Myth-Busters: Trump To Give Us 'Always Higher Prices'?
President-Elect Trump held his first press conference in quite some time. While it may be entertaining to watch him battle with the media, there are some tough and challenging consequences heading our way when it comes to Trump's stated policies. Ron Paul discusses on today's Myth-Busters!
President-Elect Trump held his first press conference in quite some time. While it may be entertaining to watch him battle with the media, there are some tough and challenging consequences heading our way when it comes to Trump's stated policies. Ron Paul discusses on today's Myth-Busters!
Hello, everybody, and thank you for tuning in to the Liberty Report.
This is the day we do mythbusters, and our co-host is Chris Rossini.
Today, we're going to talk a little bit about President-elect Donald Trump's press conference.
We're always looking for information.
We want to sort out truth from fiction and fake news, and we figured that we would pay a little bit of attention to Donald Trump's press conference.
And we're doing our best, but I'm not positive we still know exactly what he's going to do next week or when the administration starts.
But we're going to give it a try to try to figure out exactly what's going on.
So, what do you have?
Yes, the press conference was a pretty big event this week.
And while there are some nice things like him calling to task the media, that is just entertainment.
There are real issues that are going to affect us in our daily lives.
So, I'm going to read some quotes to you today, Dr. Paul, and you could give me your comments on them.
The first one is Trump appeals to the divinity here.
He says, we're going to create jobs.
I said that I will be the greatest jobs producer that God ever created.
And I mean that.
I'm really going to work hard on that.
So, is this a healthy view for the presidency and the marketplace, Dr. Paul?
Well, you know, I really don't think we have the authority to debate the creator, but anyway, we know the cliché.
But, you know, this is something that what he's doing here is what all politicians, especially presidents, do.
And that is, who gets to blame for the bad times and who gets the credit for the good times?
When times are good, you know, if the president's in whoever the president is, I did it.
I did it all by myself, and they love me, and that's why the economy is doing well.
If things turn down, then it's always the fault of the current president.
But the whole thing is, is that's just a distraction.
It's political grandstanding, it's demagoguery.
Because what you want to do is look at what the real causes are, and that's behind the scenes.
That's the economic policies that people have, what the Federal Reserve has been doing.
But that doesn't mean a president's incapable of helping.
But the president does not create jobs.
He destroys productive jobs if he participates in hiring more politicians and more bureaucrats or building an army we don't need.
That's destruction of productive jobs.
But a president could be very helpful in doing his best to reduce regulations, which Trump wants to do, as well as reduce taxation.
Sometimes he wants to do that, and sometimes he wants to raise taxes, such as on tariff.
So it's the philosophy behind the economic environment that is so important.
And it's much easier for the politician to demagogue it, look at it very short times, what's happening today or tomorrow.
But, you know, when Obama came in, you know, it wasn't very easy to suggest that, you know, Obama didn't cause the 07-08 recession depression.
He didn't help after he got in, but he didn't cause it.
And nor did a single person in the administration.
Bush didn't cause it all, but he contributed a lot.
But the cycles occur from the Federal Reserve.
And that's why I go back to the Federal Reserve, and they participate in spending.
They accommodate the Congress for the welfare, warfare state.
And then overall and longer term, we have the business cycle, which then, you know, they overdo things, and then there has to be a correction, and the correction occurs, and then the blame game occurs.
But people have to remember that there's nothing magic about a president getting in and say, I've created these jobs.
It's the individual.
What we need is an understanding of government and economics on how to release creative energy, because I think people naturally will take care of themselves and create jobs in the meantime, as long as they have an incentive, and as long as there aren't too many roadblocks in the way, and as long as there's not too much distraction from government spending and war spending and borrowing and all these things going on.
So it'll be interesting to see because I expect a major downturn before this administration finishes the first year, and then the blame game will be going on.
Can you imagine the expected downturn that's coming by Austrian economic thinking is not too far off.
And how's that going to be handled?
They're not going to go back and say, well, it's Keynes.
It's all Keynes and Paul Krugman and Samuelson's fault for teaching us lousy economics.
It is going to be a political scramble for blaming.
And then there's going to be the extreme answers for this.
You know, the extreme answer in 08 and 09 was take interest rates to 0%.
This time, when the economy turns down, in order to keep this going and keeping the job market going, what I suspect will happen is there'll be a tremendous increase in fiscal stimulation, which is a failed strategy, too.
But anyway, I think that people shouldn't buy into this idea that it is just one administration or one president who makes the difference in creating jobs.
But we do have a responsibility as all individuals if we care about prosperity.
We need to think about the environment, the business environment, and also the role of government.
If we don't deal with that, all that blaming is just going to cause more friction and difficulties like we're experiencing right now.
Dr. Paul, one of the few areas that libertarians were able to get behind Trump with some confidence was when he was talking about Russia and having good relations with them for once.
But during this press conference this week, we saw a little bit of a different side.
So I'm going to quote Donald when he said, Now, I don't know that I'm going to get along with Vladimir Putin.
I hope I do, but there's a good chance I won't.
And if I don't, do you honestly believe that Hillary would be tougher on Putin than me?
Does anybody in this room believe that?
So have we been duped, Dr. Paul?
Well, I think the people get duped way too often.
And the politicians, that's their job is to dupe the people.
So yes, because if you or I try to sit down and assure all our listeners, well, we know exactly because we've studied this and we know what Trump has said and we know what to expect on the relationship with Russia.
There's no way of knowing.
But the problem I have with this is the American people get duped all the time.
And our goal, even with this program, is try to iron out this a little bit and try to, we've been fighting fake news for a long time.
But I think actually Trump himself gets duped.
You know, I can create jobs and I can do this.
And whether I'm a friend or foe with Putin, you know, I am the best.
And he believes this stuff.
And when it's right, I guess it doesn't matter.
You know, I believe it when I start talking about monetary policy, but I figure you're sorted out by correct proposition or not.
But if you come along and you're arbitrary and you don't have a consistency, this is the benefit that goes to a politician that is a utilitarian, a so-called pragmatist, that the government is there to intervene.
And truth is not absolute.
Truth is sort of the policy that we design right now.
And the extreme part of this is when truth is dictated by the system itself, certainly in a communist system or fascist system, the leader dictates everything.
But that is why people should adhere to basic principles that are divorced from the politician himself.
But when you have a whole philosophy depending on the whims of the individuals, and this is what's happening with Russia right now.
I was anxious to see what his appointees would be, Secretary of State and Secretary of Defense.
And they haven't said exactly what Trump has said.
And then Trump comes out with this arbitrary statement about Russia.
But I think it's, again, politics because when you're facing hearings and appointments and acceptance of your cabinet, if you come across weak on Russia, the media bashes Trump and everybody else for being weak on Russia.
They're our enemy, don't you know?
And they sort of have to accommodate.
So you don't know what is political accommodation to soften their stand so they can get their votes down or their position is arbitrary and quite different.
I sort of liked it when the policy was crystal clear about Russia.
But right now, it isn't crystal clear because, you know, Tillerson and Mattis have made statements that we have to be tougher and that they condemn Russia, just like the other day Tillerson said, well, you know, we have to look at, we have to watch China very closely because what they're doing with those islands, it's equivalent to that evil thing that the Russians did with the Crimea and Ukraine without sorting that out.
And now they're saying quite a favorable thing.
We have to stand by our allies.
And right now our allies, NATO, they're putting troops, including our troops, right up near the border of Russia.
So, of course, this is still Obama's game, but it's interesting to see that what is going to happen, my prediction is, is that you're not going to see a radical change in NATO policy, even though Trump has indicated we're the boss and we pay all the money and you're going to do what we say and we'll send you a bill.
But I don't think we can expect all of a sudden that we're going to see the troops back away and that NATO take a different position, even though they were instrumental in overthrowing a government in Ukraine and installing somebody that's pro-East, pro-West.
So it's up for grabs.
We're no better off right now than we were a couple months ago.
Matter of fact, I feel like we're worse off because a month or two ago I thought, well, this is very good.
They're going to stick to their guns and we're going to have a new relationship with Russia.
But back to the inconsistency, that's probably what annoys libertarians the most, is that we have a principle and we're supposed to follow it.
But they say that I'm wrong and don't worry about it.
They're going to treat Russia fairly and friendly.
But not the Iranians.
They're the bad people.
We've got to be tough on them.
Not the Chinese.
They're bad people.
We've got to be tough on them.
It's sort of like Obama.
Oh, yeah, that Bush war in Iraq.
That was terrible.
That was a bad war.
I think we should really get enthusiastic about the good war in Afghanistan.
So now, right as he's ending his administration, he's putting more troops in there.
That's why it's so important to have a principled stand that is predictable and people can anticipate.
And then, if it's the wrong position, let them debate the position.
But everything in the political world is arbitrary and it changes all the time.
And they're just pragmatic.
Whatever satisfies the voices that are the loudest, they get the attention.
So keep our fingers crossed.
I'm still hoping that there will be more sanity in our relationship with Russia.
I just hope that if that is the case and it works, that they should apply that basic principle to the other countries like China and Iran.
Next up, Dr. Paul, we all know that Walmart's motto is always lower prices.
Well, the Trump administration maybe should go out there and trademark always higher prices.
Donald Trump said, you want to move your plant and you think, as an example, you're going to build that plant in Mexico and going to make your air conditioners or cars or whatever you're making, and you're going to sell it through that very, very strong border?
Not going to happen.
Always Higher Prices?00:10:18
You're going to pay a very large border tax.
Should we get used to higher prices, Dr. Paul?
Absolutely.
And besides, there's higher prices coming for something that is even out of the control of a strong president.
And that has to do with all the money supply floating around since the big recession started.
You know, the monetary base is huge.
Prices are starting to move up for the real reason that prices go up, and that's the monetary reason.
But you can make prices go up for other reasons.
You know, during the housing bubble, it was going up because the credit was easy, but it also went up because of government-directed funds in a certain direction, like the Community Reinvestment Act.
So you push money into an area, and then you have greater inflation.
Same way with medical care and education.
They channel funds in there.
So when you start intimidating and talking to business people, you do that.
This is what we're going to do to you.
And yet, the position of the administration coming in is less regulations, which is very good.
But the whole thing is a threat of a tariff is a regulation, but it's preemptive, it's uncertain.
It's almost easier to figure out what a written regulation is and a businessman to deal with it and try to make sense out of the whole thing.
But when you have somebody saying, you do it my way, or I'm going to do this to you, he may be able to, he may not.
But it raises another question mark.
Well, if he's going to do that, you know, I can't do this.
Or they're intimidated and they're rolled, and then they say, well, we can't take on the president, so we'll do exactly as he tells us, which scares me to death because that means big business and big governments coming together.
And it's sort of like government relationship to the military industrial complex, and they become related to all the industry.
Well, you know, this week Trump took on the drug industry and he said, well, if they're going overseas and making their products cheaper, we're not going to let them sell them drugs here.
Well, you know, for years in Congress, there was a group, Republicans and Democrats, that said our patients should be allowed to buy their drugs from overseas.
They were always cheaper and there was less monopoly control than we have with our FDA and our drug companies.
So we want to buy our drugs from overseas.
But he's saying that if you dare do that, we're not going to let the prices come down.
You know, there was essentially a monopoly with EpiPen, and it had to do with government regulations and deals made, and they were making epinephrine, which should be pennies.
And they were selling these two injectable EpiPens for over $600 and even more.
And finally, you know, because it became known about this, that monopoly was broken up to a degree.
Now, CBS makes it at $100.
If you had true deregulation and not worrying about this, it would probably cost you $10 or something.
But you want more competition.
What he's saying is intimidation, you do it our way.
And then if they're already over there, how are you going to sort it out?
Did you do it because of bad motivation?
Were you already decided to do this?
Did you do it because the plant was already built?
And I think he's going to have trouble getting by by just saying, well, that company is going to pay the tax.
That company isn't going to pay in the tax.
It's such a mess.
But I think the intimidation and the unknown out there is very negative as well.
So I think trade protectionism is very destructive to the consumer, very conducive to raising prices, and can lead to all kinds of problems.
And the basic problem is there's always retaliation.
To think that we're going to do this to a few countries and they won't pay back and pay us back, you know, it's not going to work.
So this is disappointing.
And you know, a lot of Trump supporters who know better and they know that tariffs aren't any good.
They say, well, he probably won't do it.
Well, why should he say he's going to do it then?
Maybe he won't get away with it.
But if he does, because there's a lot of people that are going to be very upset with Trump if he doesn't do it, because they want tariffs.
Keep those products out.
That is traditional.
It's not new.
It's happened for hundreds of years that you have protectionism to protect bad markets, bad governments, too much inflation, too much regulation, and all the faults that we or the host country might have that makes us uncompetitive.
So if you keep the competitive products out, you just indoctrinate and instill the bad habits and the bad policies that are domestic.
So you don't want to do that.
It's very detrimental.
And you subsidize bad habits and a system that doesn't work.
So all you do is you end up with higher prices.
And that's going to be very bad for the economy, especially in a weak economy.
People say, oh, that's not right.
In a weak economy, prices always go down.
That's not true.
You can have weak economies.
We lived through the 70s very clearly.
We had interest rates up to 21% and prices going up at a rate of 15%.
They called it stagflation.
Where did it come from?
Where did it come from?
Well, just look around.
There are inflationary depressions around the world at this very moment.
And there's nothing that protects us from having downturns, recessions, and prices going up.
So that should be the real concern.
And right now, protectionism won't do anything to help.
Actually, it'll make it much worse.
Right.
Finally, the last quote that I'm going to read really shows Donald Trump as a central planner with an iron fist.
He says you, as in companies, American companies, can go anywhere.
You've got a lot of states at play, a lot of competition.
So it's not like, oh, gee, I'm taking competition away.
You've got a lot of places you can move, and I don't care as long as it's within the United States, the borders of the United States.
How scary are these ideas, Doctor?
It's horrible.
During the height of the Cold War, we could get along, libertarians get around.
How are we going to define when you've lost your freedom?
And so often the conclusion was when you can't leave, when you can't leave, you know, there will be a Berlin Wall.
There will be walls.
The real dictatorial system holds you in.
And that's what you would be doing.
You can't leave.
Once again, it's sort of like a tariff.
You know, you can't compete.
You can't leave the country.
And I think that is just so, so dangerous.
Yeah, you can go from state to state, but what if the states are run by the federal government and the World Trade Organization?
And already we have that.
You can't, you know, if you happen to be skeptical of banking and what might be coming, and there may be calling in of cash and things.
If you pack up your suitcase and you've honestly earned the money you have and you have it in gold coins, you say, well, I'm leaving.
I'm going to go to Canada.
I'm going to go to Mexico or I'm going to fly to Europe or something.
You'll be arrested if you have anything over $10,000.
You can't do that.
Even if it's less.
You're not going to get on the airplane until you fully explain things.
So they don't want you to leave.
And I think that's a sign of loss of freedom, whether it's your financial assets, very difficult.
There's always the capital controls when that happens.
Several countries are doing that right now because they're in trouble.
We've used capital controls in the 70s, and that means you can't take your capital out.
I've worried about walls between us and other countries and saying, you know, walls sometimes are built to hold us in.
And in a way, what Trump is talking about is a wall.
You can't pick up and take your business someplace else.
And I think that is very scary, and it's done by intimidation.
I'll punish you if you don't listen to me.
That's exactly the opposite of a libertarian society.
You don't have a boss.
What you have is somebody trying to promote an environment where people get to make up all their own decisions on what they do with their personal life, what they do with their economic life.
And applying it to foreign governments, we say that, yes, they're deeply flawed, as we are as well.
But it is not under our authority that we can go and use our force to tell other people what to do.
So that's quite a bit different than having a strong leader that is telling us what we have to do and telling us where we can go and saying, well, you can move your business from Texas to Arizona or from California over.
Well, that is good.
The founders wanted us to be able to do that.
But they never said that you should never have a choice of leaving if you wanted to.
So I think in a free society, if you can't leave anytime you want and take your money with you, then you don't have freedom.
It's sort of like the monetary issue.
You have only a sound monetary system.
You can carry currencies, reserve notes, and that might be certificates of gold and silver.
But the key to it, for that to work, you have to be able to take them to the bank anytime and get a return on that.
You get your gold and your silver, just to be reassured.
And you should be reassured that if you want to leave, you can leave.
If you can't do that, that means the government has way overreached and they no longer can pretend that they are promoting a free society.
I sort of lean toward that free society.
I'm convinced that's the way you can go with peace and prosperity.
Chris, thank you very much for being with us today.
Always a pleasure.
Thanks, Dr. Paul.
Very good.
And I want to thank our audience for joining us today at MythBusters.