Show: Freedom Watch
Judge Andrew Napolitano: Hello and welcome to Freedom Watch, your daily dose of raw liberty online at Foxnews.com. I’m Judge Andrew Napolitano, here defending freedom, defending your natural rights, and defending your right to have a government that stays within the confines of the Constitution.
On the online version of Freedom Watch, we always have kept a close eye on the actions of the government, and we’ll do the same when we move this show to a weekly televised show on the Fox Business Network. One criticism of government that once was obscure but has suddenly gone on mainstream is the absence of transparency at the Federal Reserve. As politicians and economists alike struggle to get a handle on the financial crisis, listen to how Representative Alan Grayson, the Democrat from Florida, recently put it.
Alan Grayson: If you are concerned about socialism in this country, if you’re concerned about communism, about government control, let’s audit the Federal Reserve.
Judge Andrew Napolitano: Speaking of socialism, in just the past few days we’ve seen Senator Bernie Sanders, the socialist from Vermont who was working with Representative Ron Paul to pass legislation calling for an audit of the Fed, revise his position so that only the Fed’s bailout activities will be audited, not its monetary and policy decisions.
And just last night, the Fed made a particularly important bailout decision – it will start sending US dollars to central banks in Europe in an attempt to keep the economic chaos in Greece from spreading to the rest of that continent. This comes on top of a pledge of nearly a trillion dollars, a trillion dollars from the International Monetary Fund, which is also heavily US funded, and the EU to prop up the euro.
Will all of this work? Will it be a disaster? And how much freedom should the Fed have to make such decisions? Joining me now is one of the great defenders of freedom today, and the author of the bestseller “End the Fed”, Congressman Ron Paul. Congressman Paul, it’s a pleasure. Welcome back to Freedom Watch.
Ron Paul: Thank you Judge, good to be with you.
Judge Andrew Napolitano: We’ll start with Greece. You predicted a long time ago that there would be riots in Greece. When they happened, they happened. We all saw what happened to the stock market at the same time. What tipped your hand so that it was so easy for you to make this prediction?
Ron Paul: Well, I think it’s just looking at monetary history. When countries destroy currency and debt is dependent on the increase of the supply of money, eventually it breaks down and the poorest countries who have the weakest credit, they crumble first and Greece was the one to fall, Spain and others will as well and probably Italy.
United States numbers aren’t a whole lot better, but we have a powerful army and we have a lot of wealth due in this country. GDP is higher and therefore people trust our dollar more so than it deserves. But this is inevitable, and it will come to our shores as well because you just can’t create wealth out of a printing press and this whole idea that they can create a trillion dollars, they’re going to prop up these illiquid countries, just like we propped up illiquid assets here in this country…
You know, if you or I had to loan a friend some money or somebody of our family, we take it out of our savings. But there are no savings. Our government has no savings. The European governments have no savings. All they have is debt. So this is increasing debt and dependency on the creation of new money. It’s a flawed system and is only a temporary reprieve. The longer they can hold this together, the worse the trouble will be and probably the greater the riots will be.
Judge Andrew Napolitano: And what makes this even more reprehensible is that the American people have no say as to what our central bank does. For all we know, they could have been propping up Greece all along, and we wouldn’t know it absent any meaningful audit of the Federal Reserve.
Ron Paul: No, and so far we still have ways to go to get the audits, but they probably would be a little bit more reserved if they knew that every single transaction would be audited. But no. They have the authority to do it, they can extend and this is one of my biggest beefs about the Fed. They can extend loans to other countries and other central banks secretly, and that’s what they’re doing it. They’ve done it in the past, they even announced that they are going to do it. We also have to come up with a significant amount of money for the IMF. The IMF is sending a bunch and I think ours will be around $40 to $50 billion dollars of the IMF funds that we’ll have to print, and that only leads to inflationary problems down the road.
Judge Andrew Napolitano: Even in a country like Greece where 66 percent of the population is either employed by the government or on a pension by the government, we are willing to entrust Federal dollars whether created out of thin air or taken from some legitimate source into the hands of a government like that. You’d think they would’ve learned Margaret Thatcher’s basic one liner: “The problem with socialism is sooner or later, you run out of other people’s money.”
Ron Paul: Yeah, and I think we’re getting closer and closer. You know, the markets are feeling good today, but I just wonder how long that’s going to last. I wouldn’t be surprised in a day or two the sentiment will return to reality, that this is a fix that is not a fix. It’s just faking the whole process that they know, “Yes, we can handle this, we can take care of this debt by more debt.” That’s what we did in our entire bailout in the last couple of years. I mean, the problem with too much debt and too much inflationary pressure in the economy, so how do we solve it? Spend more money, run up more debt.
So here the world is crumbling, spending more money and running up more debt. Debt’s the problem. They just don’t seem to get this and it’s a political reason. There are consequences for allowing the liquidation to occur, and nobody wants to be responsible for the liquidation of debt. Debt is always liquidated; it’s just a matter of how, whether it’s the default or the liquidation of debt by paying off all the debt with money that has no value, that’s what they’ve opted for. That’s what we should’ve expected.
Judge Andrew Napolitano: You amassed, Congressman Paul, an impressive array of support for the Audit the Fed legislation from all across the political spectrum. From Jim DeMint on one end of the spectrum to Alan Grayson and Barney Frank and Bernie Sanders on the other. What did Senator Sanders do in the Senate just the other day that undermined his support and undermined the legislation which the House sent over there?
Ron Paul: You know, I’d like to give him the benefit of the doubt, which I always try to, but it was annoying to me and I was disappointed. But from his viewpoint, he doesn’t see it as such a sellout, so to speak. He sees this as pragmatic politics that we can’t get my bill passed HR 1207, S 604. He introduced it in the Senate, so therefore you work out the best deal you want to see. How much can I get, and he got something, but it wasn’t very much. It was a greater analysis of what’s happened in the past 2 years. But to true audit and no ongoing analysis, there’s nothing to say that we can’t find out what’s going on with Greece right now. So he figured, well, a little bit is better than nothing. I mean, if he stuck with the whole program, if it went down, then there would be nothing else. In other words, he gave up too soon!
Judge Andrew Napolitano: Right.
Ron Paul: And we shouldn’t do this! He could’ve still stuck with that. He could’ve stuck with Jim DeMint and fought hard for the whole thing, and then “we didn’t get it, we missed by a couple of votes, let’s see what we can salvage.” But to come up with it, and you know, once the Fed agreed to this, and once Dodd agreed to it, and the president was willing to sign it, you know that it had to be very, very limited. I believe that is what the case was.
Judge Andrew Napolitano: Well, when you and I first started talking about auditing the Fed here on Freedom Watch, the thought of this actually becoming law almost seemed too good to be true.
Ron Paul: Right.
Judge Andrew Napolitano: Since that time, you amassed over 330 cosponsors in the House of Representatives, and even though it was attached to some legislation, that those who believe in the Constitution and the free market would find repugnant, it is essentially passed in an acceptable form. So maybe, if the same effort were put in on the Senate, perhaps by a Senator Paul from Kentucky a year from now, we’ll have a happier result for those of us who want to know what the heck the central bank has been doing.
Ron Paul: Well, there’s something big going on in the country. Not only financially, but there’s something big politically. When you think about what happened out in Utah, it isn’t the people are just upset with Democrats. It looks like they’re upset with anybody who is joining the establishment and going along the get along and thinking “Well, we have to work this out, we have to blend in and we have to take a little bit, give up a lot, take a little bit.” But no, I think next Tuesday’s going to be a very, very interesting political day for our Freedom Movement.
Judge Andrew Napolitano: It sure will. Congressman Paul, it’s always a pleasure. Thanks for joining us on Freedom Watch.
Ron Paul: Thank you, Judge.