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

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.

: 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.

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.

Paul's message has been consistent, abolish the, 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.

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.

No, nobody 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.

Paul: Yeah, and I think they would.

Better than 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.

Every single second of the day they are varying the exchange rate between dollars and yen and euros and Swiss francs so in this computer age it's not a problem. You actually literally could do it if you wanted to buy something with a gold coin or silver coin there could be an adjustment.

Not in a transition period. Later on it doesn't have to be the government. I actually believe in the free market thinking: the private companies could do it, but if you try to mimic what we had before, yes, reserves would have to be held in gold and that would limit -- see that's why they don't want it -- see conservatives and liberals don't like it because that would limit spending. Today they can spend endlessly and the debt can be bought by the Fed out of money created out of thin air. That is the key to the problem.

That's probably what would happen.

No, you have the depression when you have runaway inflation, and that's when you get money that doesn't buy anything. They're working on trying to get rid of the debt by more rapid depreciation of the currency, so if you can get that currency say 50% more depreciated here in the next couple of years, the debt would only be $7 trillion. That's what they're working on, that's what the problems is, that's when people get cheated and the people who pay for that are the average people who have to pay higher prices in the stores and they are already feeling this. They are getting the brunt of this much, much worse than having a limitation on the printing of money.

All we're saying is you can't commit fraud. If you did it, you'd be a counterfeiter, but if we participate here in Washington and let the Fed counterfeit the money to subsidize our wars and our welfare, we're considered good politicians, but that's coming to an end.

Well, they would follow us most likely, but what you have to compare it to is how does printing money make any sense? That makes zero sense. Money has to originate in the market; it originates as an advancement of pure barter. Bartering started, and then you had to have the money developed because it was easier to have a third exchange instead of corn for cows or something like that; you priced it in an ounce of gold, that enhanced trade.

Then when you had the money with no definitions, it's like building a building with a yard stick that is changing its measurements every single day. You can't do it; that's why you can't do an economy on a fiat currency that varies its value every day, and of course the Fed rigging interest rates is a major problem too, so you want to free that up and have the market send the signals, not the Fed.

A lot of people think that, but the alternative is so bad that we do have to make the effort. But history has shown that fiat currencies internally self-destruct, and they always go back to gold. Gold, if you pick up a coin minted 6,000 years ago, you'd still have your money. If you pick up a piece of paper printed a year ago, it might be worth half its value. So history is on my side of the argument.

The cash has no value; it's just diluting the current value. It steals from people, and eventually what happens when you have the inflation you need ... people will always say we're short cash. The more you print, the less value you have. You can't get value. You can't create wealth out of printing presses.

Well, they did it before. We were on a gold standard in the year 1900. Galveston had the worst hurricane in the history of this country. We didn't have FEMA, we had the gold standard, no federal government bailout and we rebuilt the city of Galveston. By now they are having a terrible time with FEMA. FEMA is $18 billion in debt. It doesn't work to believe you can get wealth by just getting pieces of paper.

Well if the people do, if they cheat and they are committing fraud they should go to jail.

No, just a law against fraud. You don't need all these regulations; they cause a lot of problems. But the people who are defrauding the people right now ought to go to prison too because of what they're doing to the money. They are stealing and robbing from the people, and people work hard and they earn a dollar, and the next day it's worth 90 cents. Somebody should be accountable in a moral way, but no, that's called good politics.

No, no speculators are doing a good job trying to sort out the real value, but if you manipulate and defraud, that is different. If it's an ETF, and they bid it up, and they didn't put any money into gold or silver, that's fraud. But if it's legitimate, people are betting that the dollar value is going down; they're not so much betting on the price as they are on the value of the dollar going down. They provide a good market function.

--New York.

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