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>> this month, q and a expands from interviews from london. tonight on dan reed on his terror in mumbai. >> this week on prime minister's questions talks about the governmenty decision to scrap the subsidy for low-income students and the government's response to islamic extremism. tonight at 9:00 p.m. eastern on c-span. >> and our guests on "newsmakers" this week is congressman ron paul of texas, just been named the chair of subcommit on monetary policy.

he's joining us from the capital. thanks to both on of you. before we get to that, congressman paul, i wanted to ask you a political question. if in fact this tax package does go through how is it going to affect us? >> it has really split a lot of the conservative. i am in favor, although i don't want taxes to go up. we don't know what it will be in the final vote. i don't think this can be the litmus test to decide whether or not the new congress in the house will be considered at fault. i think this remains to be seen. >> let's turn to the new congress and your questions.

>> dr. paul, i first wanted to start off, what do you hope to accomplish as chairman, and what does it mean to you as someone that wants to end the central bank? >> i will continue to do it. i have been talking about the danger of central economic bank since the 1970's. the book is modest and i explain the fallacies. i don't talk the individuals especially since 1971 and my ultimate proposal with the gold commission, allow us to have

competition. if the dollar is a good currency to operate with, let's allow gold and silver to circulate. if you use that has legal tender. you can go to jail. we have to use depreciated money we are in the middle of the financial crisis, this was predictable. those individuals that predicted that are predicting this will get a lot worse >> what specifically do you want to achieve? >> i think the most important thing is transparency. we got a token from the fed what

the lending agencies did during the bail out. they released $3.3 trillion. they did release names, but they were a lot of unanswered questions. i think that should be top of the list in finding out exactly what they did. to continue with the audit effort, i had 320 co-sponsors last year or this current year. we have new people coming in who are more anti-fed than the current people. i think we're going to keep that alive, and the american people believe transparency is very important. i get strong support from the grass roots of america. >> congressman, we have found out of that $3 trillion. they were big banks, foreign banks. do you have a problem with that?

we obviously know about it. what's the issue there that you don't like about having this money be used in this way? >> yeah, i have a big problem with it because, you know, or it was thought at one time in our history that all appropriations would go throughout congress. we would authorize and appropriate and the congress would control it. this is off the books. the fed creates and spend their money. their budget is bigger than ours now. and the people who get bailed out are the ones in the political know. they say what i want my political to say. how could it be more political if some companies were bailed out. lehman was bailed out and goldman sachs did pretty well. those that benefitted from the bubble formation, the housing

bubble. they were the ones that got over. we ended up buying that stuff. the fed owns he's illiquid assets. the american people are losing their homes. it's economics and not legal under the constitution. i want to go back to your suggestion that you have a moral bigger megaphone. maybe can you tell us of your understanding, how far the republican leadership is willing to go with your investigation of the fed. when you talked with in-coming chairman bacchus. will you receive support from him as it goes to full committee level? >> i'm working on the assumption i will. the conversations i had with the chairman basically said you're

in charge of that subcommittee. that doesn't mean that you know, the first woke in january i sunday over a subpoena for bernanke and demand he come over with a pile of papers. i don't think that would be logical. to start sending requests to their accountantas and -- accountants and other people. we want to at least add. they can still hide behind the law with foreign banks. they billed out a foreign central bank. they dealt with that before the bail out was occurring. that was one set of information that they cling to. so i will continue to work on that. but it's to the american people's benefit for us to know who is getting bailed out.

>> congressman, doesn't the u.s. benefit from the dollar being used as a global currency? and if the fed doesn't lend to foreign central banks. how can the dollar remain a global currency? >> the market will determine that. i complain about the fed. just think of how we tried to prop up the dollar in the 1960's and early 1970's. we said the dollar is good as gold until the market overwhelmed. they didn't come to their senses and do this. so yes, we get tremendous benefits and nobody wants to really talk about it. they are starting to recognize the people around the world are getting skittish about the dollar. now the response to our easing isn't giving us the same

results. with this newly-nonced easing. there's a limit to what the fed can do. they wonder whether they should have that mandate. the treasurer is over 17%. so their policies are failing, and that's becoming more evident every day. >> congressman, when you and i have talked in the past. you said the fed has monitored the cycles we would have sharper up and downs in the economy. i wanted to get at that a little mor. what would the world and economy run by ron paul look like? and how would that play out to real people in accessing credit and functioning in an economy like now? >> you would have recently stabled prices.

that's not the goal. you want free market pricing. if you had a stable dollar, you want interest rates to be determined by the marketplace. it's impossible to have boom, bust cycles. weather might still have an influence on commodity. but you don't have a whole economy. we had a housing bubble. they didn't just affect housing, but banking and so many other things. stocks as well. you wouldn't have this unless you had this artificial manipulation of credit. the greatest economy sin that's committed is ruinning the markety signal. if you got rid of price like

wage and price control like in the 1970's, that fails. >> you mentioned bubbles before the fed was created in 1913. we had bubbles for searchs in not only the u.s. economies but others around the world. won't you have bubbles and won't they be as troublesome in >> it was never immune from local banks. during our civil war period, there was tremendous inflation. they still believed in the constitution and had the rusumpion account and we ushered

in a great growth history until world war i started. the federal preserve provides no benefits to us. >> let me follow up on this . they were more financial panics. >> i don't want to pay that price. even if you argue what we had before. we could still prevent them. if they do happen. yes. do you. you pay the price of one year of a bad recession like we did in 1921 and 1920. this was the last example of us having a hand's office approach. the g.d.p. went down.

you got rid of bad investments. we want to perpetuate the mistakes. we are trying to keep the housing prices up. we don't allow the liquidation of bad debt. yes, after someone else messes up the economy. the free market wanting to go back to a period of growth. politically, though, it looks like it's painful. if they did what i wanted in 2007 and 2008. we would be back in a growth period. japan made the same mistakes. we did it in the 1930's not like 1921 or 1922.

we are so conditioned if we have a problem, we have to fix it. the doctor that wants to get you off drugs, you feel better. eventually, the addict dies. i want them to take their medicine. i don't want the economy or the patient or the dollar to die. that's what they're working on. one of the strongest reasons for inflation is the congress. if the fed couldn't monetize our debt, interest rates would go up. all that does is create greater distortions and a larger bubble >> congressman, are you competent. if you reined it in.

congress itself could meddle and this would be more dangerous? >> i want the market to determine the money supply. but you do raise know important question because something much worse could come out of this, and this is an international one world fiat currency. they talk about the fcr's and another currency. this one a lot worse then the dollar reserve standard because it would be mandatory arounda the world and provide an incentive in the far east to come up with a currency backed by gold and people will want to go in that direction and reject the dollar. we know this gold has left west and has moved over. so the center banks of the far east have much more gold. our supply in the west has

diminished. you're right. it could be dangerous. but the danger of congress taking over, i recognize that. i don't want that. i don't want, because some of my allies to don't like the feds, we call them the green backers. congress should print the money. that is not the solution. there's no authority. matter of fact. there's an explicit prohibition. >> we have ten minutes left in your conversation >> congressman. you made auditing the fed a center plank of your platform. in this case. the fed reserve books are audited by a private accounting firm. your talking more of a policy decision. the fed fears this will lead to

meddles and problems with the economy. what do you think about this auditing and creating a problem for the federal reserve? >> yes. that is my point. they do look at interest rates. that's where our real problem is. so, unless we get a handle on that. i don't see how we can solve our problems at all. >> do you think the movement to audit the fed is actually going to lead to something that you want? which is ultimately to end the fed? >> it could allow for the legal tender competition. internationalates can do that all the time. if you're an international business man, you have to

accommodate yourself and protect yourself. be in the futures market in order to protect your currency. we think you should be able to do this domestically. exposure of the fed system going to help us in that effort. if the chaos or matter of fact, when the chaos comes from the sharp attack on the dollar, that will be the big question. we should look toward the 1870's how we did it before. the reason why this is so difficult is, the american people would have to change their opinion of the government. if we believe we should be in perpetual worry, no, you can't

attack the monetary system. so it's that attitude which creates the problem and the fed is the financer. ultimately, the american people should accept the idea the government was created to protect our liberties, but not regulate our economy and police the world. >> quick question. you spoke about employment and inflation. do you anticipate the congress will re-write the law? >> i think when time permits, i want to have that discussion in the committee because it raises questions more than gives answers. people know that, well, they're saying the fed had the

responsibility and they totally faired. it's incidental to the real problem. the real business is the business cycle. unless you address that, you can't deal with unemployment. it's a good decision but doesn't provide the answers. if we look at unemployment; what would the fed be restrained from doing? they would operate under these emergency powers and be the last resort. they will continue. i don't think it would change a whole lot, but it's a real interesting discussion. >> congressman. what do you think creates the danger on the dollar? the fiscal deficits or the still penalties? >> i don't see how you can separate them.

when they over step their bounds and inject 1.2 trillion and another 600 billion. then they are really over stepping their bounds. let's say the $600 billion did thing in an opposite manner and unemployment goes up. if bernanke sticks to his guns, qe three. another trillion dollars. if that's the course of events, it will be the monitoring of the policy and that will be second to the fiscal policy. that's a big problem as well >> congressman, the fed is stated as being too close to the banks. something that spencer bacchus said recently in an interview with the birmingham paper.

in washington, the view is the banks are to be regulated. my view is washington and the regulators are there to regulate the banks. >> what do you think about a comment about this? >> i didn't hear the full comment. i don't think any politician would stick his neck out and say, i am here to take care of the banks. i don't know the details of this. he was a strong supporter of monitoring the fed. the problem has been with over regulation. i want the bankruptcies to occur. to allow the fed to create that

problem and the congress can compensate by regulation. it came with the mandates from the congress says you must make some of those loans. those regulations are very bad. under these circumstances that banks have to make loans. >> so you think reg -- regulators should be pulling back? >> we need government to fulfill their contracts, to have honest money so you don't have to anticipate the devaluation of your currency. the market is a great regulator. we have lost great understanding that the market is a much stricter regulator than the special interest that regulate. it's been the big companies, so, the regulators get, you know,

the big companies get control of the regulators, so the marketplace doesn't happen that way and the government's role is you fulfill your promise. nobody is going to bail you out. when you regulate and guarantee the lender of lost resort; it creates a moral hazard >> congressman, we're just about out of time. i am wondering how you think the current chairman is doing? the current what? >> chairman. ben bernanke. >> i get asked that a lot and people are looking for me to be critical. i was critical about greenspan the same way.

they adhere to a philosophy i consider incorrect. whether he was a worst manager than greenspan and put another person that has the philosophy that blends in with fiat money, you have to evaluate the philosophy of the whole system and reject the counterfeit system. and artificial and inflationary. >> we have 30 seconds for a final question? >> if not. we will let that go as a final. dr. paul. thank you very much for being with us in this busy week in washington, d.c. >> let me turn just to learn a little more with the politics with this.

i found an interview saying ron paul's view doesn't represent most americans. what's the intent of leadership in exceeding to his chairmanship of this subcommittee? >> he does not think with most other lawmakers and americans. he's building a movement to end the fed. they haven't been criticized much. but kind of been seen as an untouchable force. ron paul has been around for a long time and using his decades of seniority and a thorn in the sides of the fed. that's an important give what's going on. whether it actually