an intellectual puzzle, but had world use. i found that endlessly interesting and challenging. in the end, i think i went to law school for the wrong reasons, but i was very glad i got there. >> the full interview with supreme court justice elena kagan airs tonight. >> our guest tonight on " newsmakers," ron paul. we will obviously talk with the congressmen about the

subcommittee chair. but i want to rescue a political question. if, in fact, this tax package happens, what, if >> it is so confusing. there are some pluses and minuses on both sides of the argument. it has split a lot of the conservatives. hi i am in favor of the tax package. i do not want cactus to go up. we do not know what will be in the final vote. i do not think this can be the litmus test to decide whether or not the new congress in the house will be considered at fault. that remains to be seen. to the newrn congrressman with questions. >> what do you hope to accomplish as chairman of this subcommittee? what does it mean to be someone

who wants to and the central bank and to oversee it? >> i have a better audience with more authority to do it. i have been talking about the danger of central economic planning as long as i can remember, since the early 1970's. this gives me a better platform. i wrote a book that said and the fed. the book is modest in its proposal and that i explained all of the fallacies of the monetary system we have. i do not attack individuals as much as the system. my ultimate proposal, as it has been over the years, is to allow us to have competition. if the dollar is a good currency to operate with, let's allow gold and silver to circulate. today, if you use gold and silver as legal tender, you can

go to jail. we are compelled by law to use depreciating money. who wants to take money for 20 years if the money might be worth 1/3 what it was when you put it away? it is a system that is doomed to fail. we have the financial crisis and we are in the middle of that. that was predictable. the individuals who predicted the problems we have are predicting this will get a lot worse. >> what specific things would you like to achieve in the next congress? >> the most important thing is more transparency. we have a token effort from the fed to report more detail on what the lending agencies did during the bailout. . period. but it is incomplete. it does not tell us what the

collateral was. there are a lot of unanswered questions. that should be on top of the less in finding out exactly what they did. we ought 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. we are going to keep that alive. the american people understand transparency is important. i get strong support from the grassroots of america. >> in a report that came this month, we found out that of the $3 trillion, there were big banks that receive the money, foreign central banks, investment banks. do you have a problem with that? what is the issue there that you do not like about having this money be used in this way? >> i have a big problem with it. it was thought at one time in

our history that all appropriations would go through the congress and we would authorize and appropriate and congress would control it. this is off of the books. this is secret. the fed prints its own money and they spent it. their budget is bigger than ours now. the people who get bailed out on the one to act in -- who are in the political know. how can it be more political? some companies were bailout and some were left to go bankrupt. goldman sachs was treated pretty well. we need this information. those individuals who benefited most from the bubble formation in housing and other baubles that were formed were the ones who got overextended -- bubb les were the ones who got over and send it.

the american -- the ones who got overextended. it is an unfair system and it is bad economics and it is not legal under the constitution. >> that we go back to your suggestion that you have a bigger that phone with the subcommittee chairmanship. how far is the republican leadership willing to go with the investment -- with the investigation of the fed? are you in concert with the direction you are taking the subcommittee? will you receive support as it moves to the committee level? >> the conversations i had had with the chairman said i am in charge of the subcommittee. that does not mean that in the first week in january i sent over a subpoena for ben bernanke

and the man he come over with a pile of papers. i do not think that would be logical. but to start sending requests to their accountants and say this is what i want and to see what happens. this is a lot of information. the law has been changed. we want at least that. they can still hide behind the law. if i want to demand every transaction with foreign banks, it is in lightning to know they bailout it all and central bank. they deal with foreign central banks and central governments. they did that before the bailout. that is one piece of information they cling to. i will continue to work on that. it is to the american people's benefit to know who is being bailed out. >> congrressman, doesn't the u.s. benefit from the dollar being used as a global currency? how can the dollar remain a

global currency? >> the market will determine that ultimately. the market is more powerful than the fed. i complained about the fed. think about how we try to prop up the dollar in the sick -- in the 1960's and early 1970's. the market was overwhelmed. they did not come to their senses. we get tremendous benefits and nobody wants to really talk about it because they know it. until now, they have started to recognize that people are getting skittish about the dollar. now the response to our easing is not giving us the same result. with this newly announced easing, interest rates have gone up. they have not gone down. you are limited as to what the fed can do. they are supposed to be in charge of unemployment.

they give us an unemployment rate according to the treasury. according to free-market economists it is over 22%. there -- their methods are failing. >> we will have sharper ups and sharper down without a central bank. what would a world and an economy run by congressman ron paul look like? how would that play out in terms of being able to access credit in an economy we have now? >> we would have a reasonably stable prices. you want freemarket pricing. if you had a stable dollar, that is what you want, a stable currency, one that cannot be manipulated. interest rates should be

determined by the marketplace. under these conditions, it is virtually impossible to have boom and bust cycles. you would have some prices going up. whether might have an influence on commodities. you do not have a whole economic. we had a housing bubble. that did not just that housing, it affected banking and stocks. you would not have that if he did not have this artificial manipulation of credit. to me, the greatest economic sense that was committed by doing this is ruining the market signals about what the consumer and the businessman must do. that is interest rates. it has become socialistic. that is why socialism has always failed. we control the money supply and the interest rates and that is

the source of our problem. >> you mentioned bubbles. before the fed was created, we had bubbles or centuries in the u.s. economy and other economies around the world. where did you still have bubbles and wouldn't they still be as troublesome as they are now? >> the only time we had bubbles in the 19th century is when we abuse the standard. it was never immune from local banks and flaking. they did that on occasion. during the civil war, there was tremendous inflation. they were forced to retrench because they still believe in the constitution. we went back to a gold standard and we printed money. then we ushered in a great growth. period, one of the great is in our history until world war i. the federal reserve provides no

real benefits to us long term. >> before the fed, there were more with sessions and more severe recession. -- there were more recessions and more severe recession. is that a price you are willing to pay to go back to reining in the fed now? >> i do not want to pay that price. even as you are to the case we had that before, we can present -- we can prevent them because they were artificial. you pay the price of one year of a bad recession like we did in 1921 and 1920. that was the last example of us having a hands off approach. the debt was liquidated and bddp went down rapidly. people went back to work -- and the gdp went down rapidly. we are trying to keep housing prices up and we by the bad

debt. we do not allow the liquidation of the debt. yes, after somebody else messes up the economy, the free market is demanding that we liquidate and go back to a time when you can have economic growth again. you are touching on an important point. politically, it looks like it is painful. if they did exactly what i wanted in 2007 and 2008, it might have been bad but we might be having 3% unemployment right now and we would be in a growth time. japan made the same mistake. we did in the 1930's. we did not do it in 1920 and 1922. politically, we are so condition that if there is a problem, we have to take care of it. it is exactly like a drug addiction. the doctor who wants to get you off of drugs is a bad guy. if you get the drug, you feel better.

eventually, the attic guys. i want them to take their medicine. i do not want the -- the addict dies. i do not want the person to die. i do not want the economy to die. they literally provide the funds. if the fed could not monetize our debt, interest rates would go up. they would say, we cannot get away with this. that creates great distortions and a larger bubbles. >> are you confident that if he did rein in the federal reserve your colleagues in congress would replace it with something better? isn't there a danger that congress could medal in monetary policy and that could be more -- mettle in the monetary policy and that would be more dangerous? >> i want the market to

determine the money supply. you raise an important question. something much important could come out of this. that is an international one- world currency. people talk about the imf coming up with another currency. that would be a lot worse than the dollar reserve standard because it would be mandatory around the world. also, it will provide an incentive for some nations, may be in the far east to come up with a currency backed by gold and people will want to go into that to read -- in that direction and reject the dollar. gold has moved east. the central banks in the far east has a more large accumulation of gold. it could be dangerous. the danger of the congress taking over, i recognize that. i do not want that. some of my allies who do not

like the that, we call them the green bachus. they say congress should print the money -- the greenbackers. there is an explicit prohibition against printing money whether it is the fed or the congress. >> we have about 10 minutes left. >> you have made on getting the fed a central plank of your movement. a lot of people hear the word on it and they do not know what it means. the fed books are audited by a private accounting firm. you are talking about a policy ought to have congressional -- congressional auditors go in and look at policy decisions. there are some who say this will lead to congressional and political meddling in their decisions. what you think about this auditing creating a problem for

the federal reserve? interest rates are watched closely by the market. >> they do look at interest rates and the fed is responsible for interest rates. that is where our real problem is. unless we get a handle on that, i do not see how we can solve our problems at all. >> do you think the movement to audit the fed is going to lead to something that you want, which is ultimately to end the fed? how are those two ideas connected? >> i think it could lead to a loud and a legal tender competition and allow people to get out of -- to allowing a legal tender competition and allowing people to get out of that. if you are a banker, you need to protect yourself and be in a futures market to protect your currency or lack of currency. we think he should be able to do

this domestically. exposure to the fed will help us in that effort. if the chaos -- when the chaos comes from a sharp attack on the dollar, there will be a growing consensus, which has already started, that we need monetary before. that will be the big question. we should look toward the 1870's on how we did it before. the reason that is so difficult is that the american people would have to change their attitude about what the role of government ought to be. that is the most important question. if we are the people who believe we should be the policemen of the world and have perpetual wars and have a runaway welfare state where nobody gets anything cut, no, you cannot attack the monetary system. his is that attitude that creates the problem. the fed is the finance here. -- the financier.

the american people should accept the idea that our government was created to protect our liberties it is not there to regulate our lives and ready to -- and regulate our economy and change the world. >> earlier you refer to the dual responsibilities of unemployment and inflation. i am 13 what you anticipate this congress will actually be right the law -- i am wondering if you anticipate this, which will rewrite the law. >> i would like to have that discussion on the committee. it raises questions more than it answers. they say the fed has a responsibility and they failed. so we take this power away. it is incidental to the real problem. the real problem of unemployment is the business cycle. unless you address that, you cannot deal with unemployment.

it is a good discussion. it does not provide the answers. we have eliminated this authority to look at unemployment. what with the fed be restrained from doing? they could still operate under the emergency powers and billing out and in getting credit and be the lender of last resort. -- bailing out and giving credit in been the lender of last resort. >> what you think provides the greatest danger. the sharp monetary policy or the debt? >> i do not see how you can separate them. the fiscal responsibility is these ends -- is the incentive to have the fed monetize the debt. when they overstepped their bounds and inject $1.20 trillion, they were really overstepping their bounds.

i think if they continue to do that -- let's say the $600 billion did not do any good and did things in the opposite matter and unemployment and interest rates go up, ben bernanke is point to have to say qe 3 and another $1 trillion. that will be secondary to the fiscal policy. fiscal policy and the irresponsibility of congress is a big problem as well. >> the fed has accused you of being too close to banks. i wanted to ask you about something that the incoming chairman of the financial- services committee said recently in an interview with a birmingham paper. he said the banks are to be regulated. in my view, the banks and the regulators are there to serve the bank. he later clarified that to say

he is worried about micromanaging. what do you think about a comment like that tical -- about a comment like that? >> he said he was taken out of context. no politician would stick his neck out and say he is here to take care of the banks. i do not know the details of that. he is a strong supporter or auditing the fed. if he explained himself, we would come to predict close agreement. i think what our problems has been over regulation and not under regulation. i what the markets to regulate. i want the bankruptcy to occur. to allow the fed to create the problem and say because can compensate by regulation -- the housing bubble came from too much credit and too many mandates from the congress saying you must make some of these loans.

those kind of regulations are bad when you are telling, under the circumstances, banks to make certain loans that are risky. >> you say they should be pulling back. >> i do not think we need regulators. we need law and order. we need people to fulfil their contracts. we need the government to fulfil its contract. we need honest money so that you do not have to anticipate the devaluation of your currency. we need an honest interest rate. the market is a great regulator. we have lost confidence. the market is a stricter regulated than the special interests regulators that we regulate. guess who got regulate it to their advantage? it has been the big companies. the big companies get control of the regulators. the marketplace does not happen that way. the government also role is to set fulfil no promises. if you think you are going to --

the government's role is to fulfil -- is to make sure they fulfil their promises. t take we are just about out of time. you had the opposite -- >> how did you think the current chairman has done in carrying out his responsibilities? >> people look to me to be critical. i am critical of the positive is a lousy policy. it is the system that i am critical about. i was critical of greenspan because they adhered to a philosophy that i consider totally incorrect. whether he was a worse manager then greenspan or if you fired greenspan and put another person

in who has a philosophy that blends in with keynesian theory, it won't make a difference. you have to analyze the whole philosophy of the monetary system. you have to reject the system that is literally, the fit and artificial. it is inflationary. this is the problem rather than ben bernanke himself. >> 30 seconds or a question? -- 30 seconds for a question? >> i am ok. >> i let me turn to robin harding. i thought an article that said is notl's you of the fed consistent with of congress.

what is your view of his chairmanship of this subcommittee? >> barney frank is right that congressman paul's the use do not think with the rest of congress. the fed has not been criticized much over its recent history. it has been seen as an untouchable force. ron paul has been around for a long time. he is using his decade of seniority. he gets a chance to become a thorn in the side of the fed. that is important given the current situation going on. any real changes in the fed are what we will be watching. >> we have been focusing on the house side. he was joined in his challenge to the fed by bernie sanders.

now the new senate will have a number of senators who are new. what do you think that will mean? >> i think we have to remember that the reason independent central banks were created is partly to give politicians something to complain about when the economy -- the barrier to making substantial changes to how the fed operates are extremely high. all of the governance of the fed are appointed on a long-term basis. they are independent. the legal framework of the fed -- gives the fed a lot of latitude. it is hard to see how this will be much more than noise and criticism coming from either house of congress. >> are they likely to make gains in transparency?

>> he was an early created of this audit be that movement. as a result, there was a version of that that ended up in the dodd-frank bill. that was ron paul and bernie sanders in the senate. it got a lot of traction. in transparency, he has a success story. it is doubtful that he will get to the point where he wants where we will be able to see in real time or to have congressional auditors take apart the policy decisions of the fed. even a lot of the critics of the fed say that is not important. they say you shall be looking at the end result of the fed and decide whether the fed is meeting its goals or its mandate. there is a lot to say about that with inflation and unemployment. >> it is interesting that he was

not keen on hawkins reform. that legislation gave twinned authority to the fed. it has become -- twin authority to the fed. did it surprise you that he was not so keen on the results of that? >> what you have to understand is that ron paul's world view is different from the current framework. the campaign to change the fed framework is a minor tweak. it would not meet the criteria that ron paul is looking for. the fed would not mind the change during this type of inflation. balancing inflation and unemployment is two sides of the same coin.