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Dec. 13, 2017 - Ron Paul Liberty Report
14:23
Market Update: The Cryptocurrency Craze

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Time Text
Market's Journey Through History 00:07:39
Hello everybody.
Thank you for tuning in to this market update.
Today I'd like to talk a little bit about what I see as the significance of the cryptocurrency craze.
I think it's obviously very important.
It's in the news.
It's dealing with a lot of money and a lot of speculation going on.
And I don't think anybody has quite figured out exactly what the outcome will be.
But I'm not going to deal so much with that part of Bitcoin and the currencies on this visit.
But I do want to talk a little bit about monetary history.
And I want to separate the two issues of the cryptocurrencies versus blockchain technology because I think they should be different.
I think they're going to develop differently.
But I don't want to get into that in detail.
I want to talk a little bit about what is the significance of this.
Why is it such a big deal?
Is it just sort of an accident?
Did the technology come along and say we're going to have new money and we're going to have these cryptocurrencies?
Or what was the real motivation behind this?
And I think you have to understand a little bit about monetary history to realize why blockchain technology has been so successful in getting the attention of people who are interested in an alternative monetary system.
I have for years been a strong supporter of competition in currencies, introduced legislation for that purpose and figured the market is a lot smarter than anything the government can do.
And you know, in many ways, that is one of the problems that we have today because the market is smarter.
And money came from the market.
It was when the government got involved, when the governments took over, passed legal tender laws and all these regulations, then they developed central banking that they really messed up what the market always required.
But early on in history, people bartered and it was very, very inefficient.
And then probably 3,000 years ago or so, they started using something other than just gross bartering.
They started to use an alternative, a substitute.
And that substitute was picked early on, and it was picked by the people, and they picked gold and silver, the precious metals.
They used other things, but they always used something, something to represent money.
And then governments got involved and decided that they wanted a monopoly.
So notoriously, over the many, many centuries, governments got control of it.
Sometimes they protected the principle of honest money and using commodities as money.
And things worked out pretty well.
I think of the time when they had the gold standard and the Byzantine Empire had the benzant, and it was gold-backed.
When they quit backing that up and they started inflating the currency, the Byzantine Empire finally ended and it was related to this.
So governments are notoriously very, very unhelpful when it comes to honest money because there's a conflict.
They get control of the monetary system and then the money is used to perpetuate big government.
The old days and currently today, the control that the Federal Reserve has, it's there to finance government and finance debt, finance special interests, finance the welfare system, until finally we reach a breaking point where the system doesn't work anymore because fiat money doesn't work.
So people have thought about, well, what are we going to do?
We have to have an alternative.
And that's when I think people started thinking about the alternative and put this together, the technology and talking about a cryptocurrency.
And like I said, I'm not going to go into details on this on this visit, but that is equally important.
But I think the point I would like to make is that governments really mess things up.
You take the history of our currency, and very early on, our currency was silver as a commodity that backed up our dollar.
And it was the Spanish mill dollar.
But all of history, when the people get to pick to evolve away from bartering, they have always picked the metals and other things.
I mean, there's times when they pick, you know, cows and products and tobacco and different things, but very cumbersome and is not practical.
So always, the gold and silver has won out in defining money.
So our country started off, and they were very much aware of this history.
They had the runaway inflation of the continental dollar.
And the founder says only gold and silver should be legal tender, which was a good position to hold.
It could have been that they didn't have to do that, but they did, but they said it should be gold and silver.
And it was a very imperfect system.
They had bimetallism and there was a lot of alternatives, people printing money and state banks doing different things.
So we weren't on an all-honest system of a gold or silver standard.
But we limped along, but it was relatively good in the 19th century.
But in the 20th century, there were several people, the banksters and others and big government proponents, decided, no, we have to get control of this.
And that is, of course, when they were able to orchestrate the taking over of the management of all money by a central bank.
And that was 1913, a bad year, connected to the same principle of taking away the wealth of people by having an income tax.
But 1913 came on, but the government immediately started debasing the currency, although the dollar was still related to gold.
And there was some restraint on the limits of the printing of money.
And when they would go off a gold standard, they generally would go back to it and try to honor their commitment.
But after 1913, it was more difficult.
Our government inflated for World War I and inflated during the 1920s to boost up the economy.
And then the banking people understood this and they saw this as an opportunity to get more control.
So what happened in the 1930s?
During the Depression, they used this as an excuse for governments to get even bigger.
And that was when they decided we'll default.
We're printing too much money.
We want to print a lot more.
The people don't have the right to own gold.
And in 1933, Roosevelt Total took away the right to own gold.
But the continued devaluation and destruction of the dollar that was as good as gold continued.
After 1933, the dollar was refinanced from $20 an ounce to $35 an ounce.
And that lasted until 1971.
But the American people weren't even allowed to own gold, you know, all the way up until 1975.
So there was ongoing, steady erosion of the currency.
And alongside this, the problems grew.
Big government, government surveillance, intrusion, wars, financial disequilibrium, a distribution of wealth, which is unfairly accomplished, and making the middle class poorer and the poor poorer and the rich richer.
So that has happened.
The Age of Currency Erosion 00:05:35
And even today, we're told that everything is rosy.
The stock market is up and don't worry, the government's going to take care of us.
But there is handwriting on the wall that there is a lot of discontent.
The people know there is a problem.
There's political turmoil in this country.
And it has infiltrated into the social order.
You have cultural Marxism going on.
It's very, very unstable.
My point is that debt and big government eventually leads to this where an honest currency like a gold standard will be destroyed.
First they take legal tender laws, then they debase the currency, then they have more rules and regulations, and then they enhance government and big corporations and banks until the people get really, really upset.
And that's where we are today.
I think there's much more knowledge about the fragility, not only of our system, but the world financial system.
I think people are very much aware of this.
Otherwise, I don't think people would all of a sudden be so interested in a new fantastic cryptocurrency that's going to solve all our problems and pumping in billions of dollars as a solution.
Now, my big concern will be that we have to realize how money came into being.
And it's always been in the marketplace.
It was never fiat.
It was never declared by the government that we will be told that we are going to use paper money.
Some people say that, you know, paper cryptos or computerized cryptos are no different than the dollar.
In one sense, that is true.
They're fiat.
But is fiat good automatically?
Well, fiat dollars, fiat currency by governments, is not good and always leads to trouble.
But we live in an age where I think there are so many problems out there and it's related to the currencies and people are begging and pleading for something.
And this has been offered up.
A lot of people don't fully understand it.
There's technology that is very, very interesting.
It's going to be around for a long time and that's blockchain technology.
But the question will be that due to the chaos that we have and the need for a sound currency, will that chaos be answered by having a fiat currency designed in the marketplace?
And that, of course, would be crypto.
But the point I really want to make is the significance of this, of this looking and the enthusiasm and the excitement and the dollars involved is a telltale sign of the serious nature of the financial system.
And it is sort of, you know, letting us know what the future will bring.
And it's going to bring some chaos because this won't be sorted out easily.
Nobody's going to say, well, the dollar's losing credibility and we're going to end the dollar and the central banks are going to disappear and everybody's going to have a computer and things are going to be okay.
It's not going to be that way.
I think that we have to be more careful.
But my main urging is to study and try to understand the best one can about where money came from and it didn't come from government and legal tender laws don't work.
And declaration, just because somebody says it has value and untested in the marketplace, that's going to be a real challenge.
But obviously we live in a new age, a different age, and the monetary system may evolve differently than what we've ever seen before.
But I still think one of the most important thing when we think about money is think about how it originated, where it came from, and how government has messed it up and that we have to think through clearly and as accurately as possible on what the alternative will be.
And for me, I think the more the people can decide this, yes, there'll be a lot of mistakes.
There'll be ups and downs.
Some people are going to get hurt.
The only thing I suggest strongly about the transition going from where we are today and the destruction of our central banking system and the dollar is that we go cautiously and that nobody be permitted to commit fraud.
If they're going to be fraudulent and deceive the people, then I think that makes it off limits.
But I do believe very strongly that money really should have a value attached to it on something that you can touch, but that doesn't rule out the fact that maybe the people would accept something differently.
But in the next year or two or three, I think we'll find out what comes of this.
But we have tried the gold standard.
We tried a standard where we defaulted on giving the gold back to the American people.
We defaulted in 1971.
We went on to the dollar at $35 an ounce.
And we've ushered in this age from 1971, the age of fiat, the biggest boondoggle fiat currency system the world has ever seen, a single fiat currency that runs the world.
That, I believe, is coming to an end, but I think that the solution to this is a little more complex.
And I would still argue the case that ultimately money has to have something tangible, something you can touch ultimately, although not on an everyday experience.
Convertible Currency Definition 00:00:56
You know, during the gold standard, if you had a certificate, you know, but the certificate was good because it was convertible.
But it has to be convertible, has to have a definition, and it has to be a measurement of value too.
That will be a real challenge.
So once again, I want to thank everybody for tuning in today on this update and my attempt to try to explain what I see as the significance of the cryptocurrency craze, because I think it's very significant and the results will be coming out in a systemic manner in the next few years, and we are going to be surprised.
I find it interesting and fascinating, and a lot of other people are thinking about this.
I look forward to continuing trying to further understand it and do my best to explain it.
I want to thank everybody for tuning in today to the Liberty Report.
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