Show: Lew Rockwell Show
Date of Interview: 05/07/2010
Ron Paul, long the leader in American public life for sound money, sound banking, and the free market, talks about the progress of his Audit the Fed bill – and why the Fed, the Treasury, and the banksters fear it. He also discusses the crisis in Europe and especially Greece, and the Fed’s sinister and secret role. We know why the Fed wants its secrets kept safe from the American people, about what banks and other institutions it bails out by printing new money.
But why do they so fiercely resist a physical audit of the gold at Ft. Knox and the vaults of the NY Fed? What are they hiding? Did far more US gold flow overseas under LBJ and Nixon than is admitted? Has some or all of the remaining gold been sold, though it is still physically in the US? Ron Paul, and all of us, wants some answers.
Lew Rockwell: Well, how wonderful to have as our guest this morning, Dr. Ron Paul. Congressman Paul has been for a number of years a great spokesman in American national life and really with an international presence as well for sound money, sound banking, the free market, and a very different system from the one we have today Ron, and what seems to be in trouble. But before we talk about maybe the European situation, tell us, everybody’s interested, what is the progress of your bill to audit the Fed? Also, I might mention that Ron’s most recent book is called “End the Fed”. So this bill has already done I think huge good in this country in alerting people to what a secret operation the Fed is, why we ought to be able to know what they’re doing, and you’ve gotten a huge number of co-sponsors in the House, you’ve gotten co-sponsors in the Senate, but of course there are very bad people including the Federal Reserve itself and the Treasury who are opposing you. So tell us, what’s happening with your bill to audit the Fed?
Ron Paul: Well fortunately, we got it passed in the House. We had to stick it on a terrible bill but there weren’t any other options. So in the Financial Services Committee it was passed and attached, the bill came to the floor and it was passed overwhelmingly. Interestingly enough though, I voted against the bill because the bill itself was terrible. But anyway, using the process, we were able to put a good amendment on to a bad bill, so it does exist. But now they’re debating financial reform in the Senate, and just yesterday on Thursday a major event occurred because Bernie Sanders, who was supposed to introduce my amendment and brought it up and at the last minute changed it. And I did have a conversation with him today, which is Friday. He did describe it as, “well that was the best he could get, it had to be watered down a bit. There was no way the other one would be passed,” that argument.
I think he has one point. If his bill as it is written, even though it’s much different than my bill that I introduced, it probably would be better than the rest. But my point to him was that it would be important that we have the Senate at least be on record they haven’t voted for a much cleaner bill. If it doesn’t pass, then offer his as a substitute and pass it. Under those circumstances I may well support it but I would want to go for the best bill.
But it looks like Vitter may be introducing the much cleaner bill and I know Jim DeMint has worked hard on it. He would be supporting it to come up. Quite frankly I don’t think it will pass. I think Bernie is counting the votes, he claims he has to have 60 votes to pass anything. But you know, if Dodd is supporting what Bernie wants to do as well as Reid has said that he would support Sanders, and if they’re supporting it it means the president is going to sign it, and if they’re all supporting it, I would be very suspicious that the Fed is quite aware of this and they’re satisfied with this and maybe they think they’re getting off the hook.
But anyway, there’s lots of activity going on and next week is when we’re probably going to find out one way or the other. That bill in the Senate is a mess because they don’t even know how far they’ll go. If Sanders’ amendment passes the Senate, it’s possible that we’d go into a conference and they’d have to pick between the House version versus the Senate version.
So it will be in the news, and as you’ve pointed out, the bill has already done some good just by bringing attention to it. And I think that is by far the most important thing that we’ve done so far is get the attention of the American people and the financial community, looking at the Federal Reserve. As you noticed in recent months, I’ve gotten a lot more interviews on financial news stations and they’re at least open to discussing the Federal Reserve. This was unheard of a few years ago. So I’m pretty pleased with the national debate that’s going on.
Lew Rockwell: Ron, you’re responsible for it. Of course, the great economists, a number of whom knew you and approved of you, I might say. Whether Ludwig von Mises or Friedrich von Hayek, Henry Hazlitt, Murray Rothbard, your good friend, Hans Sennholz, also your good friend. These men just a tremendous work about the nature of money, the nature of what money ought to be, banking, and all that. But you are the one, and even though your degree is in medicine but you really are an economist too. You’re the one who brought this to public attention and made the American people realize, that if I can put it in these terms, that we’re all being ripped off, that this is a rip off operation that punishes the regular person for the benefit of the government-connected rich guys.
Ron Paul: It’s counterfeit. I would like to think that Mises would be pleased because the statement he put in Human Action about there are certain individuals who are more inclined to write theoretical or intellectual articles explaining economic policies and he says then there will be others that would take these ideas and try to make them palatable to the general public. So one of my goals in life has always been to try to understand the best I could more complex issues involving economics and make them more palatable.
Fortunately, for us who believe in Austrian economics, it makes a lot more sense. Not only is that difficult, if I had to explain the mathematical explanation of Keynes the government would go nuts. I guess that’s how they get away with it. Nobody can understand it and they just demagogue the issues. But Austrian economics make so much sense. I don’t think the chore is too great. But I think groups like yours, the Mises institute and others have laid the groundwork for a political discussion. It comes together. The great writers and then the people who then advance these ideas and then eventually it gets into a political discussion.
Lew Rockwell: Ron, one of the things that’s always interested you about the Fed secrecy is what the heck they’re doing internationally. So here we have this crisis in Europe. We have the Greek sovereign debt question and of course England and Spain and Italy and Portugal and maybe even more than that, and of course the US too. What’s happening? Tell us what’s happening in Europe and maybe what the Fed is doing illegally and unconstitutionally about it.
Ron Paul: I guess I have to do a little speculating on that since we’re not privy to what they do and we don’t have a right to ask questions or get any answers. Even with an audit bill passed, they would do everything in the world to prevent that information from coming out. But I do know that they have the legal authority to buy sovereign debt and I asked Bernanke if he could buy Greek debt, and he looked at his staff at the time if he could answer that question, acknowledge that. And the staffer shook her head yes and he says yes, we can buy Greek debt.
I sort of think that they probably haven’t done that yet. But in the next time Bernanke was before the committee, I can sense this has happened, this IMF plan to bail out the Greek government, and that’s with funds that we have created. He has to create this money that goes into the IMF and we have like what? 25 percent of that? So we will be involved when it’s in our interest to prop up the international system. We will do the bailing out, but as of now I guess we don’t have any proof of that. They have the authority to do it. They don’t have the Constitutional authority to do it, but they have the technical legal authority to do whatever they want. It’s just a shame that the American people don’t have the right to know what they’re doing and we don’t have much transparency on what they’re doing.
Lew Rockwell: Ron, yesterday we had some interesting turmoil on the market that they ascribed I thought hilariously to some guy pushing the B button instead of the M button on his keyboard.
Ron Paul: What if they hit the T button?
Lew Rockwell: What’s happening? I’m going to ask you to speculate again. What’s happening? Do you see real trouble ahead immediately? Is it going to be longer term? What’s ahead?
Ron Paul: Well, I think this week was a significant week because I watch the dollar very closely. The conventional wisdom of watching the dollar is to see how it’s doing on the international exchange markets, and it’s been doing rather well. It looks real strong. Who wants to buy euros right now? So the dollar remains strong and people are frightened, we still have the most amount of wealth and the biggest military, so people do go buy Treasury bills and buy dollars.
Ordinarily, when people buy dollars, the dollar goes up. You can buy gold cheaper in the gold price in terms of the dollar going down. This week, just yesterday when we has this big rout and concern about the market; the market goes down sharply and the dollar goes up but this time, gold went up. I mean, gold in dollar terms, should be down a whole lot but not according to those who were just purchasing gold as a haven or turmoil. It went up $50. I think this is the first time for a while that it started acting like the true money that it is.
It’s always been money and always will be money but the last several decades it’s been acting more like a commodity, which it is and should be a commodity. But it’s also a monetary metal. Yesterday, the commodities were down sharply. Even silver went down. But gold acted in a proper manner and people around the world are starting to look at it and seeing it as a haven.
But I think this is the second event that I think is significant. In November of last year, the IMF always notoriously dumps gold to keep the price down like they did in 1970. In November, they dumped 200 tons of gold and it didn’t do anything. One central bank, a poor central bank for a poor country bought all 200 tons and that was India. And I thought yeah, gold is still money. The irony of it all is the West, the European nations, the United States, we’re dumping the gold, we get rid of the gold, at the same time this gold is moving eastward so I guess maybe Jim Rogers might be right. The future is in the east, not in the west.
Lew Rockwell: Ron, what about the people who think that maybe all the gold isn’t there in Fort Knox or in the New York Fed? That maybe under LBJ and Nixon a lot more left that they ever admitted?
Ron Paul: You know that’s the big thing now. If we could audit the Fed, that would include the gold because they have that on their balance sheet. I think obviously we should. You do recall during the gold commission I proposed that the gold commission go on record of auditing the gold reserve and we had 17 members of the gold commission. I think […] and I voted for auditing the gold and nobody else did.
Now why do we do this? They check on the gold every year. They go out and they look at 5 percent every year and check it and that’s supposed to be a true audit. But no, we need to know. Even if you look and saw the gold, where’s the commitment? Have they loaned it out? Has it been sold or who actually owns it? That would be pretty important, but until we get a true audit and get control of our government, we’re not going to know.
Lew Rockwell: Well I think we know the answer, that the Fed and the Treasury resist an audit of the gold. So this is not like they claim they don’t want an audit of the Fed itself because they don’t want monetary policy to interfere with this wonderful activity on all our behalf. But the fact that they don’t want to audit the physical gold, they don’t want an independent check of how much gold there is, it seems to me that’s proof that a lot of it may not be there.
Ron Paul: You know, that’s a good point. I just wonder maybe that might be. I talk a lot about the foreign entanglements with loans and guarantees as being a major issue and also the discount window where they can make loans to governments. By the way, the Bernie Sanders amendment would not permit auditing of the discount window, how they do this with the corporations. But this gold issue, there are certainly a lot of people who believe this could be one real big issue because even though technically they say gold is not money because they want paper to be money, I bet you the people who have the power over our monetary system know darn well that gold is the ultimate money and they probably don’t let their fingers get too far from the gold.
Lew Rockwell: Dr. Ron Paul, thanks so much for being with us today. Take a look at Ron’s latest book, “End the Fed”. We’re going to be featuring a number of his books in this podcast and Ron, thanks for all you do. Thanks for coming on the show, and we follow all your activities with great interest and great support.
Ron Paul: Thank you
Lew Rockwell: Goodbye Ron