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March 1, 2024 - Ron Paul Liberty Report
54:48
Ron Paul Lecture The Great Enabler The Rise of the Federal Reserve and the Growth of Government

Watch this great throwback of The Man him self for getting it right 2 decades ago.

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Time Text
Introducing Dr. Paul 00:03:44
Good afternoon ladies and gentlemen.
I'm Lydia Mashburn, Policy Director for Chairman Paul's Subcommittee on Domestic Monetary Policy.
So today's lecture is going to be the great enabler, the rise of the Federal Reserve and the Growth of Government.
Congressman Paul has sponsored six of these T-Talks, but this is the first one that he is actually presenting himself.
So I'm delighted you all could be here today for his lecture.
We also have a special guest today to introduce our speaker.
He is one of the leading advocates for limited government in the Senate.
He is the sponsor of the Audit the Fed bill in that chamber, and he is the junior senator from the Commonwealth of Kentucky.
So without further ado, please welcome to introduce Dr. Paul, Dr. Paul.
Thank you.
Thank you.
I'm glad everybody could come out today.
And we've been trying to have a lot of different speakers, and we have had some different intern speakers throughout the summer, but I was excited to be able to get my dad here today.
And it looks like the crowd, we've got a good crowd and a good turnout.
So thanks for coming out today.
You know, many people have written many things about my dad, but I think there are a couple of things that could sort of summarize who he is.
One, lobbyists don't bother to come to his office.
If you work in his office, one of the extraordinary thing is the lobbyists don't even bother to come by.
And I think that's a good thing.
He's decided how he's going to vote.
He's decided how the voters in his district want him to vote and what he wants to do with this time and with his energies here.
One of the reporters from the Wall Street Journal wrote when he came back in 1996, they reported that his refusal to compromise was legendary.
And I think that's something that folks will remember about my dad is that throughout the years, many times he stood alone, whether it was voting alone against things that his party was supporting or the opposite party.
And in fact, I think many would say he voted on principle regardless of which party introduced it.
It's important that we have folks who are willing to do that because we have too much of what I call empty partisanship up here.
People who are simply for something just because their party's for it or against something just because the other party presented it.
And I think what you'll find if you listen to my father today, you'll find that what you get is something that is beyond partisanship.
And without any further ado, I'd like to introduce my father, Ron Paul.
Thank you.
Thank you very much.
And I appreciate you coming out.
And I appreciate Rand coming over.
You know, senators are very busy, and he might have to leave, but he might not want to hear this talk again.
He's probably only heard it 10, 15, 20 times, so he may decide to leave.
But, you know, they were kidding me a whole lot when we were sworn in last January.
You know, we were sworn in together, and somebody, I think it was Cavuto, asked me, he said, boy, he says, what does it feel like to you be in the House and your son is now a senator?
And I told him, I said, if he does a real good job in the Senate, someday he might even make it to the House of Representatives.
But I don't think he's working on that project.
He's working on being a very good senator.
But today we're going to talk about the Fiat.
And those of you who have attended some of our other meetings on this, we've talked a lot about monetary policy in the Fiat.
And it is a bit of irony because as I leave here, I will go to the floor and we're going to vote on Audit the Fed bill.
Audit The Fed Bill 00:10:59
And this wasn't planned that way because we didn't know when the bill was coming up.
So ironically, we will visit here with you those who have been interested in this issue as well as we'll have the audit the Fed bill up.
It's under suspension, which means that we have to have two-thirds of the vote.
And that's even more of a challenge, but I believe we can do that.
We have 272 co-sponsors, but the actual vote will come tomorrow.
I mean, it comes tomorrow after lunch.
And it'll be something well watched.
And a lot of people already have declared, you know, since I am leaving the Congress at the end of the year, that, and they've used the word, futility.
He's been doing this for all these years.
And he won't get this bill passed.
The president won't sign a bill.
Nothing good has come of it.
Well, I look at it on the positive side.
I compare it to 10, 20, 30 years ago, and nobody cared at all about this issue.
But inevitably, I always believed that it would be a big issue.
And for you, excuse me, that's a water.
I always believed inevitably that it would become a big issue.
It's getting bigger all the time, but it's going to get a lot bigger because we embarked on a grand experiment in 1971.
And it was the breaking down of the last vestige of a gold standard, a worldwide gold standard.
And we embarked on something different than ever happened before, and that was a paper standard worldwide run by a single currency, which was the United States dollar.
In 1945, when the Bretton Woods was set up, which was a pseudo-gold standard, a real gold standard would be gold coins, redeemable currency, and the money authorities would always be held in check.
So in 1945, when they announced, well, we don't need to have gold coins.
We won't even allow the people to own gold.
American people weren't allowed to own gold.
But even at that time, the famous Austrian journalist and economist, Henry Hazlitt, who befriended Mises when he came to this country, made a prediction.
He says, this isn't going to work either.
He said the Bretton Woods wouldn't work, and he was right.
It finally broke down in 1971.
But the same type of economist, the Austrian free market economist in the 1970s, not only did they predict the event of 1971, at that time they predicted that this would lead to nothing but trouble.
Big government, big spending, huge debt, and the longer it lasts, the bigger the problem will be.
And that was when, in the early 70s, I decided to speak out.
Not because I had much thought about coming to Congress, because quite frankly, I thought talking about the Federal Reserve and the gold standard was a little bit esoteric, but it's not esoteric at all when you realize that if you have a concern about personal liberty, if you have a concern about needless war, if you have concern about runaway welfare spending, you can't ignore the Federal Reserve.
So I was anxious to speak out, and I ran the first time in 1973, and the person I ran against, I didn't win that time, but the gentleman I ran against then resigned and won a special election.
So it was sort of one of those things in politics, it's being at the right place at the right time.
It wasn't so much that in the 1970s anybody really, really cared or was thinking about it.
But events have transpired over all these years.
If you can look at economic charts, look at them from 1971 on.
They're unbelievable of what happens when you see the size of government, the problems that we have, the inflation rate, the value of the dollar.
It's all like this, and then things go exponentially.
And I think the greatest threat comes when you have a government that endlessly finances through counterfeit money, it's an attack on personal liberty.
So there's a lot of reasons.
to be interested in the Federal Reserve and studying the Federal Reserve.
There are economic reasons, there are historic and constitutional reasons, there are moral reasons, but it's the growth of government that is the really the big issue.
And when you look at it, the American people have been so complacent.
So we have had a society for these many decades where the people actually want bigger government.
People always complain about the Congress, and they should.
I've done a little bit of that myself.
But believe me, Congress reflects the people's views.
The reason we are going to debate audit the Fed bill isn't because all of a sudden there's an enlightenment on a desire here in the Congress to have monetary reform.
It's because the people of this country found out that it was an important issue and they called their congressmen and they indicated that we should have more transparency of the Fed.
And this, to me, shows that government is a reflection of what the people want.
And even in the extreme case, when people really, really get sick and tired of dictators, they usually get rid of them.
Even the kings of old were limited to the support of the people.
Sometimes it's frustrating it doesn't move more quickly.
But the attitudes are changing, and I think this is very, very good because there's so many individuals, especially young people today now.
I mean, high school kids and college kids coming in and telling me about studying and reading about the Fed.
And I tell them, I said, how old are you?
Some are 14 and 16.
I said, I didn't even have the vaguest idea about what was going on when I was your age.
But this to me is very encouraging.
And this is why, of course, there's a lot more attention.
But we're in a crisis now because we have facilitated the growth of big government.
If a country wants to go to war, in our country we're supposed to have a declaration of war, we're supposed to have the people behind it, and we're supposed to know who the enemy is and what has to be achieved to win the war.
But inevitably, throughout history, even in the old days, they almost always financed wars with inflation.
You know, they'd either steal money or clip coins or dilute the metal.
Today we just print the money.
Certainly in World War II, a tremendous amount of monetary inflation.
So if you happen to be on the side of saying we have way too many wars and we go to wars carelessly, not only do we have to restrain our executive branch, we have to restrain the Congress for financing these wars and also you have to restrain the Federal Reserve's willingness to finance the war.
If you did not have a Federal Reserve either to finance the wars or the welfare state, what would happen?
All of a sudden, interest rates would go up.
It would go up, up, up, and the politicians would have to say, hey, we can't borrow everything out of the economy.
Interest rates are too high.
And it would be a natural restraint.
But when the Federal Reserve can fool the people for a long time and say, even if there's no savings, we'll pretend they're savings.
Will pretend that capital, the capital that you need to make investments, can come out of a computer.
And they've been doing this for a long time.
But the crisis I think that we're in the midst of is probably not even 50% on the way through because nothing has changed.
Monetary policy hasn't changed.
Spending hasn't changed.
We're doing the same thing.
We're spending and monetizing, expanding the size of the government.
The debt is increasing.
And there's really, there's no, no attempt at all to cut anything.
The Republicans pretend they're going to cut, the Democrats don't even pretend.
And, you know, and the spending, and the spending continues.
So there's a pretense, of course, but if there is a cut, like this whole program of sequestering money and spending, well, guess who's opposed to following that rule that was passed by both houses, you know, Democrats and Republicans?
They're the ones who want to eliminate it.
There's no way that they're going to go through with that.
They're going to spend more money because if you don't put more and more money into the military, then they say you're, oh, you're not supporting the troops and you're un-American and you don't want to have a strong national defense.
The truth is essentially opposite of that.
So the spending, it looks like it hasn't slowed up.
So how does this all come to an end?
If the Fed is the facilitator and allows this to continue, how does it end?
They're going to keep doing it, and they are doing it.
Interest rates are real low.
So the world governments and other banks are taking the money.
It's going to end when price inflation rears its head.
It's really much higher than the government admits.
Interest rates start to rise and foreigners won't take our dollars so easily.
And then the end stages of a currency destruction can come rather rapidly.
It's been slipping and sliding.
The value of the dollar, I mean, if you measure purchasing power and however you want to measure it, it's been slipping for a long, long time.
But currencies at the end go very rapidly because confidence is lost.
But nobody knows when that comes.
One thing in Austrian economics, they can project trends pretty well.
They can have basic economic laws that say, you know, if you burn a lot of money, the money's going to lose some value.
You don't really have a complex law that says that.
But one thing you can't predict is, say, and I know that in the fall of 2008 is everybody's going to know there's a financial crisis.
That is not predictable because there's a subjective element into people's confidence level.
But be assured that this is far from over, that if you want smaller government, you have to look at the Federal Reserve.
Congress Controls Money 00:15:06
If you think welfare spending is out of control, then you have to look at the Federal Reserve.
If you want to control special interest, you have to look at the Federal Reserve.
Because many, whether on the right they might support deficits and the Federal Reserve to finance wars, on the left it might be, oh, well, we have to help the poor people.
We can't cut anybody off food stamps.
This would be horrible, horrible.
We'd rather have the deficits, and we will just monetize the debt.
But there will be a limitation on that, and I think that's what that is what's coming.
And then there will have to be a revamping of this.
But overall, what a whole generation has to decide is not only what the Federal Reserve should do and what the nature of money should be, what we have to decide as a people is what should the role of government be.
And this is where we fail.
Our consensus now is still that the role of government ought to be that we're the policemen of the world and that it's to manage our personal lives because they're involved in our personal lives day in and day out, instructing us on what kind of rules and regulations that make us better.
And also, the government is necessary for a fair distribution of all income.
And it doesn't work.
So if you decide that If you want a more traditional role for government, if you want to talk about what we had in our early history and what the Constitution is, is the government is supposed to protect our liberties.
Matter of fact, the word safety isn't even in the Constitution.
The government isn't there to make you safe and comfortable and have an income.
It's to give you liberty, assuming that you'll take care of yourself better than anybody else.
And this is, I believe what the founders thought is that safety is an important issue, but you as an individual have a responsibility.
Your family has a responsibility.
The community has a responsibility.
And then they gave us the Second Amendment.
And that was supposed to help also.
But we have assumed now that the government somehow or another can have a safety net up to take care of the poor and protect us from all harm.
Now the motivation to protect the poor is a good motivation.
But the one thing that we as a country have forgotten is if you have humanitarian instincts and you want to make sure the poor are taken care of, then you better defend liberty and free markets and sound money, productivity.
This is the system that takes care of the maximum number of poor.
And when we had a lot more freedom, we had the largest middle class in the history of the world.
Today the middle class is shrinking.
And guess what?
All those programs designed to help the poor, what is happening?
They're losing their jobs and they're losing their houses.
Housing programs.
Print the money.
Everybody can qualify for a house.
And then force banks to even make bad loans.
And it looked great.
Now, the price of the houses going up, borrow more money.
It looked like a perpetual money machine until the crisis, the predictable crisis hit.
And guess what?
Those individuals who overextended in the financial markets, those who got involved in derivatives and wild speculation, and then they literally go bankrupt.
Oh, they're too big to fail.
We have to save the country.
And guess what?
They got the bailout secretly, you know, from the Federal Reserve, a little bit from Treasury, but mostly secretly from the Federal Reserve.
And that didn't help the poor people.
Matter of fact, I think most welfare programs end up helping the wealthy more than the poor.
But it's a tougher political argument to make because it's much easier to say, whoever needs it, need a house, I'll give it to you.
If you need free education, I'll give it to you.
If you need food stamps, I'll give it to you.
If you need medical care, I'll give it to you.
It's for free.
And you can get re-elected under those circumstances.
So that is quite a bit different than assuming responsibility for ourselves, which is what was supposed to happen in a free society.
So that reassessment of what the role of government ought to be would have to come even before you can curtail the Federal Reserve system.
But the act of printing money is counterfeit.
It's an immoral act.
And it's something that we should look at it in that way.
It's certainly unconstitutional.
There's no authority in the Constitution to have a central bank.
There is authority in the Constitution for the Congress to have oversight and have control of the money supply, and it does nothing.
Today we have a combination of a secret Federal Reserve dealing with private banks who collude with private banks to set interest rates.
At the same time, they collude with the executive branch.
They claim, they say, we can't have an audit of the Fed because it would make it political.
Well, how could it be more political if the Treasury Department from the executive branch gets together with the Federal Reserve and bail out their friends?
And then they want it kept secret.
And they say, well, it'll be chaotic if we have this coming out.
Yeah, it'd be chaotic for those people who've been ripping us off.
That's why they don't want to have it.
They talk about, I want transparency, and they talk about independence.
Independence to them means secrecy.
And that's what they don't want.
But this country now has awakened not only transparency in monetary policy, but it's a very popular position to have more transparency.
So it's bad that the government has gotten so big.
The fact that it's secret makes it even that much worse.
So it's transparency that we want.
We don't want secrecy because that's when the special interests get bailed out.
They're too big to fail.
Let's take care of them.
Oh, what if we'd have taken half that amount of money?
We probably could have paid off all the mortgages of the people who lost their houses.
Not that I advocate that, but in comparison, it's still protecting the powerful special interests.
That is the biggest delusion of people who are good at heart and believe, well, we have to help the people in poverty and take care of the poor, is that they don't realize it, but they're really helping the very, very rich.
And that raises the question, you know, we've had a Tea Party movement go, you know, these last several years to address some of these problems, but we also had this Wall Street, Occupy Wall Street.
And Occupy Wall Street are considered, well, they're the leftists and they don't know what they're talking about, but actually they're half right on it.
And because they're right in that there is a 1% or more that don't deserve it because they made their money off being on the inside track of the Federal Reserve, the banking system, and they made money off the system.
They made money building weapons we don't need.
And if that 1% or if there's a large number of very rich people that couldn't have gotten rich on their own, then they should be condemned.
The whole process should be changed.
That to me is quite a bit different than if you have a Steve Jobs, who's very, very wealthy, and he made his money, he made his money only by selling us stuff that we wanted.
If you buy stuff that you like and you want it and you make somebody rich, you both benefit.
But this whole idea that we have to attack rich people, I think, is dangerous.
At the same time, we should not take the attitude that we have to defend everybody that was rich no matter how they made it, if they made it with special deals with the government.
And right now, I think the majority of the super rich are on the inside track.
The whole system, the whole system of money and banking has always benefited the very wealthy.
And that's why we have to be as objective as possible.
But I want to finish up on my opening remarks because I do want to get some questions.
But we're living in a different age.
We're living in an age where this whole crisis is being resolved and will have to be resolved.
I do not believe that we will gradually work our way out of it.
Although I think it will end rather badly because we don't seem to have much desire to cut the spending.
I always try to have a process where we can work our way back.
Medical care, you can have medical savings account, and always legalize a freedom option.
And you could do this on education too.
If they take away homeschooling and private education and force everybody into a government school and dictate the curriculum, that's bad news for us.
In money, you can do the same thing.
Even though I have a book and the Fed, I wouldn't end the Fed tomorrow if I could, because it would be even more chaotic.
But what you need and deserve is the right to opt out.
And you should have the right to use your freedom in the midst of the chaos that we have, which means that you ought to have the constitutional right to use gold and silver as legal tender.
And we'd have to repeal legal tender laws.
We would have to take taxes off gold coins and silver coins and not put people in prison for doing that.
So I think if we always have a freedom option, time and effort would work our way out of this.
Historically, though, most of the time it ends badly.
And I'm afraid that we're moving in that direction.
But the most important thing is that a whole generation of individuals know what the right thing is.
Because there will be, whether it comes quickly, calamitously, or just how it happens, the rebuilding is crucial.
So right now, I think we've made tremendous progress in so many millions of people now understanding that the Federal Reserve is important.
And that means the repairing of this is going to be quite a bit different because I think in the next few years it's going to be very clear that there seems something deeply flawed with this notion that we can have 12 people in a private room secretly creating money out of thin air and passing it out to take care of all the special interests and that they get hysterical if we say that the Constitution says the Congress has a right of oversight.
I just am convinced that's coming to an end.
And I believe that is good.
Even though times will get much tougher, I'm actually very optimistic that the educational activities in this country have been fantastic.
You're so far ahead of where I was in the 1950s and the 1960s, desperately seeking to figure this stuff out.
But no internet and no free market think tanks.
They're all available now.
The information is out there and spreading like a wildfire.
And I don't think it's going to be put to sleep.
No matter what I do, if I go down home in January and you never hear another word from me, it's not going to stop.
There's no way it's going to stop because there will be somebody somewhere, possibly even in this room, somebody's going to get up and pick up the banner and say, this is a worthy cause.
Sound money is equivalent and is necessary to have a free society.
And I encourage you to do so.
Thank you very much. Thank you.
And I think I got my allergies a little bit under control.
Okay, questions.
And when you ask questions, make them as loud as you can for me.
Go ahead.
You were talking about having Congress control the money.
What would, I mean, given their nature, what would keep them from openly and transparently destroying currency?
Yeah, I don't really want the Congress to do what the Fed's doing.
And some people see that.
Some people want that.
They want the Congress to print the money and send it out to the people they like.
And they'd be more inclined to maybe give it to the mortgage holder or the farmer or the small businessman and say, well, this is much better, and we're not going to let the Fed do it because we have to pay interest to the Fed and get the banks involved and the bond dealers involved.
But no, I don't want the Congress to print money either.
But see, we did have a pretty good period of time when we didn't have a Federal Reserve.
This argument's going on, has been going on since Jefferson and Hamilton.
Hamilton wanted a central bank.
Jefferson did not.
They had a national bank for 20 years, and Jefferson got rid of it.
Then they did it again, and Jackson got rid of it.
Then we had a period of time, especially in the latter part of the 19th century, that we didn't have a central bank.
And then 1914, 1913, 14 came and it was very bad.
The Congress's responsibility is to guarantee the value of the coinage.
You know, the weights and measures isn't.
It's in the section of Congress that talks about honest weights and measures.
And that's what they should do.
They need to make sure the coins are of an honest weight.
But no, they don't have the right to create money out of thin air.
Governments have an obligation not to break contracts and counterfeit money.
In fact, in 1792, they passed a coinage act that said that anybody who counterfeited money could get the death penalty.
That's how strongly they felt about this.
So I don't want the Congress counterfeiting money.
I don't want individuals because it's fraud.
Nor do I want the Federal Reserve to do this.
But the money supply under those conditions probably increases around 2%, 3% a year.
And as long as you have free market pricing, that prices of goods and services and exchanges between those goods and services are free.
The one other mistake they made back then was they fixed the ratio of gold to silver.
And that was a difficulty because then, depending on which price was best, it would drive out one metal and not the other, and you'd want to use the other metal.
But no, you don't want the Congress printing the money.
You want the Congress to live up to the law of the land, which means no counterfeiting.
Yes, sir.
Fixing Gold Ratios 00:11:56
Thank you so much for coming to talk to us today.
I want to know what you think would have happened immediately after the 08 financial crisis or on the 08?
A little bit louder.
What do you think would have happened after the financial crisis if we were on the gold standard and we couldn't pop a bunch of the quarterly into the market?
Okay, if we'd have been on the gold standard, you wouldn't have had the crisis.
So the crisis came from the paper money system and the bubble that the Federal Reserve creates by lowering interest rates lower than they should be, sending false information, then there's too much debt and too much malinvestment.
That comes from the Fed.
But then the question is, what if they didn't bail them out maybe?
Because it would be hard to say you're automatically on the gold standard that instant, you know.
But if you didn't bail out, it would have been a bit of havoc.
You know, there'd been a bunch of bankruptcies.
But that's what the correction is supposed to be doing.
It's when you delay the correction and the liquidation and getting rid of debt and malinvestment, when you don't get rid of it, you just prolong the agony.
This is one of the reasons why Japan's been in the doldrums for a couple decades.
And why we've been, why we went 15 years in the Depression and World War II.
It was just because the debt wasn't, it took so long to liquidate the debt.
And we're not liquidating debt, we're just transferring it from the people who deserve to go bankrupt and give it to the taxpayer, either by diluting the value of the money or raising people's taxes.
And we own the debt now rather than the big banks and financial institutions.
But to say, oh, yeah, just let them all go bankrupt, it wouldn't be a big deal.
It would have been a big deal, but it would have been a big deal for the people who it should have been a big deal for, not the average person.
But the average person now, that individual losing their jobs and losing their mortgages, and they're in a lot worse shape because of it.
In 1933, it was by executive order that Roosevelt just called into gold and said, You're not allowed to own gold anymore.
I mean, you'd think that would cause a rebellion, but people were complacent and went along with it.
In 1971, Nixon, I can remember clearly because it was a dramatic evening.
It was on a Sunday evening that they made the announcement that they would quit.
Up until 1971, we were required to honor the dollar at $35 an ounce to foreigners, but not to Americans.
So he just said, No, no more, I'm not going to do it.
In a way, he declared bankruptcy.
We were bankrupt.
We couldn't honor our commitment.
But he did that by executive order.
He put on wage and price controls.
He put on a 10% tax tariff on all imports.
And amazingly, the stock market soared the next day, thinking this was a wonderful thing.
But the IMF was changed at that time.
The IMF was used to work on the imbalances between currencies and trade policy.
But that all fell apart because there were fixed exchange rates back then.
And so the whole role for the Federal Reserve changed, it was 1976, that then Congress got around to writing laws to sort of accommodate what they had done.
But the 70s, the 1970s was very bad, and the 70s came as a consequence of LBJ's comments and his policy of the 60s saying, guns and butter, we can fight the Vietnam War, we can give welfare to everybody and take care of everybody.
But then the consequence came that we no longer had the dollars at $35 an ounce.
We had to admit that.
They made that announcement.
And the 70s were terrible.
I mean, it was when they admitted there was stagflation, there was high inflation rates.
Interest rates went to 21%, and unemployment was even higher than now.
Today we have problems that are probably worse, but a lot of it is hidden.
I was just thinking that, you know, if you had everybody that's on disability and also disability as well as getting food stamps and unemployment benefits, and you had to stand in line in a bread line like did in the Depression, everybody would know how bad things are.
But now it's done with dignity.
You don't have to wait in line.
But it also means that you're just still building a bubble.
You're still kidding yourself because you have to get back to production.
But no, they did all that in 1971 without the Congress very much involved.
But this is the fault.
This is the problem we have: Congress has renewed on their responsibility.
How do we go to war?
I mean, we don't go to war because the people have a sentiment to go to war and their Congress has an up and down vote on war.
No, we either ignore or tell the president to do what he wants, or the president makes a decision to say, oh, I'll get my instructions from the UN or NATO.
So whether it's monetary policy or foreign policy and so much of domestic economic policy, it's out of control.
And unfortunately, it seems like, regardless of which party is in charge, the process continues.
She asked, what would be the process to restore a gold standard?
Today it would be difficult.
Made a suggestion in the talk that the first thing you do is you legalize it and let the market help decide when we can go back to a gold standard.
It would be best to be international, but if we wise up, someday somebody in the not too distant future will have a gold standard.
It may be India or somebody or China, because they're buying the gold in the West and, like European countries and others, are selling gold and the gold is going east.
But they could, we could do it we, we could lead the way, but you know it's rather dramatic.
It's not likely to happen because it would require living within our means.
We can't print money anymore, so that means no deficits yeah, and and the other thing it requires is that the people have to believe the politicians.
So if I'm representing the politicians and the government, I come in and say, okay, we've decided to have our gold standard and all we have to do is, your dollar is going to be backed in gold at two thousand dollars an ounce and everything is going to be okay and we'll not.
We'll always balance our budget and there'll be no excessive spending and we're going to back off on these wars.
Nobody would believe us now.
The the uh, the best.
The best example of this, under different conditions, was in 1875.
See, they suspended the gold standard uh, during the Civil War, because once again, you know, war comes, gotta have money, no more gold.
So they suspended the gold standard.
But times were different then and they decided to go back to a gold standard.
In 1875 they had a resumption act and they had a.
They designed a three-year period to do transition back to gold and the price of gold was much higher than twenty dollars an ounce and they said, we're going to quit printing money, we're not going to run up these uh these, these deficits.
And uh, they withdrew some greenbacks and withdrew and withdraw them all and by the time the three years was up, gold in the marketplace was twenty dollars an ounce and they didn't go back to carrying gold in their pockets or anything, but they were back on the gold standard.
Anybody who wanted to turn in a certificate back then you had gold certificates.
You could turn it in, you'd get an ounce of gold for it and or an ounce of silver or whatever.
So it's the, it's this attitude of big government.
It's pretty hard if you want to finance a government that we shouldn't have with with a gold standard what you want.
What you'd have to do is decide that the role of government should be different, should be protecting our liberties and not to run a welfare state and police the world.
Maybe it'll be when the total collapse of the economy and the currency comes, that that's when hopefully, somebody will wake up and say, you know, what we have to have is sound money, and why don't we follow the advice of the founders?
I was wondering what you thought that Mitt Romney or Gary Johnson might do for sound money.
Are the one of them who elected?
Well, I don't know exactly.
I do know that yesterday I somebody told me that Mitt Romney announced that he was supporting an audit, the FED bill, and I would say that Gary Johnson would support that too.
I've never had a conversation with either one of them about the gold standard, but I don't think that I don't imagine they've given a lot of thought to it, because we're not quite there yet.
I'm trying to push people in that direction, but I don't think they're on the verge of endorsing or condemning the gold standard.
Okay, there's a funny anecdote in your book, The Revolution, about how you went to Alan Greenspan and got his gold standard paper signed by him.
I was wondering if you ever, since that book was written a few years ago, had a follow-up conversation with him about the gold standard after the committee hearing.
No, he's referring to an article that Greenspan wrote for a newsletter that I was receiving back in the 60s, the Ann Rand Objectivist Newsletter.
And Greenspan was really good.
He was hardcore, and he said paper money was a confiscation of wealth that would lead to huge debt.
I mean, he was saying everything an Austrian economist would say.
And so I knew that he was coming before the committee and we were supposed to go in and say hello and get a picture with him if we want it.
So I dug out my original copy of that.
And it was a little green booklet.
There might be one or two people in this room that remembers that.
So I took it in and I said, do you remember this?
And he said, oh, yeah, I remember this.
And I said, then I opened it up to the page where this very, very great article is.
It's not hard to find that article on the internet, Greenspan and the Gold Stan and Objectivists or Anne Rand or something.
It'll come up rather quickly.
And he says, oh, yeah, I remember this.
So I said, would you autograph this for me?
So he put his signature on that great article.
And I said, do you want to write a disclaimer on there?
He said, no, he says, I read it recently and I endorse everything, which didn't make any sense because he endorsed it.
He did everything opposite of that.
But no, I never had any more conversations on that.
He did, Murray Rothbard, a great Austrian economist, knew Greenspan pretty well because Rothbard was in the Anne Rand circles for a while and they had crossed paths.
But Rothbard has a book now.
If you want to really understand the business cycle, at least the one that helped me the most to sort out Republicans and Democrats and intervention and inflation, read Rothbard's book, America's Great Depression.
And that will really explain to you why we had the Depression and why it took so long to get out of it.
And Bernanke studied the Great Depression, and he even apologized to Milton Friedman for saying that the Federal Reserve was responsible for the Depression, which most Austrians agree, that is true.
China's Monetary Strategy 00:03:08
But he said it was because they didn't print enough money.
And of course the Austrians believed that the bubble of the 1920s created the problems, the excessive debt and the malinvestment, and that set the stage.
But the prolongation was because they kept propping it up.
They didn't want prices to go down.
They didn't want wages to go down.
And they did everything like they're doing now, only today it's probably much worse.
Do I think the dollar is losing its status as the reserve currency of the world?
Yes.
It's less used now than it used to be.
And it eventually will disappear.
Somebody else will pick up.
When that happens, I don't know that, but eventually that will happen because it just can't last forever this way.
If it would be true that we kept the reserve standard and that we could print the reserve standard of the world, none of you would ever have to work again.
I mean, why wouldn't we just print the money?
And we're, in a way, doing this, we print it.
Look at all we buy from China.
So everybody gets angry at China, but they're taking this paper and they're sending us stuff.
But of course we end up with debt.
So it's not viable for them.
It's not viable for us.
I think that China might do it.
I think they would like to.
They're working in that direction.
I think that it may be a group of countries.
I believe it'll be in the Far East.
Maybe India and Singapore and maybe Malaysia and China, they might get together and establish it.
It may be a retaliation by nations that are considered more Muslim, you know, just because if they are involved with oil and other things like this, they might be able to do it.
And if they're buying gold.
So I think you'll live to see the day when the dollar will not be the reserve standard of the world, but that will be a rocky test on exactly what happened.
But what could happen is, let's say, that we wake up with the realization, maybe then we would devise monetary reform that people would accept the dollar, you know, if it was guaranteed and convertible into gold.
But right now that's not likely to happen.
People hold dollars.
And we print dollars and then they hold them.
They're holding huge amounts of cash.
We just print the cash, we spend it overseas, and they just keep it, and they circulate it because right now it's still better than the rest of the currencies.
So if one country did this, our standard of living is going down now.
It's systematically going down.
This country is a lot poorer than it was 10 years ago.
And it would get a lot worse if another country did this and we lost the status.
It would be very, very harmful to our economy.
It would be much poorer.
Dollars and Declining Standards 00:09:52
The Constitution prohibits the states from issuing currency, but it also tells the states that they can only use gold and silver as legal tender.
So if they lived up to that mandate, because we do have American gold coins and silver coins, they should be allowed to use them.
And they should say, well, we're only going to use gold and silver coin.
The Constitution tells us to do this.
But they had a lot of trouble with the states.
One of the reasons why they had the Constitution Convention is many states did issue their own paper currency and they did abuse it.
So there is a prohibition against the states just issuing paper money.
But to use U.S. gold and silver coins, I think this would be beneficial.
I think education, educationally, that's why I like to see all these resolutions coming up in the various states because it's calling attention to it.
And that is what is required.
Education is the most important thing that we do.
And like I said before, this is the reason we're having our defense bill on the floor this afternoon, is through the education of many people who said to their congressmen, support the bill.
Why do you think that younger people are so much more willing to recognize the problems of the federal monetary policy than our older generation?
She asked why young people might be more interested in the Federal Reserve.
Well, generally speaking, I think young people have a more open mind just in general.
They're not locked in and stereotyped.
As people work within a system and they go decade after decade, they learn to be more flexible to work within the system.
It's sort of like you may know somebody like this, that they run a real hardcore campaign and they're going to be hardcore and they're going to come to Washington and change the world.
Then they get here and they don't vote that way.
Anybody ever hear of anybody like that?
But they get here and they feel more comfortable because, oh, I've got to blend in.
I've got to be part of the process.
I can't be separate.
I can't be by myself.
And they can't get on a committee unless they do it and they can't get benefits.
And so it goes on and on.
So they learn to work within the system.
I think people, the longer they've been in business, they say, oh, yeah, that Federal Reserve is a little different, but I'm not going to buck it.
Young people, I think, are much more open to ideas.
I think also, young people know that there's a problem out there that they're inheriting.
They had nothing to do with.
I mean, if you happen to not endorse all these wars that are going on, you can't ignore it.
I mean, in the last 10 years, between $3 and $4 trillion of debt because of these wars.
And you might have a friend or a neighbor or a relative that either is getting hauled over there constantly or has been injured or killed.
And young people seem to respond to that because that's a burden that's put on your shoulders.
It's actually why they became more fascinated with the, that's the general philosophy that young people became interested.
But it's the reason they got particularly involved and interested in the Federal Reserve, it might have been the financial crisis that got their attention.
But I think it's part of the process.
This material has not been available readily like it has been lately.
We had the crisis and it's hard not to know what's going on in this day and age with the information we get from the internet.
Anyway, I don't have a full explanation for that, but I'm very pleased with it.
He asked about auditing the amount of gold we have.
And the last audit, and it was a pretty thorough one, was probably 60 years ago in the 1950s, they did it.
In 1982, it was in 1981, we had a gold commission.
There were 17 of us on the gold commission to study the role of gold.
So I proposed that we have an audit of the gold with this commission.
It was some members of Congress on it, but there were other members too.
And there was a vote.
There were 17 members of the commission, and 15 voted not to audit the gold.
And two of us voted to say, yeah, we ought to count the gold.
The gold is listed on the balance sheet of the Federal Reserve.
So I would think that the way I interpret the bill to audit the Federal Reserve, you could also find out about the gold.
But no, they haven't done it, and it is pretty important.
It would be, for many, many years, I would keep saying to myself, they can't be that bold.
Do you think somebody would actually steal our gold?
Today I say, yeah, probably.
I used to struggle with this whole idea that our leaders would actually lead us into war and do things that actually set the stage for it, like lie about things, whether it's the Gulf of Tonkin or lie about what's happening in Iraq and some of the things that controversy that led up to World War II.
It was so horrendous to me.
I just couldn't accept that.
But I'm more likely to think that I've seen it too often that they do.
So that's an argument that, yes, they may well have done something with the gold.
But, you know, if any one of us would walk in there, we look at these vaults, they say, see, there's the gold, count the bricks, you know, and be satisfied.
It takes a lot more.
You need assays.
But you'd have to look at the records, too.
What if we loan the gold out?
There's been a lot of central banks loaning gold and using it as assets.
The subject of gold came up on this issue of Greece.
They said, look, we're not going to loan Greece anymore money unless they produce some asset for it.
And they were talking about using the gold.
But the answer is, There's been no recent audit of the gold, and it certainly should be, especially if we get to that point where we want to go back on a gold standard.
I think we have time for another question or two.
Here we go.
What are your plans after you leave office to continue the great freedom movement you've helped create?
Well, I know one thing that I won't be twiddling my thumbs.
I'll have something to do, and hopefully I can write another book or whatever good that'll do.
And also, I have an educational foundation.
I really think education is the most important thing.
Changing people's minds, much, much more important than being a politician.
So when people your age so often will come and say, oh, how do I become a congressman?
I said, don't plan on it.
Don't even think about it.
If it comes along, fine.
But the most important thing is to understand free market economics, the principles of individual liberty, the principles of a non-interventional foreign policy, understanding monetary policy, and then somebody will make good use of those individuals.
So I will continue with the education.
We also have this organization called Campaign for Liberty, which helped energize a lot of people to wake up Congress about the Federal Reserve and other issues.
So I will do that.
I plan to do some traveling.
I've had a lot of invitations, not only in this country, but overseas, and I haven't gone very far.
I sort of resented the idea that I had to go and get permits from the Congress in order to go someplace.
There's a lot more restrictions.
If I wanted to go to Europe and speak at a university and they would pay my way, I'm not allowed to take an honorarium, but if they would pay my way, I got to jump more hoops than if I go on a junket, get on a U.S. Air Force private airplane, and they pick you up and they take you over there, nobody pays any attention.
They're much more worried that you had somebody outside of government.
The taxpayer, yeah, I let them pay for it, and you can travel.
So I didn't take, for the years I've been here, I never took a junket, and it looks like I'll make it in the next four months without taking one either.
But I may take some private trips because right now, this whole issue of money and finance, this is not, it might be a bigger deal in Europe right now when you think of the crisis.
Matter of fact, today I had a long interview with a German newspaper because, you know, Germany's sort of under the gun.
They're the richest country over there.
They're going to bear the burden of bailing out Greece and Spain.
So it's a big issue, and they are paying attention to this.
Anyway, I think it's time that I go to the floor shortly, but thank you very much for coming, and study hard.
Thank you all for joining us today.
If you are interested in learning more about these issues, of course, the internet is your playground, but also there are a number of T-lectures that the Congressman sponsored on the basics, basic principles of money, as well as the Federal Reserve that are posted to his YouTube page.
We had some excellent scholars come and present to other crowds.
So if you're able to look at those, I would encourage you to do that.
Again, thank you for coming.
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