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Ron Paul on which nominee is right about the Federal Reserve

This is a rush transcript from "Your World," September 7, 2016. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: All right, so you have Hillary Clinton and Donald Trump fighting over the Federal Reserve. Listen to this.

(BEGIN VIDEO CLIP)

DONALD TRUMP, R, PRESIDENTIAL CANDIDATE: They're keeping the rates artificially low, so the economy doesn't go down, so that Obama can say he did a good job. It's an artificial market. It's a bubble.

HILLARY RODHAM CLINTON, D, PRESIDENTIAL CANDIDATE: Another example why he shouldn't be anywhere near the White House. You should not be commenting on Fed actions when you are either running for president or you are president. Words have consequences. Words move markets.

(END VIDEO CLIP)

CAVUTO: Well, Ron Paul has always been a critic of the Federal Reserve, whether they have consequences or not. He says we should be questioning this unelected body that sets a policy and has a great deal more power than any of us can really fathom.

The former presidential candidate, host of "The Ron Paul Liberty Report," former Texas Congressman as well, on the phone with us right now.

Congressman, good to have you.

Who is right on this? Donald Trump is talking about the Fed and taking it on and its power and influence. Hillary Clinton is saying, big mistake, don't do it. Who's right?

RON PAUL, R, FORMER U.S. CONGRESSMAN: Trump is much, much closer to saying the right things on this issue, I will tell you.

But I think -- I find Hillary astounding, even though we find that each say, but for her to say, well, you shouldn't comment on the Fed, like it's off-limits, don't talk about it. I think the members of the secret society of the Federal Reserve will love Hillary because you're not allowed to say anything.

And yet, as you know, I have considered the Federal Reserve and monetizing of debt as being very important, because I think the next step that we have, not only is the desire to know what the Fed is doing -- and Trump does support a -- an audit of the Fed -- I think the connection has to be known that deficits can be dealt with by the Federal Reserve.

They just should be prohibited from monetizing debt. When I was in Congress, the chairman of the Federal Reserve always believed the Congress for spending too much money, but it was really the Congress always politically spending money, but the Fed accommodating, you know, by doing what? Keeping interest rates low.

So I think it -- I find it rather ironic, because there are some occasions when Donald will also say, you know, the best thing going for us right now are these interest rates are so low. What it would be like if we didn't have low interest rates?

CAVUTO: Do you think that's accurate, in other words, that the Fed has sort of propped things up with these record-low interest rates and that, without it, we'd be in a very different world?

PAUL: Oh, absolutely. But they have done that notoriously for decades. You know, the big argument was started with Nixon and talking to Burns.

So it's been going on. Now, how much you could argue and say, well, the members of the board are mainly interested in Obama, I think they're interested only in their own hide, because if things go down, which they would -- let's say the interest rates jump up two or three points. It would be immediately a disaster.

And this is the other point that I try to make often, is the fact that they're low and they should be too low -- they're too low for too long, the whole point is, they should not be fixing interest rates. That's price- fixing. Conservatives have always opposed price-fixing, except the most important price in the country, and that's the price of money.

CAVUTO: They say they do that, though, Congressman. We have heard this from many a Fed chairman, because you guys, more to the point, back in your days in Congress can't do anything, won't do anything, or are politically afraid to do anything, so they have to be adults in the room and do this stuff. What do you make of that argument?

PAUL: Well, no, they just make it worse. It's true maybe on the short run, if there are shortcomings and Congress is messing things up.

But it's made worse. But Congress and the Fed worked together to create the housing bubble. You know, they had -- you know, they instructed people to make loans, bad loans, and then the Fed accommodated, created the present and they created a bubble.

They work hard in glove, as far as I'm concerned. They pretend to fight and blame each other. And that's the way I think sometimes the leadership of both parties are. They fight and fume, but very often they accommodate when they have to get a bill passed at the last minute of the session.

And they get together, and they take care of each other. And the military budgets get passed and the welfare budgets get passed. So I think a lot of this -- but I think what we're seeing here with Hillary and Trump, I would consider this more real than two people accommodating each other.

But, like I said, I think it's astounding that Hillary says we shouldn't even talk about the Fed. I think that's a little bit old- fashioned.

CAVUTO: Yes.

PAUL: I think we're past that point. I think we will be talking about the Fed. And I think we're moving into an age when you're going to see the unwinding of central banking.

We have who have been concerned about central banking will win this argument. And we're seeing that throughout the world.

CAVUTO: Yes. You will see it in an unfortunate way. Yes. You will see it in an unfortunate way.

(CROSSTALK)

PAUL: They cannot manage money. They cannot do it. All they can do is create bubbles and accommodate big spending. And we're at the end of the line here. They can't lower interest rates anymore and we can't spend anymore. The deficit are -- it's limited. And that's what we're facing.

CAVUTO: Well, I will say this, Ron. You were ahead of it long before it became chic to take on the Federal Reserve. You were doing it when people didn't even know what it was.

Thank you very much. Good catching up.

PAUL: Well, glad to see you back.

CAVUTO: Thank you. Be well. All right.

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