Ron Paul discusses the pitfalls his “Audit the Fed” amendment faces during the legislative process, vastly increased public awareness of the Federal Reserve and central banking, gold’s increase in value relative the dollar and why the US empire would be impossible to maintain without the Fed’s ability to monetize debt.
Show: AntiWar Radio
Host: Scott Horton
Scott Horton: Alright, y’all. Welcome back to the show. It’s AntiWar Radio on KAOS 95.9 FM in Austin, Texas. And our next guest is AntiWar.com’s man in the House of Representatives. He makes Thomas Jefferson look like James Madison. It’s Dr. Ron Paul from District 14 now in Texas Gulf Coast. Welcome back to the show, Ron.
Ron Paul: Good afternoon, good to be with you.
Scott Horton: Well, I’m happy to talk to you again. Sort of bad news with the watered-down version of the audit amendment passed in the Senate, but I thought I would start this interview off with a little bit of positivity which is that, well, six months ago in the House of Representatives, Mel Watt and others were more than happy to carry Ben Bernanke’s water and oppose your real audit amendment and yet in the Senate not one Senator dared to really come out against this audit. You get all the credit. You did it. You have the whole country against the Federal Reserve now, and you have the Senate and the entire government running scared, Ron. Congratulations and thank you.
Ron Paul: Well, let’s hope so.
Scott Horton: So now this watered-down version of the amendment — the audit amendment, what exactly does it mandate? Could you explain to us the difference between what your amendment had and what this does?
Ron Paul: Well, I guess the best way to describe it is [the Sanders amendment] does require disclosure of what they did in the last two years in the bailout. So it’s not a truthful audit and it’s not ongoing. It won’t last into the next years. It’s just to disclose which companies and where the money went during that scramble to bail out our economy. So it’s a minor victory.
The biggest victory is a PR victory in that we have the American people now very much more knowledgeable about the Federal Reserve than ever before. They know the Federal Reserve is powerful, they create money, and they bail out their friends. I think that’s the most important thing.
But this whole story about having a real audit is not quite over because it looks like it will not be put in the Senate bill, it is in the House bill – the Financial Reform Bill, and they might have to have a conference. If they do then there’ll be an argument over which version to use—the watered-down version. Actually they could use both because what was passed in the Senate, although it was not a true audit, it was worthwhile. I would not have been able to vote against it. I just did not like the process.
Some of the senators are already saying when supporters call in and ask a Senator, “Why didn’t you vote for Vitter’s Amendment?” Vitter introduced 1207, our bill. And they said, “Oh well, we voted for Sanders’ bill.” See, it was to give them political cover and it made people feel better about it and they confused the public but you don’t have to get rid of what Sanders did, but it would be nice if in the conference we could get the House side of the full audit. We still have a ways to go on that because they can avoid the conference if they want and that raises other questions.
Scott Horton: Well, I’m happy to hear you say that. I guess I would have thought that if both Houses had passed your version then they would have ruined it in the conference, but you’re saying that there’s actually a possibility that the Senate version could be improved in the conference committee, huh?
Ron Paul: Yes, theoretically it is. Now if Vitter’s Amendment, which is our bill, would have passed, it would have been harder, much harder. They could, but it would have been harder to start messing around in the conference because it has such a high profile. Everybody knows what’s going on. Sometimes what they’ll do in a conference is they will change things or add things that nobody knows about until a year later or something, but this is being well-watched.
Let’s say the conference was going on right now, we could raise a lot of fuss and get a lot of attention but I think we would not do any better than we did in the Senate and probably couldn’t win the vote. But once again, the important issue is putting the blame where it’s deserved and that is on the Federal Reserve for all the mischief they cause.
Scott Horton: In your TV appearances lately and your House floor speeches, you have been really emphasizing the currency crisis, as you call it. And you’re saying we’re already in one. We’re in danger of having one, am I reading that right?
Ron Paul: Yes, because —
Scott Horton: What does that really mean?
Ron Paul: Well, I say the dollar’s being devaluated rather rapidly. The only long-term traditional way of measuring the value of a currency is by gold. We had the Fed come in in 1913 and the dollar-gold ratio was 20:1. $20 could buy an ounce of gold and now it takes almost $1,250 to buy one ounce of gold. It has been devalued. It’s been devalued over 98%. A devaluation means each dollar is worth less. Actually they’re not dollars anymore. They’re Federal Reserve notes, promises to pay nothing. Dollars have long been lost because dollars mean actually the weight in silver.
But I draw the analogy in the early 1970s when the Bretton Woods broke down, we devalued against gold. At that time it was not done on a daily basis. It was done deliberately by governments because they had fixed exchange rates, but they devalued in 1971 and 1973 twice for a total of 18% devaluation and that ushered in the horrendous inflation of the late 1970s where prices were going up 15% a year, interest rates had to go up to 21% to really save the dollar.
My argument now is just in the last ten years, we’ve devalued the dollar by 80% and that to me means that people in terms of real measurement of the gold, they’re rejecting the dollar, which if history proves us correct, history says this will translate into much higher prices in the not too distant future.
Scott Horton: Is it brilliant of Ben Bernanke to create all this money, to give it to the banks, to fill up all their bad debts, and cover all their losses but then pay them to keep the money and not loan it out? Because it seems like there’s a little Ron Paul on his shoulders screaming about inflation and he’s kind of taking it seriously and he’s going along this policy of creating all this money, but he’s really not letting it all go out into circulation, if I understand that.
Ron Paul: Well, I do not think he has a policy that said to the banks “do not let it go out”. I think the conditions are such that it doesn’t go out. There are some people who do not want to borrow money under these conditions. Bankers have lost a lot of money so they are much more cautious. Regulators, especially in housing and other things where governments are involved, they’ve been stunned too because they were very very loose.
All these things add up that it’s much better for the banks to just take the money which is practically free from the Federal Reserve, and then they go and they make money just by buying treasury bills or doing other things and make just a couple percentage points, but you can make billions and billions of dollars. These banks are making a lot of money. They’re paying back this debt. Even General Motors paying back their debt by us giving them more money. We buy their stocks and give them money then they pay back little loans. So it’s all a gimmick. It’s to the benefit of the banks to run this program.
Scott Horton: It’s funny the way you talk about the way the money is going around. GM bailing out, it sounds like America is giving all that money to the Germans to repay the French and the British after World War I and then they ended up hyper-inflating trying to pay everybody back.
Ron Paul: What we’re doing right now, we’re bailing out Europe but the market — and the reason I’ve been talking more about the currency, is we did the bailouts for two years. Now we’re embarking on the bailout of Europe and usually the dollar price of gold would just move with the stock market or the dollar, but now it moves totally independently. It moves like it’s a currency in itself. It’s always been a currency but it was sort of in limbo for the last several decades. It was only moving as strictly a commodity. But gold is both money and a commodity and now it’s proving itself. It’s not moving up just because the dollar is going down.
As a matter of fact, the dollar is going up. Ordinarily that should make the price of gold go down. But people are buying gold because it’s the ultimate currency and people are getting frightened enough. It doesn’t take very much because there are trillions and trillions of fiat dollars and other currencies around the world. If just 3 or 4 or 5% of that say, “Hey, we’re getting a little bit nervous. Why don’t we buy hard assets.” That’s why I expect all of the currencies of the world to depreciate against gold in the very near future, which means it’s going to usher in a panic situation where prices are going to start to soar.
Scott Horton: Alright, one last question. I know you’re in a hurry. How would the US government pay for its endless warfare without the Federal Reserve?
Ron Paul: They can’t do it. They monetize that debt. Next week we have a supplemental coming up. I don’t know if you recall but when Bush was fighting those wars the Democrats condemned them because it was always emergency funding. It was never through the budget resolution. But Obama’s doing the same thing. It’s going to be sort of as a supplemental emergency. Then we’ll pay for it but there’s nobody in the bank. Even if we raise taxes there’s no revenues to collect. The revenues are actually going down because the economy’s so weak. It has to be paid for by the Federal Reserve. The Federal Reserve directly or indirectly will create money and credit and pay these bills, which just puts more pressure on the dollar and we’ve gotten away with it for a long, long time and the dollar’s still better than the other paper currencies, but we’re entering the stage now where all the currencies, especially the dollar now, is being devalued on a daily basis.
Scott Horton: All right, thank you very much for your time on the show today.
Ron Paul: Thank you very much, bye bye.
Scott Horton: Really appreciate it. Everybody, that is Dr. Ron Paul, District 14 in South Texas. We’ll be right back