all these rules and regulations that are an abuse of our liberty. If the system is still functioning, where the court systems are functioning, one of the things that could save us is jury nullification. And I think maybe that will catch on, too. That means that juries have a right and an obligation, under the early understanding of the judiciary system in our history, that the juries have the right to judge the law. Today they are explicitly told that they cannot, and if you bring that up you’re in big trouble. But a jury is supposed to be secret, and if in secrecy they are saying, “You know, some of these tax laws and some of these drug laws and some of these economic laws are not worthwhile. Why should we put somebody in prison because they obeyed a state law, but the federal government comes in and overrules it on a drug charge?” If they had a jury that understood this, they could just never convict these people. So maybe that will happen too, but more likely what is going to happen is the people will just ignore the system, they’ll go into the underground economy, they’ll trade services. It won’t be a very good time because that’s sort of going backwards. People will have to literally go into bartering. But I think that’s also an important reason why people ought to, for security reasons, have gold and silver coins in case of an emergency.
Eric King: There have been rumblings of a secondary police force reportable directly to the President reminiscent of Nazi Germany’s brown shirts, or what eventually became the SS. And now longer school hours are being discussed so the state can more effectively take control of raising the nation’s children, as opposed to parents – a reminiscent of Nazi Germany’s Hitler youth training. How can the people of the United States stop this police state from engulfing them?
Ron Paul: They first have to wake up. A lot of people are, but a lot of people like to be taken care of. You can look at the example of how this inoculation program for H1N1 is going. One group of people are screaming and howling, “Don’t round me up and don’t force me to take this shot. I don’t want one, you don’t have a right to force me.” In another breath they’re lying and begging and pleading, “Give me the shot, give me the shot”. They ‘re scared to death and they’ll wait in long lines for a shot that I think is questionable. So it’s sort of a contest between the ones that want to be taken care of and will be obedient to everything the government tells them versus the people who would like to make their own decisions. But it will be easier for the side that wants to make their own decision to win this when the government becomes so ineffective that people don’t have any trust in the government anymore.
Eric King: Let me ask you about the comment that Charlie Monger made, Buffett’s partner at Berkshire Hathaway. He talked about the need to basically remove the banking and Wall Street crowd from running our government and said these people need surgery performed to remove them, but they do not want surgery. But it would be better for the wider civilization if they were removed. Will they be removed from our government, Congressman Paul?
Ron Paul: You mean the banking cartel that might control our government?
Eric King: Yes.
Ron Paul: Well, you’ll have to remove the system, that’s why the system of government is so important and that’s why we have to decide what the role of government ought to be. As long as you have a Federal Reserve system and big government collecting a lot of tax and collecting revenues, you’re always going to have people vying for control and some of them will be out for self defense and they’ll say, “Oh yea, they take all our money. I’m going to Washington, I’m going to try to get some back to build highways in my state too. Because if they’re taking it why just sit back and let somebody else have it”. That will continue but I think the basic question is that we probably need a whole generation to ask the question, “What should the role of government be?”
Eric King: When you look at the dollar debasement and the massive debt the country has, and they keep expanding the balance sheet from the Federal Reserve, do you look at the dollar and say, “There is no real will in Congress to stop this”, so you just see a collapse. Is that what you’re really saying when I see your interview?
Ron Paul: There is no moral restraint. There is no resistance by conservatives or liberals, because they want the spending for different reasons. So if we get only constitutionalist here, even with their shortcomings, if they only did what Article 1 Section A permitted them to do, we wouldn’t have these problems. So it’s a matter of having a different group of people in Washington. But if the people think that they can keep voting themselves largess and all these benefits, that’s who will come to Washington. And hopefully that will shift, but right now Washington is filled with people who obediently try to participate in this game. It’s just very difficult to say that we’re going to end this real quick.
Eric King: You are so much more in touch with this than our listeners because you’re there in Washington, but do you see already some bills that are passed that that have the started the beginnings of what could be capital controls? Because if you have a currency implode or over time greatly devalued, you end up many times with capital controls. Do you see that happening, or signs of that starting to happen?
Ron Paul: It always does, because governments when they get into so much trouble, and right now I think there are signs that less dollars are coming into this country for investments. Our money is flowing in the other direction, so if we start sending our capital out, you know, there will be controls; they inevitably do it. And I imagine that with all the emergency legislation that’s been passed over the years they could use almost anything they want, whether it’s national security or even these financial emergency powers that they have been given. And even if they didn’t have it, they are going to do it. They just have to scare the people and then they worry about whether they’re doing it correctly or not later on. But I definitely think that at the rate we’re going, we will see financial controls, which will only compound our problems.
Eric King: Do you have any idea about a time frame on that, or is it just too early to tell?
Ron Paul: No, I wouldn’t be able to say; I don’t think it’s obviously going to happen this year. But things can shift rather quickly, you know, right now the circulation of money is rather slow and if that would change and people started getting rid of their dollars and having to buy stuff instead of just parting dollars, it could shift rather quickly and in a year or two it’s possible.
Eric King: You are such a student of history, Congressman Paul. Does the U.S. remind you of the latter stages or near the end of an empire where it is been looted? Is the country being looted?
Ron Paul: Well, the people certainly have been looted. And the transition in a time when the money is systematically debased, but you don’t have runaway inflation, actually the middle class gets poorer and the wealthy class gets wealthier. We’re starting to see that. And I think we shifted gears in the year 2000. Most people say the crash and the crisis came in 2008, but I think it really started with the NASDAQ bubble. It’s being going on for a while because our standard of living has been going down. There have been no real new jobs, and the shift has been away from the average middle class because Wall Street, even during that time and even on the bailout, the special privileged were able to get bailed out. So generally this is what happens; the people on the inside get the benefits and the middle class and the poor suffer.
Eric King: You mentioned the poverty right now. The United States is being purposefully de-industrialized. I think its part of the move towards global governance. We already have 10 cities across American, they’re growing in size and poverty is spreading in this country as the elites consolidate their power and wealth and plan to merge America into a global government and remove its sovereignty. Someone like you, Congressman Paul, you never vote for legislation unless the proposed measure is expressly authorized by the Constitution. You give the people hope that the elites’ plan to destroy America and its freedoms can be stopped. What chance do we have at this late hour, Congressman Paul?
Ron Paul: That’s a tough one. I guess if I thought there were a zero chance, I wouldn’t do it. I wouldn’t be doing this and working trying to change things. But I don’t work with the assumption that tomorrow or the next day we will have the votes necessary, or that my speeches will convert very many. I work on the assumption that this is a long term process. The only way this can be turned around is to talk to the next generation. That’s where I am the most encouraged, because the college kids are responding most favorably with this message. And, therefore, I have a tint of optimism about this but I think the heartache is yet to come and I think our traditions will serve us well because we have been the freest and the richest and we knew something about sound money and property rights and contracts, and that’s why we did prosper. So it won’t be quite as bad as, say, the Soviet system when they collapsed because they didn’t have the traditions of freedom and personal responsibility that we have. But still, we live in very precarious times. If it goes the other way we’re going to lose lot more of our freedoms.
Eric King: Lord Monckton gave a speech recently about loss sovereignty and the upcoming climate treaty which will give up, I guess, U.S. sovereignty in his words anyway. How disturbing, though, is it? Because I know you didn’t have a chance to see that speech, but how disturbing is it to you when you see this slow evaporation of U.S. sovereignty over time? Because you mentioned to me that it really is piece by piece that you see this happening with various U.N. treaties or whatever it is we have been doing.
Ron Paul: Yeah, it is consistently eroding our sovereignty. I think the most sovereignty should remain with the individual and the family; it should be very, very local. That’s what was intended; the federal government was meant to be very small, and that has obviously changed dramatically. But now, in the last 40 or 50 years it’s been gravitating to international government. Even with this financial crisis going on they’re talking about internationalizing all these regulations as well. If you look at the WTO, the WTO started off regulating all the drugs and nutritional products, and the drug companies were all for this, saying, “This is globalism and this is all good”. So this means it’s giving up responsibility of the individual for dealing with these problems as well as our state and as well as our federal government. But that probably is one of the most serious problems that we have, because right now they know the dollar is ending its supremacy so what are they going to replace it with? And they’re talking with the United Nations and IMF is coming up with some type of a currency, some special drawing right or a basket of currency and replace our Federal Reserve System. As bad as the Federal Reserve System is, at least we have the responsibility to deal with that. But if it goes to an international system, that won’t be good for us.
Eric King: Congress suspended the law, I think it was prohibiting the use of U.S. troops on U.S. soil against U.S. citizens. And they are currently training a rather large force in Texas right now for potential use against U.S. citizens if there is social disorder. Is that something that worries you, Congressman Paul?
Ron Paul: I think they are quite capable of doing that. As a matter of fact that subject came up with this national emergency dealing with the flu because those national powers do give the federal government power to round people up and force inoculations and all. So the potential is there and governments have notoriously done it in the past. Right now, I can’t say that I know of any schedule that they have for really invoking those kinds of controls on the people.
Eric King: When you look at today versus the 1950s, I think we could use less than a dollar of money printing, maybe 66 cents or so and get a dollar of GDP growth in the economy. That was obviously when we were very healthy, very industrialized and there was a very strong economy. But what is it taking today? Because I talk to some of the top people in the financial world each week, as you know Congressman Paul, and I’ve heard some numbers that are very disturbing. Do you have any quantification about how many dollars it takes to create a dollar of GDP?
Ron Paul: No, but it’s a lot more than a dollar. I’ve seen it […] 5 or 6 dollars, but I don’t know that figure for sure. Maybe it’s difficult to actually calculate. Even the GDP figures I’ve never been too excited about those because government spending is part of GDP. So if you build more airplanes and more tanks and more bullets you’re actually contributing to the GDP, which is a farce, too because it actually should be subtracted because they’re taking money away from people’s livelihood and maybe have them getting good medical care or better education or buying a house. I don’t think that’s a good measurement.
Eric King: In closing let me just ask you, Congressman Paul, the way that we’re headed, obviously it’s a train wreck, it’s a potential collapse of the dollar. And, as you said, we could have the nation fracture, I guess, potentially. You said you didn’t know whether states would secede or not. But what in your mind is going to be the eventual outcome of this? Because as Lord Monckton said, these communists are taking over everything and they’re trying to force one-world communistic government. I mean, it’s almost a fight to enslave the people globally, is it not?
Ron Paul: Yeah. There are at least some that will do it. But I still believe that even like in Europe, as successful as they have been with the European Union, I still think that as times get tougher and the economies gets weaker, there will be a revival of nationalism. I don’t think that the French and the Germans and the British and all will just go along and be one unified government. So I think there will be a natural resistance. Even in this country there are both liberals and conservatives for different reasons who object to some of these international trade agreements. Some are just against trade but others are against the abuse of our sovereignty. So I don’t know, I think there is a good chance that we will wake up and improve things. But I don’t believe it’s going to happen without seeing a lot more poverty and a lot more violence in our cities. The only question is is what will be the prevailing philosophy of our country, should the government be there to protect our liberties or should the government be there to run our lives and run the economy and police the world. If we continue with that, we’re in big, big trouble. But I’m just working on the assumption that we can convert enough people that when we do the rebuilding we’ll make it a much better place.
Eric King: Then are you optimistic in the end, Congressman Paul?
Ron Paul: Yes, I am more optimistic in the long run. In the short term I’m rather pessimistic.
Eric King: And also, I just to make a quick mention of the Campaign for Liberty, and the job that Jesse Bent and others are doing over there. If people wanted to go and make a donation, what is the website for Campaign for Liberty?
Ron Paul: That is CampaignForLiberty.com and we welcome any help.
Eric King: Also, Congressman Paul, your last book “The Revolution” was a number 1 New York Times bestseller. Now you’ve just released “End the Fed”, a highly acclaimed book and we will have a direct link on your interview page to that book “End the Fed” as well.
Ron Paul: Of course, we would welcome any help if anybody gets interested in buying the book, “End the Fed”.
Eric King: What I’ll do is I’ll have a direct link on your interview page for the book and for Campaign for Liberty.
Ron Paul: Wonderful.
Eric King: Alright, well thank you so much for joining us, Congressman Paul.
Ron Paul: Thank you, good to talk with you.