The Federal Reserve has the authority to buy the debt of any foreign government, which in turn the US Taxpayer must cover losses.
This is a key point the Federal Reserve Bank, a PRIVATE institution, can "tax and spend without representation" of the common citizen. This is the heart of the issue, which unfortunately, when corrected, will be painful like removing a deadly cancerous tumor allowed to grow for years.
Unfortunately, Ron Paul's passion comes across like hes a nutcase, which is somewhat true. But the heart of his questioning is right, if the taxpayer must cover losses, the books must be made public.