Ron, welcome. And you were saying these things when no one else was saying it. And they called you, “Dr. No – you’re an obstructionist”. Must have been awful for you.

Ron Paul: Well, I expected it, so it didn’t bother me too much. I’ve always been amazed that they’ve tolerated me as well as they have. My wife always helped me out on that, because they had called me “Dr. No” and it sounds so negative because I think liberty is very positive. But she said, “Just tell them you spell ‘no’ as ‘know’”, so we just marched on and tried to do the things that we thought were right and I think in some ways were vindicated. The country certainly is talking about it, we don’t see the definite move towards liberty, but a lot more people are talking about it. And one thing is for sure; the people are upset with the status quo. So I see it as an opportunity and hopefully our message will sink in.

John Stossel: And what do you see in this week’s election results? You’re happy, obviously, that your son – congratulations – is now a Senator. What else? Is this good for liberty?

Ron Paul: It is, because they’re recognizing the problem and they’re recognizing that the status quo has to be changed, and a lot of people had to be put out of office. That is very, very good. But what is being offered, is the big question. You know, I was excited about 1980′s election, 1994 and the year 2000, thinking that maybe conservative libertarian types in the Republican Party would make a significant change, but it never happened. But one thing that really disappointed me in the campaign is they weren’t really involved in personal liberty, the Patriot Act, searches without warrants, torture, preventive war and all the things going on. They never talked about foreign policy, and they call themselves fiscal conservatives and they spend a trillion dollars a year on managing an empire. I mean, you’re not going to solve your problem that way. You can’t tinker around with cutting food-stamps for the poor and think you’re going to solve this problem. We have to change our attitude about the role of government, we can’t be the policeman of the world, we shouldn’t be policing personal lifestyles, and we certainly shouldn’t be running the economy. We have to have those attitudes changed, or there’s no hope that we’ll solve our problems.

John Stossel: So, are you disappointed in your own son, because he has said, “My dad would eliminate half the Federal departments, I’m trying to nibble around the edges”.

Ron Paul: Well, he’s been challenged pretty well, and I think at times that’s fine, that’s what we’re involved in. But, you know, they came down pretty hard on him and he hadn’t even cast a vote yet, so I’m going to give him a break. I’m going to wait to see how he votes. And I think he’s going to do very well and I think he knows what it’s all about and he’s very principled and he knows the libertarian message. He knows what capitalism is all about. So I think we should remain optimistic about how he does.

John Stossel: Let me bring in two other people who know what capitalism is all about. Matt Welch is the editor of Reason Magazine. Kimberly Strassel writes opinion columns for the Wall Street Journal. So what do you guys say, what do the election results mean for freedom?

Kimberly Strassel: Well, I think it was a huge victory for the possibility of economic freedom. We got a lot of candidates who came in and were talking about the right things: Limited government, less spending, lower taxes. But now we’re going to see if they can actually put it into action, and that’s the hard part. And they’re going to have a very tough time, you know, I’ve already seen one of the interesting interviews that’s already come out with President Obama. They asked, “Well, what are you going to work with the Republicans on?” And he said, “Oh well, you know, I think that Highway Reauthorization Bill is a good first thing we can do”. So he’s going to be out there.

John Stossel: He’s going to win them over with pork for their…

Kimberly Strassel: Yea, that’s going to be the big trap: “We’ll see how committed you are to those limited government spending principles, or we can send back some pork to your district.”

John Stossel: Matt Welch, Reason Magazine?

Matt Welch: It’s always a good day when politicians get fired, and it’s even better when they get fired for the right reason, which many people did this week. And we’re getting to a place where we do have more of a “Dr. No” situation.

Kimberly Strassel: The word is repudiation, that was what this was about.

Matt Welch: Or refutation.

Kimberly Strassel: Refutation.

John Stossel: Dr. Paul, your thoughts on that?

Ron Paul: You know, I think there will be this big effort to work together and to compromise. And I think that is very dangerous. That doesn’t mean that you’re rigid and you don’t work with people, but if you work for compromise, which means the moderate approach is – somebody proposes an increases of a 100 billion and you settle for a 50 billion, and they say that’s a compromise. The only way we should work in compromise is if you propose nothing and somebody else wants a 100 and you settle for 50.

John Stossel: I was disappointed when I looked at the smaller results after the excitement over the House changing and some of these ballot measures; proposition 19 to legalize marijuana went down in California, restricting eminent domain abuse defeated in Nevada, getting bureaucrats in San Francisco to pay a little more for their own health benefits – defeated, reducing the sales tax in Massachusetts – defeated. There were others. It’s like the Libertarians are getting killed.

Matt Welch: Don’t forget prop 25 in California, too, which allowed to reduce the threshold to raise taxes from a the two-thirds vote in the legislature to 50% vote, which is …

John Stossel: And in California the vote to say, “Yes, we want to have these global warming rules that will make no difference, but will kill our economy. Yes!”

Kimberly Strassel: But John – think about where those are based. We’re talking about Massachusetts over here – one coast, California – another coast. I mean, these are not exactly bastions of freedom any more these days.

Matt Welch: And in the case of California and prop 19 in particular, the revolution didn’t happen, but it got started in a way. In 2012 we’re going to see legalization.

John Stossel: Prop 19, for these of you who don’t know, is to legalize marijuana.

Matt Welch: We’re going to see the propositions for legalization knocking through the front door liberty in Colorado, in probably Nevada, South Dakota in 2012. And it’s going to have a definite impact on, among other things, the presidential race in 2012 with these ballot measures.

John Stossel: Who are the new freedom leaders now in Congress who impress you? Dr. Paul, let me go to you first, besides your son, of course.

Ron Paul: Yea, we won’t be biased and pick him. But, you know, the one candidate now is Congressman Justin Amash from Michigan. Not much was said on the national level. I think he’s going to be one of my very close allies. So I would like to see him become a Congressional leader.

John Stossel: I’m embarrassed, I hadn’t even heard of him, so that’s interesting.

Kimberly Strassel: He posts all of his votes on Facebook as an explanation for why he voted the way he did. He’s a total-transparency candidate.

John Stossel: Radical.

Kimberly Strassel: Yea. The thing I thought was really cool was the number of people elected who were business candidates. I mean, people who have actually been out there in the world, they know how make …

John Stossel: Name some names.

Kimberly Strassel: Okay, you know, Steve Southerland down in Florida. He knows what it means to hire people; he knows what it means to fire people; he knows what it means to make payroll. You look at Rick Snyder from Michigan, who ran a computer company, he just became governor up there. Vicky Hartzler, who beat Ike Skelton, a big guy in Congress, and she and her husband own a small business. They sell farm equipment. Stephen Fincher down in Tennessee; this guy actually climbed off his tractor. He’s a farmer and ran for Congress and won. So real world experience, not the lawyers we normally see, but guys who actually know how things work and are going to bring that sensibility to Congress.

Matt Welch: I think it’s also interesting to follow people how they won in addition to what they ran on. And since the congressman is being polite or discrete about his son, I will say that the way that Rand Paul won is fascinating. He ran against the Republican establishment. Explicitly, Mitch McConnell tried to support his opponent in the primary election and he ran a principled Tea Partyish candidacy and won going away. Everyone said he was going to lose after he won the primary. We’ve already forgotten that the Tea Party screwed it up for the Republican Party. Well, that didn’t turn out to be true. He has power in his independence right now. And Marco Rubio down in Florida, when he gave his acceptance speech said that this is not a victory for the Republican Party – that was very interesting – this is a wakeup call to the Republican Party, a second chance, a lifeline. And people who were sounding these notes are people who we should be following.

Ron Paul: Thank you, David.

David Asman: Well, you know, first of all … we’re going to get to the Fed, I know our audience wants to hear about it and you want to talk about it … but I’ve got to congratulate you on Rand Paul. Your son just blew away the competition last night. Any advice? Did you call him up to offer any?

Ron Paul: Well, he called shortly afterward. He called awfully early and he was awfully surprised that it was so early. He didn’t have his shirt and tie on yet! Yeah, we talked a little bit, and we’re talking about what we might do. One thing he’d like to do is have a joint party on our swearing in day, which would be beneficial or very nice for both of us.

David Asman: That’s kind of nice, but beyond the parties, any specific advice on how he should govern?

Ron Paul: Well, yes. I suggested to him we have at least one specific bill that we introduce on the first day that both of us are there. And he says, “How about End the Fed?” So “End the Fed” or “Audit the Fed”, we’ll do something with monetary policy on our first day to make a point.

David Asman: Very seamlessly you make a Segway towards the next subject, which is the main subject of the day: what the Fed did today. You know, as important as these elections were – and don’t get me wrong, I think they were the most important thing that happened today – but seriously, what the Fed is doing scares the heck out of me, Doctor. I don’t know about you, and actually I do know about you; it scares you as well. But isn’t the Fed just monetizing this debt that’s being built up by politicians?

Ron Paul: Absolutely. And they continue to do it. But it’s not only the debt they buy, but when they grant loans to banks and have the banks buy debt, that’s monetizing debt, too. So the balance sheet of the Fed isn’t the only thing to look to find out how much debt is being monetized. So yes, it is. You said, “Enough is enough.” I say, “Enough is too much.” They’re doing too much of this for so long.

David Asman: We’ve seen it before, not just in the Weimar Republic where we saw super inflation, but also in the United States, when we saw in the 1960s and 1970s the “Guns and Butter” policy that a very compliant Federal Reserve, very much like Mr. Bernanke, kept buying up this government debt and it eventually led to very high inflation and it took us years to get over.

Ron Paul: Well, they get to be too arrogant for themselves. They think they can manage, they think they can endlessly print the money and create the credit and also that they can modify the prices going up. But you know what they don’t understand is that inflation – the increase in the supply of money and credit – is the disease. It causes the malinvestment and causes a pyramid of debt. And sometimes, or at least eventually, it will push up prices. They claim that they can inflate and yet if they don’t see prices rising, they’re free to do as much as they want. I think that’s an absolute fallacy because prices are unpredictable. There’s a subjective value in pricing. And they figure that they can control this. So the whole program is so fallacious. It’s completely wrong.

David Asman: They think that they can ease us into inflation and, of course, inflation is the best way for the government to steal money from the public, because it makes it much cheaper for them to pay off their debts. We get this bracket creep where people have to have higher wages in order to keep up with inflation. So it pushes them into higher tax brackets, so the government gets more money that way. It’s an insidious process. Well, let’s link what the Fed is doing to what happened with the election. Is there anything that you and your son, Rand Paul, and all the new Tea Party types, can do to rein in the Fed?

Ron Paul: Not under current conditions. You saw what happened when we tried to audit the Fed last year. They were strong enough to silence us in the conference and in the Senate and they’ll continue to do that.

David Asman: Hold on a second before you go further. How precisely did they silence you? I know you’re a hard man to silence.

Ron Paul: Well, we got it passed in the House, you know, I even got it on that disastrous bill. But I was willing to at least put it on that bill. But when it went to conference, the conference rejected it. So they had a lot of influence. They worked very, very closely with the Senate and the different people involved and they worked with the House too, some of the members, but they didn’t win in the House. But when it went to the conference, they were able to get it removed. And even if it had been passed, they’re not going to respond to it, just like they don’t respond to the Freedom of Information Act. So they’re very, very powerful, and they’re very independent. What really bugs me about this, though, is this is all of the books. You say, “What can we do in the Congress?” We’re actually irrelevant when it comes to … the Fed today decides, “Well, we’ll spend another trillion dollars to central economic plan”. They don’t have a right to do that, it’s morally wrong, it’s unconstitutional, and it’s economically disastrous. And the people are just starting to wake up, but they are waking up. And I think they’re going to hear from us here in the next couple of years more so than ever.

David Asman: Forgive me, Doctor, but it might even be before a couple of years. Your Republican colleague from Texas, Randy Neugebauer, apparently wants to hold hearings, wants to have you as the part of it, too, with the financial services committee. I understand that besides the hearings, in order to try to reign in the Fed, you were going to be on a new sub-committee on monetary policy. So it looks like the wheels are starting to turn on this.

Ron Paul: Yea, it isn’t a new committee, and it’s been quite a few years I’ve been bumped around and I didn’t get the committee when we were in charge before. But right now, I do believe that I will have the chairmanship of the sub-committee on domestic monetary policy. And that will give me a lot of ability to do more of what I have been doing. So that, and with the help of others, and with the sentiment around the country – see, the sentiment in the country had to be strong to get 320 co-sponsors of that bill.

David Asman: By the way, would you have the power of sepino? Would you be able to do what Fox Business has not been able to do, which is to break that information barrier of the Fed?

Ron Paul: You do have the power of subpoena, whether we get that far or not, I don’t know. I personally only believe in the power of subpoena for Federal officials and the Federal Reserve and people like this. I don’t like to see the Congress subpoenaing and bringing in private companies. I have a little reservation on that. But when it comes to the executive branch and the Federal Reserve, we should insist. So far, I think, in the past they have responded. They do come in and they have all their answers lined up. But I think there’s going to be a very, very serious effort because the attitude in the country has changed, the Congress is changing, we have the Banking Committee, and Randy Neugebauer is willing to help. So I’m optimistic that we’re going to hear a lot more about how the Fed operates. And, to me, that is what is important. I always assume that if you can get the Fed and show the people what’s happening, then we will talk about monetary reform. But, to me, it’s getting rid of this cartel, this secret cartel. It isn’t even nine people, I mean, it’s 1 person. They’re dictators and they’re economic planners and they’ve being doing it for decades.

David Asman: Particularly when they’re operating in tandem with the Treasury Department, which is essentially what’s happening as they monetize the debt of these free spenders. Doctor, stay with us because I want to bring in somebody who I know, you know and respect. A Fox News senior judicial analyst and Freedom Watch host, Judge Andrew Napolitano.

David Asman: Great to see you.

Judge Napolitano: Great to see you, too.

David Asman: Now, you share Ron Paul’s lack of enthusiasm for subpoenaing members of the Fed in order to get them to reveal stuff …

Ron Paul: No, no, no, I’m sorry. I would subpoena the Fed, not private companies.

David Asman: Oh, I see. Okay.

Ron Paul: The Fed and the executive, I’m sorry I didn’t make that clear.

Judge Napolitano: First of all, Congressman Paul, congratulations on your own reelection and on the triumph of your son, the Senator. I guess he sort of out ranks you now that he’s a Senator.

David Asman: Seniority wins in this case.

Judge Napolitano: I agree with everything Congressman Paul has said. I, too, have antipathy towards subpoenaing, for example, a baseball player and having him testify about the contents of his urine.

David Asman: Which they have done.

Judge Napolitano: Which, of course, they have done. I would not only advise the congressman to subpoena Ben Bernanke, I would advise him to serve what’s called a “subpoena deus tecum”, which is a fancy phrase for “and you shall bring with you the following”. And in that list of “the following” would be their checkbook, their ledger book, all of their files and records. They’ll refuse and then the House will present the subpoena to a Federal Judge who, hopefully, will enforce…

David Asman: Alright, here’s the thing, and Judge, I’ll go to you first on this. The Fed still describes itself as a private institution, even though what it does affects the money in all of our pockets. Whenever they print billions or trillions of dollars, it affects us. Hold on a second. What Randy Neugebauer wants to do, and what Ron Paul wants to do along with him, is to come up with some kind of legislation to force them to be accountable every time they print money. That is, they won’t have a free ticket to run those printing presses and devaluing the currency in our pocket. Does the Congress have that power?

Judge Napolitano: Well, the answer is yes. But this president would not sign such legislation. In fact, no president – unless the president were Ron Paul or Rand Paul or someone who truly understands the monster the Fed has become – would sign that legislation. But the subpoena power can be perfected without the involvement of the president with simply the use of a Federal judge to enforce it.

David Asman: But, Dr. Paul, we need more than information. We need to stop these guys from devaluing our currency, don’t we?

Ron Paul: Yeah, absolutely. But I think the information is going to get the attention of a lot more people. No, I agree with you absolutely; it’s a race because I think they’re going to self-destruct, they’re going to destroy the money at the rate that they’re going and at the rate that the Congress is reigning them in. But we have the authority, even though they call themselves private and people assume they’re private, they’re secret. It’s been created by government, it was created by the Federal Reserve Act, and we could, in one day, repeal the Federal Reserve Act. You know, that’s all we need to do – that would do it. I consider that a little more disruptive than what I want, but I still think that’s the ultimate goal.

David Asman: Okay, I know Judge wants it, but let me just ask one more question, do another round. Dr. Paul, you did have a lot of support in trying to get information out of the Fed, I think you had 200 members of Congress going along with you. With this new Congress that’s come in, aren’t you more likely to actually achieve the goal of reigning in the Fed? And might we live within the next couple of years to the point where we do see the Fed unable to continue to devalue our currency?

Ron Paul: Well, actually we had 320 co-sponsors, so we had a large number, well over the 218 that we needed. No, I think it’s going to be easier, I’m going to bring it up immediately. It will be brought up constantly in the sub-committee that I will be chairing. And yes, we’re going to get more support. We still have to think about the Senate, but I understand we’ve improved the Senate a little bit on this election, so I think we’ll get more support over there as well.

David Asman: Judge, is it going to happen in our lifetime?

Judge Napolitano: I don’t think it’s going to happen unless they have the votes to override the veto of the president. That’s where the subpoena power will work. But look, we’re on the same side here, we both want the public to know what’s going on. And I fully agree with Congressman Paul. A simple audit, a simple awareness on the part of the public of what the Fed has been doing, would be such a catastrophe to the Fed’s power. It would stop it in its tracts.

00:30 – Mark Elam (Ron Paul’s Campaign Manager)
04:05 – Ronnie Paul (Ron Paul’s oldest son)
07:40 – Carol Paul (Ron Paul’s wife)
09:14 – Ron Paul
15:55 – Rand Paul (live from Kentucky)
23:33 – Ron Paul
51:55 – Mark Elam

Ron Paul: Thank you David, good to be with you.

David Asman: So do you think that John Boehner gets it, that he really understands what this national rebellion is all about?

Ron Paul: You’re trying to put me on the spot, I don’t know, I can’t read into his mind, but my guess is that he better, I think he is. But that still doesn’t mean that he’ll be following through and that remains to be seen, but I think that goes for all the Republicans, the Conservatives did capitulate, as you pointed out. So the test is not in the election and like you mentioned, the test is really how we handle ourselves. But I don’t hear enough precise things that we would cut. I never hear that the military-industrial complex should be addressed, I never hear that the non-discretionary funding is all the same. I never hear which departments they really want to get rid of.

So it goes on and on, so you just can’t have a little tinkering on the edge. I think you have to deal with the philosophy of government as long as you want big government, you can’t tinker with the edges.

David Asman: Congressman, let us do, you and I, let us do what they won’t do. Let us talk specifics here, now I have thought that two departments could go immediately, even though everybody says “oh that’s too radical,” and you do hear it from some people like Joe Miller and others, and Rand Paul for example who’s your son, who’s also running in Kentucky. The Department of Education was started with the idea of spending a lot of federal dollars in order to improve test scores all over the nation and improve education. It’s failed in that goal. That’s one that I can see go.

Another is the Department of Energy, that was created in order to get us off the dependence on foreign oil. At the time I think we were 60% of our oil was foreign, now it’s something like 70 or 80%, so that also has failed. So there are two departments right there, but you hear a couple of candidates now saying “we can get rid of them.” Do you hear anybody sitting in Congress saying “we should get rid of them?”

Ron Paul: Not seriously, and of course, remember Reagan ran on that but he didn’t get much done after he was elected. But we also have to remember the Department of Education, HEW came in under Eisenhower and here the last chance we had with the Republican Congress and the Republican president, we gave them No Child Left Behind, that’s why the people are so disgusted and that’s why there is a Tea Party Movement because the credibility is on the line and I’m just hoping that we do what we’re supposed to do, but we’ll soon find out, but I can…

David Asman: The one instance that’s happened in the past couple of years have made me question John Boehner, I think more in any, is when Jeff Flake was trying to get on the appropriations committee and it was John Boehner’s appointment, it was his decision as to who would be appointed at that position as minority leader, and rather than putting Jeff Flake on, a guy who was against earmarks from the get go, he was against pork, he sort of campaigned on that issue, John Boehner put a porker from the South on the thing and left Jeff Flake out in the cold. That kind of told me that he didn’t get it back then. that’s why I’m wondering if he gets it now.

Ron Paul: Yeah and it remains to be seen and hopefully the pressure and the election that’s going on will change, I don’t think the Tea Party Movement’s been going unnoticed, but I also see signs that the Tea Party Movement which originally is very spontaneous is also now incorporating some very conventional Republican themes and they’re not dealing with some of the issues that I talked about two years ago.

David Asman: Will there be a fight for the position that John Boehner has as, or that he could have as speaker if the Republicans win, will there be a fight for the speakership?

Ron Paul: I don’t think so, I think, I’ve not heard about that, so I would be surprised if that happened and I wouldn’t know exactly the individual who might replace him or be in the position to do it. So I would suspect that if we win, Boehner will most likely be the speaker.

David Asman: Alright, what about committees? There are some really, talk about Ways and Means for example, the committee that writes most tax legislation decides the ways and means by which tax revenue is spent. Who do you think, do you think we’ll have new folks in there or at least folks like Paul Ryan who is really clear in his Tea Party-like ideas?

Ron Paul: I think Paul Ryan will have a major role to play, I don’t think they’ll push him aside, I think that he has proven himself and I think he will be very much involved. But I also think about and I don’t want to overbear you with this, but taxes occur through inflation too, so ways and means that are real important but if you run up debt and the government prints some money, the people will get taxed. So government is so out of control, it used to be said that if we weren’t in session the people were safe, it doesn’t hold, we’re gone, we’re not even going to go back hardly anymore this year, we weren’t there in August. But regulations continue, the spending continues the…

David Asman: Well and you mentioned…

Ron Paul: Keeps printing money…

David Asman: Inflation is one form of tax so are regulations, regulations add to the cost of doing business, that’s another, and we’ve seen just how many dozens or hundreds or thousands of new regulations in the past 18 months.

Ron Paul: And who passes those? The Constitution says “Only Congress can write law,” aren’t regulations law? And we have thousands and thousands of pages of these regulations written by the executive branch and then we have the judicial branch doing the same thing, they write a lot of legislation and the Congress is home worrying about being elected next year and not doing their job.

David Asman: Well Congressman…

Ron Paul: They renege and defer to the executive branch too often.

David Asman: Clearly it is a question of leadership and who takes the leadership role in the next Congress, but the overall question of leadership leading into 2012 is who runs for the Republican nomination? Are you ready to declare here on Scoreboard here and now that you will be the 2012 candidate for president?

Ron Paul: Not quite, not ready to do that, we have to find out who the first 20 are to sign up, they’ll probably be 20 or 25 who say, well at least that many will be thinking about it. No, in time it’ll come about and you know the issue that I’ve been very interested in and I think that issue is building, I think the dollar now is under attack and if we are anywhere close to a major dollar crisis, I know one thing: I’m going to want to speak out on it because I feel strongly on what we ought to do. And even today the Fed hints again “oh, we might inflate some more” and what happens? Gold jumps up $18, I mean this is…

David Asman: Bernanke is going in exactly the opposite direction of a stronger dollar, Ron Paul, so I did not hear by the way a clear rejection of the idea that you will run for president, you’re leaving the door pretty wide open.

Ron Paul: Absolutely, it’s wide open, but I have no committee, I have no precise plans but I’ve also have not said “no I don’t want to do it, I’m not going to do it.” Under the circumstances I am very reluctant because anybody who really wants to be president under these conditions maybe they ought to be examined first because of the conditions, I mean it is horrendous…

David Asman: I understand.

Ron Paul: The problems that we face and so therefore…

David Asman: It’s like running for the governorship of California or New York, I think it’s the same situation.

Ron Paul: Yeah, [...]

Ron Paul: Thank you.

Tom Sullivan: Lets start with the Republican revolution that everybody is talking about since Christine O’Donnell won in Delaware. You’ve been kind of a revolutionary guy within the Republican Party, what do you make of it?

Ron Paul: Well, I don’t give a lot of credit to the Republican Party for this. I think they’re aware of what’s happening in the country. There’s a revolution going on at the grassroots, and that’s the Tea Party movement. And they want less government, so Republicans are saying, “Hey, that’s what we’ve been talking about, let’s join them”. So I see the Republicans joining the Tea Party movement more than the Republicans leading the Tea Party movement.

Tom Sullivan: Well, you know, a couple of years ago when you were running for president, when you first came on to the national stage, a lot of people called you a gadfly. But now, they’re taking you much more seriously. You were kind of the first voice of a lot of these protests, if you will, but you were protesting from withing the halls of Congress. Are you going to run again for president?

Ron Paul: Oh, I don’t know. I get asked that question a lot and I think about it a lot, and I haven’t ruled it out. But I’m far from ruling it in, too. I think depends on what’s going on next year. I may do it, I may not.

Tom Sullivan: Okay. Well, you got a lot more people listening to you now than you did two years ago. The economy: I mean, jobs and jobs and jobs. And people are looking to Washington and saying, “First of all, there’s nothing that you can really do other than set the stage.” But is it really top priority? People on Washington are working on everything but jobs. They’re talking about it.

Ron Paul: Yeah, and I think they have a confused understanding of economics, because somehow or other, they think that more debt and more inflation and more government spending and keeping the printing press running, will solve the problems. But that’s what has gotten us into the mess. But what they don’t understand is that you have to have the liquidation, the elimination of all the mistakes, all the excessive debt and all the malinvestment, which we’re prohibiting, just as we did in the Depression. Rather than following the 1920/21 depression which lasted one year, the GDP went down rapidly, people went back to work again. So the majority here in Washington certainly do not understand this and they won’t allow the correction because it’s too painful. They don’t want the operation, they’d rather die with their disease than have the operation. Because you have to cut back, you have to cut spending, you have to deregulate, you have to cut taxes massively, and you have to understand where capital comes from. Capital comes from savings, it can’t come out of a printing press. And until we understand that, we’re not going to have jobs, just government spending money on some work project. That takes away from productive investments, that’s why we’re not building car plants and we’re not having productive effort, because the money and the resources are being drained into temporary job making, which is not lasting.

Tom Sullivan: Well, you know, in Congress you’re supposed to represent us, you’re supposed to reflect us, you’re supposed to reflect your congressional district. With all these new names – and there are a whole bunch of new names this past Tuesday that I’ve never heard of before. If you get a crop of all-new people, a bunch of new people in Washington, in Congress, do you think that will change business as usual in Congress?

Ron Paul: Not necessarily. It depends on what they think about on economics. I think it definitely is going to change, because they’re challenging the status quo of big government spending and centralized controls. And what the grassroots are actually rejecting, whether they know it or not, they’re rejecting Keynesian economics. Now that is a revolution. But you have to replace it with something, and for me, it’s replacing it with free market economics of the Austrian school: sound money, getting rid of the Fed, audid the Fed. All these things are important. I think if there is a big takeover, a big change, if they’re not going to have more surveillance and transparency of the government and more invasion of our privacy, the Constitution should protect our privacy and government should be totally open. Today government is totally closed, everything is done secretly, you can’t even evaluate, you don’t even know what’s going on. And the people are being watched; cameras are everywhere. Every financial transaction, 1099s for $600 transactions. I mean, that is the revolution that has to come and the seeds have been planted, it still needs some guiding.

Tom Sullivan: Alright. So, the seeds get planted, and a bunch of people elect a brand new member of Congress, and they can run in. Now, you’ve been there a while, you’ve seen freshmen roll in every two years. And yet, I had a member of Congress that was in a leadership position, tell me years ago that the only way you can be in a leadership position in Washington is if you have a safe seat, so you don’t have to spend a lot of time in your district. You spend a lot of time basically managing your leadership position. So unless the leadership changes, does it really matter if we change half the Congress?

Ron Paul: Well, the leadership changes and the Congress changes only when the people change and the attitudes of the people change. The Congress and governments, whether they’re dictatorships or democracies, they reflect the people. When the people get fed up, they throw them out. The Soviet Union ended because the people finally got fed up and didn’t work any longer. And this is what we have to concentrate on: the attitudes of the people are changing and eventually it will be transmitted to the Congress. I mean, they’re already recognizing that the grassroots movement known as the Tea Party movement is very significant. So many are saying, “Hey, what are they saying, what are they saying? How do I stay in office?” and that’s the way it always works. Very rarely do you come up with truly new ideas and true changes from the politicians who’ve been around for a long time. It comes from the grassroots, it comes from an understanding of economics and the purpose of liberty. You know, right now, I think, one of the neatest things happening is that you don’t win elections now by saying, “I brought the bacon home. I’m going up there and I’m going to get more stuff”. Nobody believes that anymore. So there is a revolution going on. It’s the people who say, “Enough is enough. You can’t trust the government, we want to return it to the people, we want you to have jobs with a better economic system, and we want you to spend your own money.” Now that is quite a bit different than sending the errand boy to Washington. And that changes when the people change, and I believe the people are changing.

Tom Sullivan: I think so, too. I think there is a change going on. You know, you’re a baby doctor, you’re a medical doctor.

Ron Paul: Right.

Tom Sullivan: How did you get so much… I mean, you really know every chapter and verse of history of the Federal Reserve and the gold standard. How did you get involved and how did you learn your economics?

Ron Paul: Well, it was in parallel with medicine. I loved medicine, I delivered 4,000 babies over the years. But in a parallel way, even in the 1950s and 1960s I started studying economics. I came across Hayek’s book, “The Road to Serfdom” and I read all of Ayn Rand’s stuff and von Mises and Murray Rothbard. I found economics fascinating and I was particularly interested in the monetary standard. Then I related the monetary issue to big government, because if you can’t have a Federal Reserve, a central bank that monetizes debt, you can’t have all this mess because you can’t tax and you can’t borrow that much money. And today, though, it is coming to and end, and I just think it’s great.

Tom Sullivan: So what do you think of the economy? When are we going to turn? We know it will turn someday, somehow. What’s your prediction?

Ron Paul: It’s going to get a lot worse. I think we’re barely in 1932, during the Great Depression, and they call this one the Great Recession. But this is much bigger than anything in the monetary history of the world. Never has a world economy been run on a total fiat currency, controlled by us, of course, by the dollar. And it has horrendous malinvestment and debt that has to be liquidated. And so far, nobody wants to do that. They want to continue the process, so it’s going to go wild. We’re going to continue to make our mistakes. We will survive it, but when we do, we’ll have to return to sound money and say, “We turned off the printing presses, we’re going to allow the people to keep what they earn and take the jobs that they can get at the salary that they can find.” When that attitude changes, we can go back to work rather quickly and get back on our feet.

Tom Sullivan: We’ll be watching. Congressman Ron Paul, thank you very much.

Ron Paul: Oh sure, I think she can win. I think she’s going to have to work very hard. She has the roughest job of all the Tea Party candidates because she’s in a more liberal state; it’s a much more difficult job than my son has in Kentucky, or Angle has in Nevada. So no, but she can win, there’s a lot of unhappiness in this country and for that reason, the numbers are just coming together. Democrats are disillusioned and are not going to show up, the Republicans are. And the Tea Party People are added on to the Republicans because a lot of them haven’t been involved before. They’re independents and it adds to it; it isn’t taking away from the Republicans, if you have a Republican base then the Tea Party People add on to it. That’s why she has a very good chance.

Anderson Cooper: So the Democrats tonight who are saying “Wow, this is great for the Democratic Party”, you think they’re measuring the drapes too early?

Ron Paul: Well, if I talk to Republicans and they sound a little too cocky, that’s what I’d tell them. Because I don’t think anybody should get… they should wait and see. They should always run — I used to run track, and I always assumed somebody was going to step on me if I didn’t keep running. So I think that’s the way it is in politics, you have to keep running and not assume you can glide to victory.

Anderson Cooper: It’s not over until it’s over. A number of Tea Party activists who I’ve talked to in the last couple of days — and before this primary — were saying “Look, even if she can’t win, it’s still important that she won and we don’t really care if she can’t win; it’s important to make a point as one to vote your principles”, do you think that’s true? Or do you think it’s more important to get a safe Republican seat in the Senate?

Ron Paul: Well, I think both are true. I mean, the fact that she won is very important — we should be glad about that — but also she should go for the winning; but I guess you’re suggesting that, “well if you knew she couldn’t win, therefore you should cop about and bend your principles.” Well, I’m not one that would endorse that very easily, because my goal in life has been to nudge people over to a more principled position, where there has to do with foreign policy or civil liberties or economic policy, so that has always been my goal. So I think winning along with those goals and those principles, of course is the ideal situation.

Anderson Cooper: Is there a room in the Republican Party today for a “Mike Castle”, who would someone call a moderate Republican or what does some in the Tea Party would say just a liberal Republican, or a Democrat who just calls himself a Republican… but I mean, is there a room for a Mike Castle in the Republican Party today?

Ron Paul: Sure. Probably it depends on the state; it’s going to be much tougher, because we live in revolutionary times. What we’re witnessing today is change coming from the grassroots. I have noticed over the many years that Presidential candidates always campaign on change and then we never get it. But real change only comes philosophically from the grassroots, when the people endorse certain views or condemn certain views. And that’s what’s happening this time — and this only happens once, maybe in two or three lifetimes, it doesn’t happen often.

Anderson Cooper: And you really believe this is a revolutionary time? That this is…

Ron Paul: Oh yeah, but it’s economic, I see everything in economic policies; and that’s what drives everybody, that makes people so angry and upset. You think if there were no economic problems that this would be going on? But this is the end of Keynesianism. Keynesianism has been with us for 70 years and its failing! And even the liberals know its failing. It’s sort of like a revolutionary end of an age with a downfall of the Soviet System. It finally just didn’t work, you didn’t have to fight there anymore. it didn’t come from the leaders, it came from the grassroots; and that’s what’s happening right now. The grassroots knows that government fails. Even today Statistics says, “Hardly anybody trusts government anymore”. And for a good reason, it doesn’t function; it doesn’t have the right system anymore.

Anderson Cooper: Those who say, “Well look, what about actually getting things done in Washington?”, I mean, that compromise is essential in politics, that no matter what, you need at some point to compromise with someone on the other side of the aisle or someone within your own party to effect change; do you think that’s true? And if so, do you think these new voices, those who have been elected by the Tea Party and their supporters, do you think they’re going to be willing to compromise on things?

Ron Paul: Well, I don’t think we have to compromise. I think you build coalitions. I work a lot with the Democrats on foreign policy and civil liberties, so I think coalitions are very good. But compromise, yes: If I want to eliminate the income tax and the other side wants to reduce it 50% — I would say, well, if it’s reduced 50% that’s not bad, that’s a good compromise. But if somebody else wants to double your taxes and somebody says “Let’s not double, let’s just increase it by 25%”; no, I don’t deal with those kind of compromises. Always compromise with people in your goals, which to me, is perfecting liberty. Increasing individual liberty and the free marketplace; when you compromise moving in that direction and working with coalitions, that’s quite a big difference. But if you work coalitions — I’ve worked with various ones like Barney Frank and Dennis Kucinich and others in trying to promote an agenda — and this is seen as compromise, it’s not exactly as compromise, but I think the people in the country see this as good; because you can work together and find out what you agree on. I think the war issue is a great issue, and the Federal Reserve has been something. I had tremendous support from Democrats, I had 320 members of Congress signed on to that bill; so that is what I think is important, but I didn’t have to compromise my principles.

Anderson Cooper: As a single member of Congress though, given the anger that is out there… I mean, obviously you have a lot of support and sort of a lot of credit among Tea Party activists, but do you think some Republican Congresspeople are concerned about being seen as too moderate, as being seen as too willing to compromise?

Ron Paul: By the Tea Party people?

Anderson Cooper: Yeah.

Joe Bartlett: Alright, that’s Congressman Ron Paul. He wants to know just how much gold we have there at Fort Knox behind our currency. Congressman Paul is with us this morning here on the John Gambling Show with Joe Bartlett, Congressman good morning…

Ron Paul: Good morning John, nice to be with you.

Joe Bartlett: Is there any doubt that we have enough gold at Fort Knox to back up our currency?

Ron Paul: They don’t even pretend that that’s the case, they gave up on that a long time ago. That’s what they gave up on in 1971 when they closed the gold window. We had almost 700 million ounces of gold and we gave 490 million ounces away at $35 an ounce. And of course it was worth a whole lot more. So we’re down to 262 million, I guess if you tried to just protect M1 which is cash and checking account money, I mean gold would have to be, who knows, I’ve had to do the calculation, 5 or $10,000 so we don’t have enough gold to back it.

But it’d be nice to know how much gold we have, because the paper I’m convinced will eventually quit working. Because all we’re doing is printing money and creating new money and not too long ago during the midst of the financial crisis the Federal Reserve just within weeks created $2 trillion and they’re thinking about doing it again and so it’d be nice to know if we have the gold and they shouldn’t hesitate to do this but it’s been a long time, nobody is quite sure couldn’t give me the information when we’ve had a real audit in the past.

Joe Bartlett: Then how does that work, I mean, do we just have gold, do we put more gold deposits in there to back it up or it’s…

Ron Paul: Oh no, it stays the same and, gold isn’t allowed to go up in dollar price by the Central Bankers because that reflects on the value of the dollar and that’s why in the 1960s they wouldn’t allow gold to go up but that meant the dollar was much weaker than the markets perceive. Right now the Central Banks of the west, Europeans, they were very open about it, they would sell gold and they would try to knock down the price of gold and we pretend that we don’t participate but my guess is that we probably do, either indirectly or directly. I mean, they can manipulate futures markets, so we should know about this and I think since it’s the responsibility of the Federal Government to have a sound currency it’d be nice to know if we have any real money. Paper money actually is illegal under the constitution so it’s a responsibility of the Congress that they’ve neglected for a long time.

Joe Bartlett: What do you think we’d find if this were to be done?

Ron Paul: There’s a lot of people who believe it really isn’t there, I don’t take that, I think it’s, I think the gold is probably there I think there’s some gold that the quality might not be as good as they claim. There may have been some commitments because a lot of banks have loaned out their gold or guaranteed loans, so some of that may have gone on, but it’s really hard to say and that’s the reason I think it’s so important that we look into it.

Joe Bartlett: Alright Congressman, let me ask you about the midterm elections that are coming up in November. Everybody is predicting a big huge Republican sweep, Republicans winning the house, potentially even the Senate, what’s your take on what we might see in November?

Ron Paul: Well I think I agree with that, the sentiment is even getting stronger for the Republicans so I think this is good news not because I’m a diehard partisan but I think anything that put a break on what’s happening in Washington might be helpful to the psychology of the country and to the markets. I think people fear endless regulations, endless spending and endless debt. My biggest concern is the credibility of the Republican Party. We had our chance and introduced the country into some of this mess that we have because we ran up deficits too.

So it’s a real challenge for the Republicans whether they’re going to live up to it, but I predict they’re going to do a pretty good job because in opposition they have been voting much better, and if we have control of the House, they’re going to resist and they’re going to not be so anxious to accommodate the president.

Joe Bartlett: But don’t we end up then with a stalemate or do you think that the Republicans can drive policy if they have both House sets of Congress?

Ron Paul: Well, no they can’t because there’ll be vetos but a stalemate is better than the onslaught, so it’s a heck of a way to look at it. But it’s a benefit, if you’re breaking it and then maybe they’ll wake up. Now Clinton did a better job once he lost control of the House and the Senate. He was more willing to work. Most people including myself we’re little skeptical of whether or not our current president will be willing to work along, maybe moderate his position to maybe not want to raise taxes and maybe want to back of a little bit on his agenda.

But if we get the House and the Senate and we pass a bill to remove this medical mandate, at least give people a freedom of choice, then he’s probably going to veto that, so that’s the dilemma we have. But the message has to be heard, the message has already been heard in the primaries, but I like the idea that it’s the independent type of Conservative and Republican that’s winning a lot of these primaries and that’s sending a strong signal as well.

Joe Bartlett: Congressman Ron Paul with his, I know you’ve been outspoken on this Mosque issue here at ground zero and we follow the rhetoric here obviously every single day. The latest coming from the Iman saying that this is an issue that is going to demonstrate whether Muslims get a fair shake in America, I don’t buy that and I know you support their right under the Constitution to do this. What do you make of all of the debate though?

Ron Paul: Well I think the debate is the most important thing, I don’t think anybody really cares about the building because there’s a Mosque nearby and there’s this community centers, so this is propaganda from the very beginning and my take on this is that we’re in a lot of war mongering in the Middle East but we have to have an enemy, so the enemy has to be Islam and not Al-Qaeda so it makes a big difference, and this is an attempt to continue to build up the hostility toward Islam is per-se, and therefore the people who like what we’re doing in Middle East are then justified.

Joe Bartlett: Interesting, I read the piece that you wrote about the end of combat in Iraq is pretty interesting, that it really isn’t the end of combat because we have troops there.

Ron Paul: Yeah, with just 50,000 plus 100,000 contractors and that number is supposed to up, there was a real neat cartoon this morning in the paper that just sort of fit what I was saying because it showed the troops leaving but they had a sign pointing toward Afghanistan, they’re not really coming home so it is a bit of deception. I mean, we’re going to keep the biggest Embassy in the world in Baghdad, we’re going to have many many military bases and the people of Baghdad, you take the guy that’s, the one with the most political power is Al Sadr and he’s a strong, strong nationalist aligned with Iran.

So I would say that we really haven’t won a heck of a lot, I think we probably have lost on this because this whole process benefits Osama Bin Laden because he now has Al-Qaeda in Iraq, Saddam Hussein would never have allowed that and he, Saddam Hussein was an enemy of the Iranians, so I think geopolitically we’re in much worse shape.

Joe Bartlett: Congressman Ron Paul, always a pleasure to talk to you, thanks a lot for your time this morning.

Ron Paul: Thanks for having me.

Ron Paul: Well, I think it will be a mixed bag and I think even though, let’s say, half of the Tea Party candidates win, it’s a pretty big deal. But no, they’re not going to win all their support – you know, everybody they support. I think it will be pretty mixed.

CNN Anchor: And let me ask you about one of the races up in Alaska. Sarah Palin has weighed in, throwing her weight behind the challenger in that race, Joe Miller, running against Senator Makowsky. And I’m just wondering, what do you make of Sarah Palin, Newt Gingrich, Mike Huckabee; some of these big name Republicans sort of weighing in in individual races across the country. Do you think that’s a good idea?

Ron Paul: Oh, I think they’re pretty good. I do it, but I’m very, very selective. I just have trouble finding the candidates I really get enthusiastic about. I want candidates that have a real Constitutional take on foreign policy and civil liberties, the drug war and also on economic matters. But no, I think for them to weigh in, but I want the people to sort all these positions out, so that they know exactly what is being supported, what positions are being supported.

CNN Anchor: Do you think it’s meddling for somebody like Sarah Palin to go into a contest like the one up in Alaska and throw her weight behind the challenger there, or perhaps another state like Georgia where she gets criticized somewhat for doing that down in Georgia?

Ron Paul: No, I wouldn’t call it meddling. I think our presidents have done this for many, many decades, if not ever since the beginning of time, the beginning of our country. So no, I think it’s pretty traditional to do it. Maybe some people overdo it, and exaggerate and do it just to build up chips and get people to support them later on. But no, I wouldn’t use the word ‘meddling’, but sometimes I guess they get overly involved more than they should.

CNN Anchor: Let me ask you about one of the issues that’s come up during a lot of these contests all over the country, and that’s the proposed Islamic center and Mosque near Ground Zero. You came out very much in favor of that project, mainly along libertarian lines, saying that property rights and freedom of religion rights are a big part of this. And on your blog you wrote that opposition to the mosque is all about hate and Islamaphobia. What did you mean about that?

Ron Paul: I think the people who are organizing that is one thing, but now that every candidate gets asked that question, I don’t think you can put them all in the same category. But the organizers, the woman that put this out on her webpage and the people that picked up on it and preached this, yes, I think that they want to continue the hatred towards Islam rather than Al-Qaida in order that justify their foreign policy of intervention and nation building and occupation, because if you don’t have an enemy that you despise, it’s hard to get that support.

But you know, I think it’s turned into another issue as well, maybe your station has reported on this Imam and he seems like a pretty reasonable person. So if he’s a reasonable person that worked for Bush as well as Obama, and he’s making inroads because he’s trying to bring Christians, Jews and Muslims together. So if that would happen, there wouldn’t be as much hatred over there. So I think maybe there are some now that are trying to destroy him and his reputation, and I think that’s going to backfire. It sounds to me, and I don’t know the individual, the Imam, but it sounds to me like he might be a very reasonable person. So in order to perpetuate this foreign policy, not only do they have to perpetuate the hate towards Islam, they have to really destroy somebody who might be bringing the religious factions together.

CNN Anchor: And what do you have to say about former House Speaker Newt Gingrich, comparing this Mosque near ground zero to having Nazi symbols outside of the Holocaust Center. What did you think about that? Was that an appropriate comment, do you think?

Ron Paul: Well, I think he’s overstepped his bounds and I think he’ll suffer the consequences for it, because it was over the top. I mean, to compare this Imam to Hitler and the fact that there are mosques within that area already, and that he ignores the fact that there are strip joints in this area, and he has to go after an Imam that is trying to bring people together, yeah, I think for a bright guy like Newt Gingrich on some of the issues, I would say, politically he’s made a major mistake.

CNN Anchor: Do you think he should apologize for that comment?

Ron Paul: I don’t believe in these apology games. He’s going to have to apologize to himself. He’s going to be sorry, but being sorry about what he did and recognize it will be a much bigger deal than if the media comes and badgers him in into making a public apology. But maybe he’ll come around to that, but it should be spontaneous and earnest but not as a reaction to badgering by the media: “When are you going to apologize?” I never quite thought that was good.

CNN Anchor: What about your son, Rand Paul, who’s running for that Senate seat down in Kentucky. He’s taken a slightly different position than you and has essentially come out against the project. Is that causing any friction in the Paul family?

Ron Paul: No, as a matter of fact, I really haven’t spoken to him about it. But I think he’s in a category of most of the people who are running for office who get pushed, and rightfully so, by their opposition or by the media and say, “What is your position, do you want it or not?” and he’s taken a different position. But that isn’t my concern as much as the people who started on the website and picked it up and the politicians who are trying to gain a lot of points. And they’re active in promoting this mainly because they believe in an interventionist foreign policy and they want to make sure that Islam is blamed rather than Al-Qaida. And so yes, I think it’s okay to have a disagreement on exactly what we should do with the mosque. As a matter of fact, my emphasis is not on should the mosque be built or shouldn’t it be built, that is very secondary. Everybody recognizes on private property and a place of worship… we’re supposed to protect that.

CNN Anchor: Your problem is more in playing the politics, you feel that some of these people are playing politics with this is what you’re essentially saying. What about the president, did he make a mistake weighing in on this controversy, do you think? Did he inflame this controversy by weighing in on it?

Ron Paul: You know, some people are saying this, especially on the conservative side, but actually I didn’t think his statement was all that bad. I thought it was conciliatory in trying to bring people together. I mean, he and Bush both hired the Imam to go over and promote bringing the religious factors together. So no, I wouldn’t go out of my way to condemn him for saying that. Now politically he may have stirred the flames, because that just gave more ammunition to the conservatives who like to pick anything he says and make a political issue out of it. But I don’t think it’s the right one. I’d rather pick issues like too much spending and why he’s expanding the war in Afghanistan. But since too many conservatives like the expansion of the war in Afghanistan, you know, they are willing to go and attack him because he might send a message that they disagree with. But no, I don’t think his statement was all that bad.