Ron Paul fears gold prices could hit $10,000 an ounce if the U.S.
doesn't get its fiscal house in order.
Paul, a Texas
Republican, has been in Congress for 35 years, has had two unsuccessful
runs for the Republican nomination for president and is now embarking
on a third attempt.
has been consistent, abolish the Federal Reserve, stop printing
money and go back on a gold standard. But only now, with the U.S.
butting up against the debt ceiling having already racked up a $14.3
trillion deficit, are people starting to pay attention.
After a recent
Republican debate, Paul had 11% of potential voters as the slogan
"End the Fed," also the title of one of his recent books,
catches on. I interviewed Paul on Capitol Hill to find out how the
gold standard would fix the U.S. fiscal crisis.
I know you love the gold standard, but my question is how do you
make that ideal a reality in a modern day society?
Well it's not so much that I will make it a reality or any one person
will do it, it will become a reality when the current system fails
and it's in the process of failing. The first process is for the
financial bubble to burst, which it has, and then the response being
massive monetary inflation, which will destroy the value of money,
which we have done insidiously ever since we have had the Fed.
At one time
the ratio of dollars to gold was $20 to 1 ounce, now it's over $1,500.
They'll lose control, people will panic out of the dollar, then
you'll see gold at maybe $5,000 to $10,000, and then they'll say
we have to do something and then that's when countries resort to
something of real value to regain the trust. But now we're losing
the trust and we're only waiting on that day, so when that happens
there will be a restoration of sound money to some degree.
gold at $5,000-$10,000 does that mean the dollar is at zero or 10
compared to other currencies?
I think we're
going to come to our senses before that, but in other countries
they have. You know Germany, Zimbabwe, Mexico they've had to start
all over again. I'm hoping that we come to our senses and we just
say all right, we're going to quit spending, quit printing money
and then restore confidence, but it's up for grabs because the bubble
is bigger than ever before [and] the world is enduring a dollar
since 1971, all the currencies are linked; they use the dollar as
a reserve, so it's not just us that has to deal with this. Right
now, as a matter of fact, we're benefiting to a degree from that
because the other currencies have used the dollars as if they were
gold, and they're in trouble, say a country like Greece and others,
they inflated on top of ours so they even resorted to using dollars,
so that gives us a temporary reprieve.
how do we deal with that? How do we implement that? I know you have
talked about gold certificates, but how do we do that worldwide
and in our own country then?
Well we can't
deal worldwide. The opposition, those who believe in government,
are trying to do that worldwide probably not use gold but probably
use fiat money, you know at the IMF, which I would find very annoying.
But we can only deal with our own problems. They followed us when
we had a sound dollar, and then they followed us when we made our
dollar unsound, but if we can lead the way we could just say we
would stop printing money.
How do we
go back to some kind of gold standard? I know that one of the myths
that you debunked back in the '80s was that there was not enough
gold. Maybe back in the'80s there was enough gold, but there is
definitely not enough gold right now.
is the same. The other day I picked up a good silver dime, and I
got to thinking that is one tenth of an ounce. That's worth about
$4. I could still buy two loaves of bread with it.
Or one gallon
of gas at this point.
So all of a sudden you have a lot of money, when it's sound money,
but we have a precedent to follow but it's not as easy as it was.
We were off the gold standard from 1861 to 1878, and they had a
resumption act, and what they did was they promised no more greenbacks;
we're not going to run any more deficits; we're not fighting any
wars; we don't have a welfare state and people believed them so
gold went from like $150 an ounce down to $20 an ounce. It was a
nonevent; they went back to the gold standard.
So you think
that all it would take would be for the government to actually say
would believe them, but they have to do it. That's why it's tough,
and this is also the reason that I'm opting out for not waiting
for that day. I want competition with the Fed. I want to legalize
the Constitution. I want to legalize the trading in gold and silver,
no taxes, no sales taxes, no capital gains taxes. Private companies
can mint their own coins, they just have to be not fraudulent, like
our government is fraudulent. They don't back their currency with
anything, but you would have to repeal the legal tender laws, and
if the crisis doesn't come, then people ... can just go with the
Federal Reserve, trust the Fed forever.
But if a young
person thinks they have to put away money for their future or raising
their kids, they might think, "hmm, maybe I oughta buy a gold
bond" because if you put $10,000 away today to educate somebody
in 10 years, you'll get your $10,000 back, but school might cost
you 20k, so nobody is going to save in dollars, but they would save
in a gold bond.
So is this
something that we would see dollars in circulation and also
gold and silver coins in circulation, and then the people are free
to chose which they would rather do business in? Is that your hope
that eventually more people would choose gold and silver that would
take us out of this fiat currency?
Yeah, and I think they would.
a lot of faith in the people, though?
having faith in the government or the Fed, you can't trust them.
But the Mexican government is doing this now. They have savings
accounts in silver, but we do it internationally all the time not
with gold but the various currencies, the banks, the corporations
and international trade.