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Transcript Part 4
But their whole goal in monetary policy is they're hoping that they can report the CPI going a little higher. But the truth is prices are going up a lot faster than they will admit, and it’s only a gimmick to distract us from the Federal Reserve. They think that it’s some people that aren’t at a point of getting the prices to go higher that would only happen. But that is hardly the solution. So all they do is they push on a string. They keep pushing. They push all that money out, and the people aren’t doing with the money that they think that they should. They keep buying more debt and monetizing debt, and what we need is a productive society and that won’t come until you have the liquidation of the mal-investment of excessive debt and too much regulation. And confidence restored. Companies now have a hard time finding money. You can borrow it pretty cheaply, but there’s no confidence that if I start a new business and I’m going to manufacture steel once again and be competitive – nobody’s doing that like we did in the Industrial Revolution.
Chris: Now, the Federal Reserve, I blame a lot and use the word blame carefully. I don’t like to cast blame around. But they had some blame coming, and I’m a big critic of Greenspan, Ben Bernanke, now Yellen, and I’m almost becoming infuriated – if I could use that word carefully – because of the learning curve; seems to be so flat for that organization. It seems completely obviously to me that if you take all the savings of the country and you give it zero percent return and then people don’t get the interest return on that you end up with – it seems capably obviously that you would end up with a system that we currently have where you have low spending, low borrowing, low investment, all these things they say that want, but essentially what the Fed did was they didn’t give money to Main Street. They actually took it away. Where did it go? Well, because of how the yield curve is built, they gave that money, took it away from savers and gave it to the big banks.
Would it be unfair of an observer like myself to say the Feds not – they talk a good game about helping the middle class and helping economy, but if you follow their actions not their words, what they’ve really done is taken a bunch of purchasing power from one group and handed it another group. And that other group, by the way, has created lots of inflation in gulfstream jets, trophy properties, high-end art, good jewels, and all of that.
Dr. Paul: That’s exactly what happened because the person that had a house and couldn’t pay the mortgage, which was a problem coming from the system that we had, the mal-investment, low interest rate and the over building. They weren’t bailed out. They generally lost their job and lost their houses so often. But there was some bailing out and exactly the people you're talking about – the very wealthy people and the people who were making all these mortgages – oh, they're too big to fail. So they got the bailouts. And they weren’t just domestic. This was an international event, and because the dollar is the reserve currency it was used to bail out other central banks and other governments and international corporations. And in the sense of pasting it together for a while longer, they did that, but now whether it’s the bond bubble or the dollar bubble, it’s bigger than ever.
The eventual event will be driven by the marketplace, and that means it will come undone, and they won’t be able to stop it just printing more money. It’s actually the opposite. Instead of, like they did, they print money and they prop up. There will be a time when, if we have a sharp downturn and they decide, well, QE didn’t work because it wasn’t enough and they double QE, there’ll be a point of no return and the confidence will be lost. We’ll dump the dollar. Interest rates will go up instead of down, and that will make all the difference in the world because it will be unsustainable, and then there will be the real challenge to the dollar being at reserve currency is when the dollar no longer serves as the international money, as the key currency. That’s when the ballgame is over.
Chris: Absolutely. So I want to talk to you about politics now. Recently you wrote on your national blog on the Campaign for Liberty website you said, “President Trump has been notoriously inconsistent in his foreign policy. He campaigned on it and won the presidency with promises to repair relations with Russia, pull out of no win wars like Afghanistan, and end the failed US policy of nation building overseas. Once in office he pursued policies exactly the opposite of what he campaigned on. Unfortunately, Iran is one of the few areas where the president has been very consistent, and consistently wrong.” First, why did Trump do such a turnabout from his campaign rhetoric and then your thoughts on Iran?
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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Re: Ron Paul: We Are Reaching A Point Of No Return
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Transcript Part 3
Chris: Well, let’s talk about when it comes, what that looks like because 2008 we had roughly maybe fifty-two trillion in debt in the United States. A hundred fifty-seven trillion worldwide, I believe the numbers are closer to sixty-three trillion in debt in the United States now, and we’ve got, I don’t know, a little over two-hundred-twelve trillion worldwide. So what we’ve done – you mentioned it before – the Federal Reserve policies I guess did three things: the wealth gap, the financial bubbles, plus a huge increase in debt. My concern, and I wonder if you share this, is that when the next – not if, when – the next downturn comes that there’s just that much more debt to be destroyed, which is just that much more disruptive, which is going to be that much more painful to go through. Would you agree?
Dr. Paul: Yeah. Absolutely. That is where the real problem is. Now, the Fed actually understands this to a degree. They won’t admit because then they’d have to blame themselves for monetizing the debt and the Congress for spending too much money. Their goal right now is to have price inflation. Why is the CPI going up? When you think about it, the CPI going up is very destructive to that middle class that’s getting poorer. They want to purposely destroy the value of money, which is exactly the opposite. They believe that if you have a prosperous economy price – if you see the prices going up you’ll have a prosperous economy. It doesn’t make any sense. If you have a prosperous society, and we still have that in some goals, prices go down. In electronics they still go down in spite of all this stuff that’s going on.
But their whole goal in monetary policy is they're hoping that they can report the CPI going a little higher. But the truth is prices are going up a lot faster than they will admit, and it’s only a gimmick to distract us from the Federal Reserve. They think that it’s some people that aren’t at a point of getting the prices to go higher that would only happen. But that is hardly the solution. So all they do is they push on a string. They keep pushing. They push all that money out, and the people aren’t doing with the money that they think that they should. They keep buying more debt and monetizing debt, and what we need is a productive society and that won’t come until you have the liquidation of the mal-investment of excessive debt and too much regulation. And confidence restored. Companies now have a hard time finding money. You can borrow it pretty cheaply, but there’s no confidence that if I start a new business and I’m going to manufacture steel once again and be competitive – nobody’s doing that like we did in the Industrial Revolution.
Chris: Now, the Federal Reserve, I blame a lot and use the word blame carefully. I don’t like to cast blame around. But they had some blame coming, and I’m a big critic of Greenspan, Ben Bernanke, now Yellen, and I’m almost becoming infuriated – if I could use that word carefully – because of the learning curve; seems to be so flat for that organization. It seems completely obviously to me that if you take all the savings of the country and you give it zero percent return and then people don’t get the interest return on that you end up with – it seems capably obviously that you would end up with a system that we currently have where you have low spending, low borrowing, low investment, all these things they say that want, but essentially what the Fed did was they didn’t give money to Main Street. They actually took it away. Where did it go? Well, because of how the yield curve is built, they gave that money, took it away from savers and gave it to the big banks.
Would it be unfair of an observer like myself to say the Feds not – they talk a good game about helping the middle class and helping economy, but if you follow their actions not their words, what they’ve really done is taken a bunch of purchasing power from one group and handed it another group. And that other group, by the way, has created lots of inflation in gulfstream jets, trophy properties, high-end art, good jewels, and all of that.
Dr. Paul: That’s exactly what happened because the person that had a house and couldn’t pay the mortgage, which was a problem coming from the system that we had, the mal-investment, low interest rate and the over building. They weren’t bailed out. They generally lost their job and lost their houses so often. But there was some bailing out and exactly the people you're talking about – the very wealthy people and the people who were making all these mortgages – oh, they're too big to fail. So they got the bailouts. And they weren’t just domestic. This was an international event, and because the dollar is the reserve currency it was used to bail out other central banks and other governments and international corporations. And in the sense of pasting it together for a while longer, they did that, but now whether it’s the bond bubble or the dollar bubble, it’s bigger than ever.
The eventual event will be driven by the marketplace, and that means it will come undone, and they won’t be able to stop it just printing more money. It’s actually the opposite. Instead of, like they did, they print money and they prop up. There will be a time when, if we have a sharp downturn and they decide, well, QE didn’t work because it wasn’t enough and they double QE, there’ll be a point of no return and the confidence will be lost. We’ll dump the dollar. Interest rates will go up instead of down, and that will make all the difference in the world because it will be unsustainable, and then there will be the real challenge to the dollar being at reserve currency is when the dollar no longer serves as the international money, as the key currency. That’s when the ballgame is over.
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